BC Journal

#Finterms: Magnificent Seven

The “Magnificent Seven” is the term used to describe seven high-flying technology stocks – Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla. Together they contributed to over half of the S&P 500’s 26% return in 2023.

These seven stocks returned a whopping 111% in 2023 alone. Enthusiasm surrounding Artificial Intelligence (Ai) and other technological advancements contributed to the rally.

#magnificentseven #stockmarket #technology #sp500 #markets

Financial Literacy

#Finterms: Soft Landing

A Soft Landing is when a central bank, such as the United States Federal Reserve, tames inflation without triggering a recession.

Central banks seek to accomplish this by reducing the country’s money supply. Common strategies include raising reserve requirements, selling government bonds, and of course hiking interest rates.

Soft Landings can be elusive, though. Economists caution that the U.S. has successfully navigated only one soft landing since World War II. Regardless, many remain optimistic that the Federal Reserve can bring inflation to its 2% target and avoid causing a significant slowdown (recession) in 2024.

#softlanding #centralbank #inflation #interestrates #moneysupply #recession

Financial Literacy

#Finterms: Transitory Inflation

Central bankers used the term Transitory Inflation to explain a series of rapid price increases following the Covid-19 Pandemic. Inflation readings nearly doubled from 2.6% in March 2021 to 5% just two months later. Price increases eventually peaked at 9.1% in June 2022 before gradually decelerating.

The phrase implied that price increases were merely temporary and circumstantial.

Central bankers argued that supply chain disruptions, pent-up consumer demand from pandemic lockdowns, and available cash from stimulus actions were driving price increases. This theory posited that prices would quickly stabilize once producers and consumers readjusted.

Inflation ultimately proved stickier than the Federal Reserve anticipated. Economists point to government policy, job market disruptions, and corporate profit-taking as key culprits.

#inflation #transitory #Covid #FED

Financial Literacy