July 9, 2022 | Daily JAM |
I expect a BIG week for inflation numbers. Investors and traders will get the June report on Consumer Price Index (CPI) inflation on Wednesday, July 13. The CPI isn’t the inflation index that the Federal Reserve tracks, but it is an indication of where inflation measures that the Fed does follow, such as the Personal Consumption Expenditures index are headed. The Fed next meets to set interest rates on Wednesday, July 27. The market is expecting the U.S. central bank to raise interest rates by 75 basis points at that meeting. On July 8, the CME’s FedWatch Tool put the odds of a 75 basis point increase at 93%. Economists surveyed by Bloomberg expect that headline CPI inflation–that is inflation that includes food and energy prices–climbed at a 9% rate in June. That would be above the 8.6% headline rate reported in May.
July 6, 2022 | Daily JAM, Morning Briefing |
In my opinion, this was the most important statement in the minutes from the Federal Reserve’s June meeting released today: Fed officials “recognized that policy firming could slow the pace of economic growth for a time, but they saw the return of inflation to 2% as critical to achieving maximum employment on a sustained basis.” Nothing guaranteed but the Jerome Powell Fed, commonly regarded on Wall Street as having no stomach for a recession, was signaling that it would continue to increase interest rates until it brought inflation under control even at the cost of a recession. That’s important because the current market consensus is predicated on the Fed quickly backing off on interest rate increases face of a recession. Recession soon, perhaps this quarter or the next, but then interest rate cuts in early 2023, the current story goes.
June 23, 2022 | ABBV, Daily JAM, Dividend Income, GOLD, Jubak Picks, PXD, Special Reports |
The advice is sound, very sound. Move part (at least of your portfolio to cash and sit out the worst of this bear market on the sidelines. And since you have that cash in hand, you’ll be ready to snap up bargains when the market has put in a bottom (or near the bottom, or on the way up from the bottom…or something.) But right now that’s easier said than done.
June 22, 2022 | Daily JAM, Morning Briefing, Videos |
My one-hundred-and-forty-eighth YouTube video “Ouch! The Fed Gets Honest About Inflation” went up today. In front of the Senate Finance Committee today, Fed chair Jerome Powell said that the Fed has all the tools it needs to fight inflation–except, he admitted, that nothing it does to raise interest rates will lower the price of gasoline or food. Those prices don’t figure into the core inflation rate the Fed watches, but they are very real to consumers. More money spent on food and fuel means less money available for everything else.
June 22, 2022 | Daily JAM |
Lennar (LEN) has started trimming prices and offering buyer incentives to bolster sales. The bad news here is that a slowing housing market is an early indicator of rising odds of a recession. The good news is that this is supposed to be what happens–the housing sector slows–when the Federal Reserve raises interest rates to fight inflation.
June 20, 2022 | Daily JAM, Videos |
My one-hundred-and-forty-seventh YouTube video “Rip the Band-Aid Off on Interest Rates” went up today. My Trend of the Week video this week looks at hedge fund gurus who have been yelling that the Federal Reserve needs even bigger interest rate increases than the 0.75% hike the central bank delivered on June 15. Most of these hedge fund managers are arguing their own book–since they’re short Treasuries–but that doesn’t mean they are wrong in their predictions for how high rates will need to go before we see inflation start to come down.
June 20, 2022 | Daily JAM, Dividend Income, PFXF, VGSH |
I’ve probably overstayed my welcome in the Vanguard Short-Term Treasury ETF (VGSH) and the VanEck Preferred Securities ex-Financials ETF (PFXF), but with the Federal Reserve accelerating its interest rate increases, I think selling these two members of my Dividend Portfolio is a bit more pressing right now.
June 15, 2022 | Daily JAM, Morning Briefing, Videos |
My one-hundred-and-forty-fifth YouTube video “Fed Hike Makes the Market Happy” went up today. The Federal Reserve raised interest rates by 75 basis points today–instead of the 50 points so widely expected just weeks ago–and stocks rallied. Here’s the Wall Street narrative that explains why.
June 13, 2022 | Daily JAM, Special Reports |
It is different this time: Part 1 and Part 2 of my Special Report: Your Best Investment Strategy for the Next 5 Years. And finally the full Part 3 with strategies and picks for the 5-year period including the “out” years. It’s likely to “be different this time” for the next five years or so. And you need an investment strategy for that period.
June 13, 2022 | Daily JAM, Morning Briefing |
The latest Consumer Expectations survey (that is for May) from the New York Federal Reserve shows U.S. households’ anticipate inflation will rise at a 6.6% annual rate over the next year. That’s up from April expectations for a 6.3% rate. The May anticipated rate matches March results in the survey for the highest inflation anticipation on record.
June 12, 2022 | Daily JAM, Friday Trick or Trend |
At its March 16 meeting the Federal Reserve’s Dot Plot showed Fed officials forecasting that the Fed’s short-term interest rate, now set at 0.75% to 1.00%, would end 2022 at 1.9%. Things have changed since then with the Federal Reserve due to meet on Wednesday, June 15. There’s currently a fairly large divergence on interest rate expectations for the end of 2022.The June meeting and the new Federal Reserve Dot Plot showing the consensus forecast by Fed officials will go a long way to narrowing that divergence. But I don’t expect all disagreement to vanish from the markets on Wednesday. And I do expect that resolving this disagreement will present a bumpy road to the financial markets.
June 11, 2022 | Daily JAM, Weekend JAM |
After Friday’s gut punch to stocks, the Wednesday, June 15, the meeting of the Federal Reserve’s interest-rate will be even more important for stock market direction. I argued back on June 2 in my video “Beware the Fed’s Dot Plot” that the June 15 meeting was likely to create big waves in the financial markets. Investors and traders would be ready to buy or sell big time depending on what the Fed said in its Dot Plot about its expectations for future interest rates, inflation, and economic growth. The Fed had already lowered its projections for economic growth, raised its projections for inflation, and increased its projections for interest rates at the end of 2022 and in 2023 at its March 16 meeting and the release of a Dot Plot on future expectations.Now, though, after inflation rose aggressively to an annual 8.6% rate in the May Consumer Price Index report on Friday, the stakes are even higher.
