Now that the “Inflation Reduction Act” has moved out of the Senate, we should see the Consumer Price Index move towards zero! Well, it has not passed the House or been signed by President Biden. After that, the CPI will move to zero. Not really of course. Although importantly, in the latest Fed Survey, consumers' expectations of inflation in 2022 is 6.5%, but in 2023 and the next 3 years inflation expectations are 3.2%, a...
Important Client Action Item (Blog Post Begins Below): The San Francisco Governor of the Federal Reserve Bank indicated today that the Fed is far from over-attacking inflation, meaning short-term interest rates will continue to increase and stay higher for longer. The July stock market rally was presumed on fewer interest rate raises and the possibility of lowering rates going forward based on two-quarters of negative GDP growth. The two-quarters of negative GDP growth is a...
Insight into possible Wall Street/investor thinking. After the market closed on Monday, Walmart announced a significant decline in sales because inflation in food items is leading to lower discretionary spending, resulting in too much inventory and a subsequent lowering of prices to clear it out and a reduction in quarterly and 2022 profits. The immediate result is a futures sell off in the S&P 500, Dow, and Nasdaq and a steep after hours decline in...
The Euro and the US dollar are no longer exactly at parity, however, if you have contemplated buying property in the European Union, now is the time to consider it. The heat wave and fires could be a problem though, kind of like California. So far, in SF, we have been lucky with clean air this year, however, that can change anytime. The Market In July, for the first time this year, markets have gains...
The Market Markets focus on trends in preference to absolute numbers. Inflation numbers came out this week and they might be higher than last month’s, but markets look for trends. And the bad news is good is often at work. If inflation numbers are higher this month, it may be interpreted that this is the high and the trend will be down going forward. One indicator that I have mentioned repeatedly in our newsletter is...
First Half Decline The first half of the year is done with stock market averages experiencing the largest ½ year decline since 1970. These declines include the fixed income market (bonds) as well, although the declines are less in that asset class and recently we have seen declines in interest rates as well. Headlines do not include the fact that in the 2nd half of 1970, market averages increased by 26%. Will history repeat itself...
Markets Week Ending 7/1/2022 From the depths of correction territory and a 20% decline, markets rallied across the board last week. Interest rates stabilized with the yield curve remaining pretty flat between 2 year and 30 year maturity. The bond market remains skeptical of economic growth past 2 years time from today. Earnings season for the 2nd quarter begins in July with not a great deal of visibility and analysts still expecting growth of 4.8%...
Economy and the Market: The Fed funds rate was increased by 75 “basis points” or “bps” or 0.75%. For reference, 100 “basis points” = 1.00%. Until recently, the expectation of the Fed funds rate increase was 0.50% or 50 basis points. The recent CPI/inflation increase announced last week moved the expectations for the Fed funds increase to 0.75%. The rise in expectations for the increase was part of the reason for the stock market sell-off...
According to the economic decision-makers, two quarters in a row of negative GDP growth results in a recession being called. This would be a lot sooner than economists have been anticipating. The Federal Reserve has an indicator called GDPNow: “follows economic data in real-time and uses it to project the way the economy is heading. Tuesday’s data, combined with other recent releases, resulted in the model downgrading what had been an estimate of 1.3% growth...
We had a stock market bounce back last week with a bounce off the intraday bottom in the SP 500 of a 20% decline defined as a bear market. The bond market stabilized last week with 10-year yields below 3%, a recent high. Mortgage rates moved down slightly from their highs for 30-year mortgages of close to 6%. Not surprisingly, mortgage refinancing has slowed down very quickly. Will housing prices follow? So far no, as...
SAS Managed Account Client Action item: A reminder that Charles Schwab acquired TD Ameritrade back in 2019. The best way to prepare for the merger is to ensure that you have a userID, online access to all of your SAS managed accounts held at TD Ameritrade, and have the most up to date e-Delivery (electronic delivery) settings for your account statements. Login here: www.advisorclient.com First time registration here: https://www.advisorclient.com/login/getstarted Update or confirm your e-delivery (electronic...
SAS Managed Account Client Action item: A reminder that Charles Schwab acquired TD Ameritrade back in 2019. The best way to prepare for the merger is to ensure that you have a userID, online access to all of your SAS managed accounts held at TD Ameritrade, and have the most up to date e-Delivery (electronic delivery) settings for your account statements. Login here: www.advisorclient.com First time registration here: https://www.advisorclient.com/login/getstarted Update or confirm your e-delivery (electronic...
