On June 15, 2022, the Federal Reserve’s Open Market Committee (FOMC) raised the federal funds rate to 1.65 percent. They vowed to “undertake open market operations as necessary to maintain the federal funds rate in a target range of 1.5-to-1.75 percent.” Let’s call it 1.75 percent for today’s discussion, which is in line with the usual commentary. According to Bloomberg data, the bond market is pricing in that short-term interest rates will hit 3.6 percent. How might short-term interest rates reach 3.6%? Let’s plot how the Fed could drive short-term interest rates to 3.6 percent. As of June 15, 2022,…
Insights & Advice
Tag: investing
American Values Impact Financial Choices | Conscience or Money?
Charles Schwab’s sixth-annual Modern Wealth Survey revealed that people with money do have a heart. Almost three-quarters of the American respondents (73 percent) say that their values govern their life decisions. And almost as many (69 percent) say their top financial considerations support causes they care about. When deciding where to place investment dollars, Americans consider such things as the company’s reputation (91 percent). Corporate values (81 percent) are nearly as crucial as traditional factors. The company’s financial performance (96 percent) and the price (93 percent) still mattered the most, but barely. These values carry over to the workplace. More than 8…
Want to predict tomorrow’s stock market? Watch corporate insiders today.
It’s a fool’s errand to try and stick the landing and call the end of a bear market down to the exact day. Nonetheless, on February 7, 2022, this fool argued that there was a six-in-10 chance the stock market would bottom on May 22, 2022. I’m dying to find out if I’m right (or close to being right). If I am wrong, the stock market is in for a world of hurt. I assigned a two-in-10 chance that the stock market would drop 20% by September 2022. If the downdraft continues, in part, it will be because investors expect…
Markets liked the Fed’s message
The first interest rate rise in years was officially triggered in this week’s Federal Open Market Committee Meeting. Since then, stocks gained more than 5 % on the news, which was contrary to many investors’ expectations. The reaction was even more confusing when you consider how hawkish Chair Jerome Powell and his FOMC members were, both in the minute meetings and in Powell’s Q&A session after the meeting. The Fed is officially planning for seven rate rises this year after the 25-basis point move on Wednesday. The next hike could come as early as the central bank’s next meeting in…