We almost put in four straight weeks of gains with the big up day Friday, but it was a loss given the down days earlier in the week.
This came with the Federal Reserve raising the Fed Fund’s rate by 75 basis points.
This has put us at 4% and the debate rages as to where and when the Fed will stop.
Many had hoped for 4.5%, indicating that we are close to the Fed stopping for a while.
Many have been using the term pivot to describe a period that the Fed will stop raising rates and interpret the data for several months.
The thought is that the data is always in the rear view mirror and we need to pause to see the real impact of rising rates.
Furthermore, the thought was this might prevent the Fed doing more harm than good.
This week we will get the latest Consumer Price numbers on inflation.
Most forecasts I have seen is that there won’t be an increase in the measure of inflation, but that it will in all likelihood stay close to where it was with core rate coming in at 6.5%.
That is three times the goal of 2% set by the Fed as its target.
All this said, it is being discussed as many are hoping the Fed will only raise the Red Funds Rate by 50 basis points next month. The thought being that we need to slow down the level of each increase as we close in on 5%.
There are some who are pointing to the recent layoffs at Amazon and Facebook (Meta).
These are no small cutbacks and follow Elon Musk’s labor cutbacks at Twitter, though not nearly as severe. The indication that the economy is not strong and probably will get worse.
The one hope is that the strict COVID lockdowns in China are ending, allowing the supply chain to improve.
All I know is that the debate rages whether the worst is behind us or whether we are in a lull before the real storm.
If history is a predictor, then a split government of gridlock would portend good times in the equities markets.
That has been the case in the past. It has also been the case that the Fed never has produced a soft landing either.
Your choices are vast and varied.
I decided I would not let the train leave without me and took positions in some of the chip stocks like AKD and Cirrus.
I also think that the split government will tie the hands of the executive branch as it comes to energy allowing those companies to prosper.
As such I took positions in Paramount Resources and Magellan Midstream.
The latter two were more to do with good dividend return over growth prospects.
I suppose gridlock is my only hope.
That is not a great hand to draw to.
Better odds though than hitting the Powerball.
