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  • Scott Poore, AIF, AWMA, APMA

Equities Continue Rally Despite Best Efforts By The Fed

Equities continue rally in spite of the Fed. It wasn't all equal as some sectors lagged others.

Fed Chairman Powell struck a dovish tone a week ago by stating "if we need to do more" with regard to further rate hikes. Yet, on Thursday of this past week, Powell struck an entirely different tone by stating "we are not confident we have achieved such a stance" with regard to rate hikes and dealing with inflation. This is a bit nonsensical as gas prices, used cars, and commodities, represented by the broad GSCI were lower last month. It's expected that both CPI & PPI will be lower on both a month-over-month and year-over-year basis at their release later this week.


Credit Card Debt and Personal Savings are being bantered about lately as signs of a coming recession.

However, when we put those metrics into the context of personal disposable income, we can see that the picture is not so problematic. Credit Card Debt relative to Disposable Income shows consumers are not near the levels of pre-COVID and no where near the levels of 2000 and 2007 - preceding those respective recessions. In addition, Personal Savings, when taken as a whole is down, but relative to Disposable Income is still at a healthier level than both 2000 and 2007 - even higher year-over-year. The Fed recently revised their Q4 GDP projection up from +1.2% to +2.1% due mainly to higher projections for consumer spending. Similarly, both the Chicago Fed's National Financial Conditions Index and the St. Louis Fed's Financial Stress Index moved lower last week, indicating loose financial conditions. Positive news on inflation should help equities continue rallying as further rate hikes would appear less likely.

 

Disclosures


The information contained herein is for informational purposes only and is developed from sources believed to be providing accurate information. The opinions expressed are those of the author, are for general information, and should not be considered a solicitation for the purchase or sale of any security. The decision to review or consider the purchase or sell of any security should not be undertaken without consideration of your personal financial information, investment objectives and risk tolerance with your financial professional.


Forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.


Any market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.


Past Performance does not guarantee future results.

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