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  • Scott Poore, AIF, AWMA, APMA

The Fed Game

Markets declined last week on new worries about a rate hike later this month.

Though last week was a holiday-shortened week, there was plenty of action in the markets. The minutes from the last Fed meeting were released which showed overwhelming support for last month’s “pause.” In addition, the minutes suggested that the Committee is monitoring employment and price stability. Well, the Jobs Report last week revealed that the unemployment rate dipped slightly to 3.6%, but has held steady between 3.8% and 3.4% for the past year and a half (well below the historical average). In addition, Average Hourly Earnings were steady in June (+4.4%).


Prices have already stabilized as major commodities and energy have declined year-over-year.

Food items such as chicken and pork (major July 4th picnic favorites) were down 9% and 6%, respectively this year versus last year. And yet, the consumer continues spending. July 4th spending was up more than 2% this year. Total automobile sales were up almost 4% last month. In fact, the leading economic growth index released by ECRI, shows the highest growth rate in more than a year. With earnings and jobs relatively stable and prices coming down, it would appear that is a little bit of a tailwind for consumers. The question now becomes, why would the Fed need to raise rates again later this month? The answer to that is less clear.

 

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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