In today’s Steady Investor, we cover current events that we believe are shifting the state of the market, such as:
The Fed Clarifies Its Interest Rate Hiking Plans – Stock market volatility (working in both directions) has been a theme of the last week. Investors appeared to be pricing and re-pricing the possible paths of monetary policy tightening, with worst-case scenarios having the Fed end QE abruptly while also raising interest rates on a rapid timeline. The actual outcome may be less dramatic than many fear – the Fed said on Wednesday the central bank was poised to raise interest rates at its March 15-16 meeting, while also ending the purchases of Treasuries and mortgage securities that month as well. One potential source of concern for market watchers is whether the Fed may increase rates at every meeting, versus every other meeting as had been previously hinted. When Chairman Jerome Powell was asked about the pace of rate increases, he responded by saying the Fed would need to be “nimble,” which was not necessarily the answer investors were hoping for. Even still, it is worth remembering that the Fed’s starting point is one of extreme accommodation, such that tightening now could be more aptly be viewed as ‘becoming less accommodative.’1
Guard Your Investments Against the Market Correction!
As inflation worries grow, and the market enters correction territory, many investors may be unsure of how to protect their investments. This can cause investors to make knee-jerk decisions that run counter to long-term goals.
To help you navigate this turbulent time, we have put together a free guide to help you avoid the worst impacts of a sudden market drop.
If you have $500,000 or more to invest, get our free guide, 4 Keys to Navigating a Stock Market Correction. It offers the most important steps you can take to help ensure that a temporary market downturn won’t cause irreversible long-term damage to your portfolio.
Supply Chain and Labor Issues Hit Grocery Stores – Have readers noticed some key items missing from grocery store shelves over the last few days and weeks? The answer for many is likely yes, and the cause, perhaps obviously, is the strain in supply chains and labor markets caused by the Omicron variant. According to a survey from the U.S. Census Bureau, some 8.8 million Americans were out of work due to sickness or having to care for someone with Covid-19. Labor shortages beget supply chain problems, as the lack of workers at processing plants and in logistics can result in products not reaching shelves in time. Earlier in the pandemic, part of the problem was customers clearing out shelves in anticipation of a long-winded lockdown, and today the problem stems from the supply side. According to food-industry executives, we should expect these problems to persist for weeks or even months as the current wave of infections abates.3
U.S. Economy Delivers Strong Growth in 2021, But Omicron Impacts the Start of 2022 – According to the Commerce Department, the U.S. economy grew 1.7% in Q4 2021 (6.9% on an annualized basis). The strong finish to the year capped off what was a historic year in terms of an economic rebound, with the U.S. economy expanding at 5.7% – its fastest pace in nearly 40 years. The strong pace may have run into some speedbumps at the turn of the year, however, with the Omicron variant creating disruptions as mentioned above. According to manufacturing and services surveys conducted by IHS Markit, the U.S. economy pulled back substantially in terms of factory activity and services consumption at the turn of the year. The IHS composite purchasing managers index, which takes into account both services and manufacturing, fell from 57 in December to 50.8 in January – a steep decline in activity. While any reading above 50 indicates expansion, it is fair to say that the variant may have caused economic activity to plateau in the short term.4
Will Oil Hit $100 a Barrel by Summer? Some Wall Street forecasts are now calling for a barrel of crude oil to hit $100 by summer, given persistent and robust global demand being met with lagging supply. According to the International Energy Agency, OPEC+ has been falling significantly short of its promises to increase oil supply to the markets, lagging by some 790,000 barrels of oil a day. The group’s inability to meet higher quotas has fueled speculation that oil prices could keep charting higher into the warmer months. Meanwhile, the U.S. has not seen substantial increases in well drilling over the past few months, though higher prices would in theory encourage producers to bring more supply online.5
How to Navigate a Market Correction – Volatility has shifted the market in many ways this year, and for those who are unsure of how to navigate a market correction, we want you to be prepared.
With that being said, now is the perfect time to base your investing decisions on research and fundamentals. To help you do this, we have created a guide, 4 Keys to Navigating a Stock Market Correction3. This guide answers question like – Are there any silver linings that come with it? What are some ways to navigate through it?
If you have $500,000 or more to invest and want to learn more, click on the link below to download our latest guide: 4 Keys to Navigating a Stock Market Correction6.
Disclosure