Across My Desk: Interest Rates
he Fed has raised interest rates again. That makes the 17th consecutive move upward over the past two years. While the intent is to keep inflation under control, most people know that things cost a lot more today then they did two years ago---and I'm not just talking the price of a gallon of gas!That said, the market continues to soar and market mouths see plenty of investment opportunities ahead. Here's how a "Special Alert Louis Navellier", dated June 29, saw things:
"The Federal Open Market Committee raised interest rates for the 17th consecutive time today by 25 basis points. No one was surprised. However, most were worried about what the Fed would say in its statement. Investors had been conditioning themselves for the worst - a statement that would indicate that several more rate hikes were in the offing...
"The most comforting part of the statement was "inflation expectations remain contained". Stocks soared on heavy trading, with the Dow surging 217 points (1.98%), the Nasdaq 62 points (2.96%), and the S&P 500 26 points (2.16%)...
"Without a doubt today was a turning point for the equity markets. Investors will now be able to focus on earnings season, which officially kicks off on July 10 with Alcoa's announcement. As a result, we're very confident that our portfolios will continue to rally before and during earnings season.
"The second quarter will likely end up being the 17th consecutive quarter of double-digit earnings growth - and stocks are cheap! In the U.S., forward P/Es are around their lowest levels since 1995, and in Europe they haven't been this low since 1994. What's more, forward earnings estimates for most of the market are continuing to hit new highs nearly every week (only small caps have failed to hit new highs lately).
"No question this is a fabulous buying opportunity. The market has already priced in another rate hike from the Fed in August, which largely puts the Fed fears on the back burner, at least until the next CPI report on July 19. As such, much of the market's resistance has been removed."
Sooner or later, however---and this is me speaking not Mr. Navellier---our nation's rising debt, the cost of the war, low wages for the entry and mid-level working Americans is going to impact the markets and not in a positive fashion.
My advice: Invest cautiously and make sure that you've a nest egg with two to three YEARS of money in it that you access easily. Life has gotten very expensive for most of us and a fat savings pot isn't just a nice thought but imperative today.
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