If you haven’t already, subscribe to our newsletter here to get our articles directly to your inbox and follow us on Twitter and Instagram! Also join us for our Twitter spaces, every Tuesday we discuss our stock breakdown at 8 PM EST, & Friday we have a Bitcoin Happy Hour at 4:30 PM EST!
Jerome Powell and the Fed Raise by 25 bps
Yeah, yeah, yeah, I know if you’re on any sort of social media you’ve heard about the Fed raising interest rates, but what does this all mean? The Fed has been raising interest rates at a historic pace over the past 6 or so months and what that does is it essentially makes money harder to come by. The circle instances are the total market cap during a gray band which indicate a recession. I initially thought the Fed would raise by 50 bps and slow to 25 bps following that, but Jerome Powell had other ideas. The Fed raised by 25 bps but Powell in the meeting said that the Fed has no plans of slowing or reversing raising rates for the rest of the year.
Powell has indicated numerous times that the Fed will continue to raise throughout the year and I believe that will be the case. The Fed has doubled down and not indicated otherwise. For some reason, fintwit and the market believe this to be false so we shall see if Powell holds true. I even ran a recent Twitter poll and the results were essentially split (although a small amount of votes were submitted).
Unemployment is still at 3.4%
Powell has mentioned this as a metric the Federal Reserve will keep a close eye on. Unemployment rising is a very slow pace compared to what many would expect which has led a lot to question the validity of this data. It seems there has been massive amounts of tech layoffs, but the narrative around the tech layoffs are that these tech workers are finding new positions within 3 months of being laid off. The jobs data is also a lagging indicator meaning unemployment cannot be filed until you severance is fully paid out. This means that if employees get laid off and want to file for unemployment but get 3 months pay following the lay off the employee cannot file for unemployment until he or she is without employment for more than 3 months. This can be a sign that unemployment numbers could increase over time and it is definitely something to keep an eye on going forward.
Video edition: Macro Insights
https://www.youtube.com/live/HywtrE9CLog?feature=share
If you’re new to stock investing, check out our introduction to stock investing series:
Have a great week everyone,
Brandon
Disclosure: The article was written by Brandon Keys, and it expresses the author's own opinions. I am not receiving compensation for it. I have no business relationships with any company whose stock is mentioned in this article. The information presented in this article is for informational purposes only and in no way should be construed as financial advice or recommendation to buy or sell any stock. Brandon is not a financial advisor. I encourage all readers to do further research and do your own due diligence before making any investments.