Macro Minute Week of 12/12/21
In my Macro Minute newsletter, I write about upcoming macro events and the potential impact on markets
You can also stay up to date by following us on Twitter, Instagram, and YouTube!
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!
I delayed this newsletter until Wednesday because of the two big macro events described below. More to come. Enjoy!
CPI Print of 7.1% beating expectations of 7.3%
Time for celebration, inflation is over! Just kidding. I mean what are we doing here? The market will most likely take off as for some reason beating expectations although inflation is still at 7.1% of a fabricated number is somehow a positive sign. The CPI print is the definition of clown world. Although we are seeing some positive signs with MoM CPI only being 0.1%, I am not hopeful this will not continue for at least the next year. These numbers are already based on last year’s inflation numbers, meaning it compounds over time. So in order to get back to “pre-COVID” numbers we will need to keep raising interest rates, which i will get into in my next section.
FED Raises Interest Rates 50 basis points
It seems like every time the FED meets, the entire market hangs on every word that Jerome Powell says. This time is no different. Powell and the FED raised interest rates by 50 bps which seems like a draw down compared to the previous raises of 75 bps, but all things considered it is still an elevated raise. Powell did not back down and hinted at more rate increases in the future. The belief around “FinTwit” seems that there will be another 50 bps rate hike in February, then the pivot will begin. I am not under that belief. I believe the FED will continue to raise rates and IF, that is a big IF, they stop raising interest rates in 2023 it will not be until Q3 or Q4. This latest hike brings the interest rate to a 15 year high, which sounds lofty, but when you take into account that the interest rate was nearly zero for the past decade and the macro environment was perceived to be healthier than it was, it makes sense. Powell will stop at nothing and will continue to raise. You can take that to the bank, or I guess Fed in this case.
Stay up to date on Green Candle by subscribing to our newsletter and following us on Twitter and Instagram! And don’t forget to join us in our Twitter Spaces Tuesday night at 8 PM EST!
Video edition: Macro Insights
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.