Chaos and mayhem: the Fed estimates inflation will grow faster than it projected just 3 months ago and moves up expectations for rate hike. The Dow Jones was down 3.45%, its worst week since October as fears that record-low interest rates could end sooner than projected. Today the Dow closed down 533 points, or 1.58%: the S&P 500 was down 55 points, or 1.31% and the tech heavy-Nasdaq shed 131 points, or 0.9%. Every sector in the S&P had similar losses.
“This notably more hawkish stance from the Fed has jolted investors as they assess the markets, and given that this shift comes on the back of record high stock market performance, it’s no surprise that equities have pulled back in response.
I love this chart: click on the interactive link to see a larger version and what the actual rate was on any date you move your cursor over! What were YOU doing in 1970? In 1980? Note: recessions are the gray areas! https://fred.stlouisfed.org/series/FEDFUNDS
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A picture is always worth 1,000 words: here is the U.S compared to the rest of the world, in 2020.
😲 Why does this matter to you? You can’t have this much “red” and get over it in a quarter. We have time, and work, to do. Remember my recurring theme of 2019…9th Inning Investing? This is what market tops look, and feel, like. No matter how unpleasant it might feel, there is nothing new under the sun and that is reassuring.
You don’t need to even read the numbers to see that Bitcoin, the darling of 2021, has been dealt a nasty blow.
😊😲 Why does this matter to you? For all of the flashy headlines, the Elon Musk tweets, the traders on their smart phone apps…there is something reassuring in knowing that bubbles always burst. Nothing goes to the moon and stays there. You don’t have to abandon reason, and the tried and true.