Transcript:
Tom Vaughan:
Hello everybody, welcome to Wednesday. The S&P 500 was down about .26% today. And really, it was kind of an interesting day in the sense that the broad markets were down a bit. But a lot of good news was coming out from different earnings reports. So we’re still getting third quarter earnings reports this week is mostly around retailers. We had Lowe’s and Target report today, for example and they reported really good numbers all together. You got Williams Sonoma and such, you know, coming up and whatnot, too. So be really interesting see how this plays out. Because, again, the key thing we’re looking at here is the consumer, are they able to, you know, continue to move forward? And so far, the answer is yes.
And ironically, today, the market fell, at least, it seems, partly because of the really good reports from these retailers and there’s some fear that the market, you know, the overall economy kind of overheat as this pent up demand comes in at a pretty high rate, and people are spending money, and we could end up at the higher inflationary scenario. And one of the ways to slow that down is obviously is to raise interest rates from the Federal Reserve. The consensus right now is that that wouldn’t happen until maybe July of next year with some people thinking it’s still not going to start till 2023. Some people think it might start earlier. But when you get really good numbers from these retailers, sometimes there’s a fear that oh, they might have to start even earlier than that, like February or something along those lines.
And it’s funny, if you read the articles, you know, kind of side by side, you’ve got one group that thinks, you know, we really are behind the ball here, we need to start raising rates and slow things down. And other group to saying if you look at, you know, some of the other pieces of the economy, we need to maybe not even raise rates until 2023. So this is the battle that we’re going to see a play out here.
Personally, I’m not really worried about the first rate increase, I’m more worried about the 10th, or the 15th rate increase, because that’s when things seem to really have had problems for the market in the past. We have seen some rallies actually, once they do start doing something like we saw just a few weeks ago, when they talked about cutting back on the bond purchases with the Federal Reserve. We saw very nice movement out of that. There is a part of the market that’s relieved that they might be trying to fight inflation and not let things overheat.
So it’s this basic teeter totter balancing thing that we’re going through right now. You know, we want the economy to grow to create jobs, we don’t want it to grow too fast to create inflation. So that’s something we’re going to be talking about going forward here. But I think the market’s really healthy. You know, a situation where demand is higher than you know expected, is really a good thing to have altogether. It’s a good problem. So, look forward to talking to you tomorrow. Thank you very much.