Transcript:
Tom Vaughan:
Hello, everybody, welcome to Tuesday, the S&P 500 was down .2%. Today. And just real quick note today, because really, if you look at what’s happening right now, the market is just waiting for this Federal Reserve meeting to finish tomorrow. And then Chairman Powell, the head of the Federal Reserve Board, will come out and speak and take questions and what have you. And every single word will be analyzed, and then they’ll release their minutes at some point in the future, and those will all be analyzed.
So really important, what they’re trying to figure out is, the Federal Reserve has said that they’re going to cut back on purchasing bonds, which they’ve been doing, $120 billion a month. They’re going to start cutting back early next year, and that they will start to raise rates again at the end of 2023. So that’s been out there for a long time. And everybody’s just trying to figure out if that’s going to change, because we’re already factoring in those particular data points. And if they start cutting back on bond purchases earlier, then you’ve got to factor that in, and usually, that’s a negative factor, because this is a stimulus piece of the economy that would be disappearing. And so you know, how does the economy react to that, as those types of things. Will they have to raise rates sooner than they expect? So it’s been a big tug of war.
But if you look at the bond market, which is really, really good at kind of analyzing what’s happening with inflation, it’s been falling. And it’s still below one and a half percent, at just barely, but that’s an area where I think, the bond market is trying to tell us that they’re not seeing massive inflationary pressure. And what we do have, and these increase in prices that we are seeing are mostly temporary, and the economy, and the growth in the economy, might be able to do a lot better than some of those increased costs of labor costs do come up, because they’re having to pull people out of their homes, so to speak, that might be offset by higher sales and those types of things.
So I think the lower retail sales that came out today gives the federal reserve some room to be able to come out and say, Hey, you know, things aren’t as great as everybody thinks. We can stay the course and still execute the plan that we laid out, almost a year ago, actually. And so anyway, that’s what’s happening. Very important. We’ll see what happens tomorrow. Often a lot of volatility on the Wednesday when Chairman Powell speaks often, often, actually Thursday after it’s been pretty good too. So we’ll see how that plays out. But anyway, look forward to seeing you. Thank you very much for listening today and I will talk to you tomorrow.