Transcript:
Tom Vaughan:
Hello, everybody, welcome to Tuesday, the S&P 500 was up point 5%. In a second day in a row, we’ve had an update. The Russell 2000 was the bigger winner today, the Small Cap index was up 1%. Pretty good timeframe. But really, we’re kind of in a waiting day today, because tomorrow is when the Federal Reserve meets the meet to come out talk about, you know, what, they decided how much to raise rates, and then there’s a question and answer session, any positive or negative surprises, you know, that come out of these different comments that will be reflected in the market right away tomorrow. So be very fascinating to see what happens there and what they have to say. And I just want to emphasize, you know, kind of demonstrate really how important the Fed is here, because the Fed is the one organization institution here that has some control over what they say and do that can make a big difference to the economy and ultimately to the stock market.
So you know, on one hand, we have this very powerful American consumer right now save a lot of money during the pandemic, pay down their debts, and now they’re spending. And then on the other hand, we have these things that are kind of tamping down the economy, this COVID situation in China with the lock downs, the Ukraine situation. And of course, interest rates have already come up a lot, even though the Fed hasn’t moved rates, they’ve talked about it enough, and the market has moved rates. And so mortgage rates, for example, have gone up quite a bit, housing markets should theoretically slow down during this time period, which would obviously create a situation where it starts to come down. And so for example, if you look, just a couple weeks ago, the market was doing okay, starting to bounce back up. And then chairman Powell, Federal Reserve Chairman came out and said, hey, you know, we’re gonna raise rates, so half a percent and very aggressive talking about what they’re doing, market fell pretty heavily. And so what what the markets looking at there is, hey, we already have all these things that are trying to slow us down.
And now you’re talking about slowing this down some more, we’re worried that you’re going to do what you’ve done in the past a few times, which is over raise rates, and kick us into recession, and the market starts to react to that. So, you know, we can’t control China, we can’t control Ukraine. And so the Federal Reserve is one place that they can actually control again, what they’re saying and doing. So it’ll be very interesting to see how they work through this smart people, lots of good data. And so hopefully, they’ll be able to kind of find that middle ground to get us back into that kind of two to 3%. inflationary range. We’ll see how this plays out as far as that goes. But very important. Part of becoming a better investor is to really understand what the most important components are. The Federal Reserve is definitely in the top two or three, in my opinion in terms of how important they can be to the market. And you’ll see that tomorrow as the market responds to the to the comments and what have you to so look forward to talking to you tomorrow. I’ll tell you kind of what they said and what the market reaction was and what my opinion is about what happened there too. So look forward to seeing you then. Thank you very much.