Jun 7, 2022
Summary:
Markets have been extremely volatile, and pressing questions about
the future of the economy linger. Will inflation and negative GDP
print decline? Furthermore, how will these factors affect you and
your investments? Jim Welsh appears on this episode of FSN to
inform us about what to expect in consideration of the role that
the Fed will play over the next couple of months. We’re seeing
increases in gas and oil, wage growth that does not mirror the
progression of inflation, and depletion of supplies in the energy
sector. Listen in for more insight on the mayhem of the markets,
and scenarios for the foreseeable future.
Highlights:
-Jim was expecting a 10-15% pullback going into this year,
accounting for trends in the S&P
-We’ve had the pullback from the highs, but the S&P needs to
punch about 4200 to open the door for higher prices
-The Fed is at an interesting juncture that will play a role over
the next few months
-Interest rate increases have adversely affected the economy,
housing, etc.
-Consumers still have over $2 trillion worth of savings, but the
bottom 20% of wage earners spend 70-75% of their disposable
income
-The squeeze is already intense, and this is going to continue
-Wage growth (about 5-6%) is not parallel with inflation
-The Fed is trying to prevent the markets from getting ahead of
them, which contributes to their decision making
-The increase in gas and oil in May will contribute a lot to
inflation
-As they raise rates more, the economy will show signs of slowing
in the next few months
-The Fed has started to shrink its balance sheet, which has not
been paid attention to closely
-Jim thinks we may be on the cusp of
a 15-20 year bear market; a lot of issues that have been building
up with the US economy will most likely come to a head
-Is inflation down-ticking enough to give people on the Federal
Reserve confidence that inflation is going to trend downwards?
-Gold needs to hold recent lows to make another run above 1900s
-When volatility increases, the relation between sectors moves
upwards towards 1
-We need to see a break in oil, and subsequently, in gasoline
prices
-We should be focusing on the price of natural gas rather than
oil
-We’re depleting supplies that, in the past, would have gone to
other domestic needs
-There is a floor underneath Natgas prices
Useful Links:
Financial Survival Network
Macro Tides