Call it a relief rally.
The Fed rose interest rates by 0.75%. A few weeks ago, that would have been unthinkable. A week ago, it would have been dramatic.
Yesterday, it was just expected.
Not surprisingly, the market showed some life and there’s potential for a further increase this morning. This doesn’t mean we’re out of trouble when it comes to the larger economy… but for now that doesn’t seem to matter.
Stocks in Asia are up in response to the rally in the American markets. Even bitcoin bounced back.
The question is what comes next. The Biden Administration is putting more pressure on oil companies to lower prices. Dr. Kent Moors wrote earlier this week that there is indeed some evidence that oil companies are taking some advantage of the situation… but that doesn’t conceal the larger supply challenge.
After all, why else would President Joe Biden be traveling hat in hand to Saudi Arabia?
If the Fed’s objective was to show resolution in confronting inflation without collapsing the stock market, consider it mission accomplished.
However, based on what we’ve seen over the last year, my fear is that it is still just kicking the can down the road.
We’ll win either way.
In this week’s Hood Talk, Chris looks at the market through three time frames – the daily, monthly, and weekly charts.
This isn’t just guesswork, but an analysis using tools that hedge funds are willing to pay millions of dollars to use.
WORD ON THE STREET
POTUS TO OIL COMPANIES: TIME TO DO YOUR “PATRIOTIC DUTY”
“Taking Advantage Of The War” – The White House sent letters to no fewer than seven refinery operators saying they were making profits that were “not acceptable.” White House Press Secretary Karine Jean-Pierre said lowering prices was a “patriotic duty.” “What they have been doing is taking advantage of the war,” she said of refineries. “As I showed earlier, they have tripled their income.” If lectures don’t work, what comes next.
When The Park Gear Makes The Car Roll Away – You know, it seems like Tesla always gets the bad press for safety failures, so it’s time to let someone else have a chance. Ford is recalling 2.9 million vehicles because of a pretty important safety flaw. Even if the shifter shows that the vehicle is in park, the vehicle may not actually be in the correct gear. The National Highway Safety Administration reports at least four injuries may have been caused by the flaw.
Apple Faces Unionization Drive – As the labor market remains tight and wages fail to keep pace with inflation, we are probably going to see a lot more of this. Apple is the latest company facing a unionization drive, with a vote underway at a location in Towson, Maryland. The potential union is called the Apple Coalition of Organized Retail Employees (AppleCORE, very cute). If it wins in Towson, don’t expect it to stop there.
Powell Tempers Expectations After Rate Hike – Federal Reserve Chairman Jerome Powell defended the central bank’s 0.75% interest rate hike but warned there may be more pain ahead. “It’s not going to be easy,” he had said in May about stopping inflation. Yesterday he tried to project strength but left himself an out. “We’re strongly committed to bringing inflation back down,” he said, cautioning that “further surprises could be in store.” I hate surprises, especially when it comes to economic data. You could even say avoiding them is our job.
HOT SPOTS: What’s Going on in Geopolitics
America Sending Another Billion To Ukraine – President Joe Biden informed Ukrainian president Volodymyr Zelenskyy that the United States will be sending another billion dollars worth of aid, including ammunition and new artillery and coastal defense weapons. In Brussels, more than 45 countries of the “Ukraine Defense Contact Group” met to coordinate aid to the beleaguered country.
China Opens Door For Invasion? – What if you wanted to invade a country but didn’t want to call it a war? Well, in Russia, you do it by just calling it a “Special Military Operation.” China may be following Moscow’s lead when it comes to euphemism. Xi Jinping has reportedly authorized the military’s use in “non-war” operations… raising the prospect that an invasion of Taiwan could be launched without technically declaring war. State media reported the new directive… a sign China is sending a message it wants the West and Taiwan to hear loud and clear.
Fate Of Two American Fighters Unknown – Two Americans fighting for Ukraine have reportedly been taken captive by Russian forces, though there is as yet no confirmation they are still alive. If they are and Russia or its allies have them, it will draw Washington into a major diplomatic quagmire. The Donetsk People’s Republic (DPR), which Russia insists is independent, has already sentenced British volunteers to death. If the DPR or the Luhansk People’s Republic has the Americans, the USA’s volunteers could face the same fate. Negotiating with the separatist states may also prove difficult since Washington’s official position is that they aren’t independent countries at all.
CUTTING EDGE: What‘s Happening In Tech
Doctor, Heal Thyself – Despite being twice vaccinated and twice “boosted,” Dr. Anthony Fauci has tested positive for COVID-19. This is the first time Dr. Fauci has tested positive since the pandemic began. He reportedly is suffering “mild symptoms.
Musk Backing DeSantis? – Elon Musk said that he voted Republican for the first time for Mayra Flores, the GOP star who flipped a Democratic seat in a special election two days ago. Musk also suggested that he might be open to supporting Florida Governor Ron DeSantis, a favorite for the GOP nomination if former president Donald Trump doesn’t run. Gov. DeSantis joked that he welcomed support from “African-Americans,” referring to Musk’s South African place of birth. There was plenty of outrage on Twitter… good thing for Musk that he’s still committed to buying it.
Dawn Of The Exercise Pill – Somehow, this offends me on a moral level even though it is objectively good. Scientists from Stanford University and Baylor have identified a modified amino acid called Lac-Phe that can reduce consumption and body fat in lab rats fed a high-fat diet. Glucose tolerance was also increased. This raises the prospect of a way to reduce obesity and keep people in shape – simply by taking a pill.
FOR YOUR CONSIDERATION
“Today’s installment comes from events unfolding toward the end of the last century (it still seems strange to say that). Given the present day fascination with Russian oligarchs, their money and toys, and the political connections that gave them rise, this one has some current resonance.”
It seemed like another success story in post-Communist Russia… but with a tragic ending.
A relatively young entrepreneur had been cut down in his prime by unknown criminals. Surely, this would force the government into action.
Unfortunately, things were rarely as they seemed following the fall of the USSR. In this Spy Tale, Dr. Kent Moors describes the rise and fall of a criminal who paid the ultimate price for corruption.
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