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Aggressive Interest Rate Hikes

Another week has passed. The Federal Reserve is seeing the results of its aggressive interest rate hikes. Stocks and bonds have been especially hard hit.

This Week 9/16/2022
Stocks/Indices 7/26/2022 Last Week This Week One Wk From 7/26
DOW JONES IND. AVG. $31,764.00 $32,031.70 $30,822.42 -3.8% -3.0%
GOLD (GLD) $160.00 $159.82 $155.84 -2.5% -2.6%
TECH (QQQ) $294.30 $307.09 $289.32 -5.8% -1.7%
BONDS (TLT) $116.84 $108.31 $107.07 -1.1% -8.4%

All four categories were down this week with QQQ taking the biggest hit. Since the Fed began, all categories are down with TLT down 8.5%.

Powell’s comments at the Cato Money Conference this week left no doubt about his resolve. Markets are now believers across the board.

Continued rate hikes are likely to continue to drop these numbers, although GLD may become immune when it becomes apparent that Powell’s actions will not solve the inflation problem.

My opinion is, so long as Powell continues his Don Quixote behavior, GLD (and other precious metals) are likely be the winner in the above categories. That doesn’t mean that positive returns will happen soon.

We are in a deep hole. At whatever level you might consider our predicament, Chairman Powell is much closer to the center of the earth than we are. Regardless of what is right or even possible the political class will not allow the Fed to do what it sees as necessary, even if the Fed knew what that was!

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