The market update is summarized using the following four markers:
|Stocks/Indices||7/26/2022||Last Week||This Week||Week||From 7/26|
An interesting, if not confusing week! The Fed supposedly called an emergency meeting on Monday morning and markets rallied strongly, apparently in anticipation of an easing. I have not seen any reports on what happened at that meeting or why it was called. Regardless, a strong (2-day) rally was tempered by the end of the week.
Stocks rallied for the week as did GLD. Bonds declined again.
It is difficult to make much of one week’s results. Results from 7/26, the day before the first rate increase, show results not unexpected. TLT has been severely hurt, as expected. GLD has suffered the least, also not unexpected in an inflationary environment.
Wealth has disappeared! Inflation, as yet, has shown no signs of slowing! The economy is weakening!
These results, especially over the longer timeframe, were to be expected. Unfortunately, for the Federal Reserve, they are fighting inflation while the political class continues to behave as if it is not a problem. Spending must be cut! The Fed cannot solve this problem alone. Nor can they be expected to continue much longer, especially if it means fiscal insolvency!
The Fed is not independent. It is an underage child, dependent on its parents, the political class, for survival. Does anyone really believe it will be allowed to continue to reveal, no less threaten, the bankruptcy of the Federal Government?
Unless and until government returns to fiscal soundness, bet on continuing inflation and a collapsing economy!