Inflation Uptick, Trump & Powell, Rate Cuts

Yup, you read it right.

Inflation, Trump & JP, Rate Cuts.

An odd triplet, but nonetheless, we are going to be running through these topics today as we await any further surprises in the economic data. As you know and if you’ve been following along, the real numbers to watch now are the unemployment / jobless claims.

These tend to turn for the worse, and fast. If they do, then we could get a market sell off rather quickly, coupled with some other bad corporate bankruptcy news.

BUT… for now… we are continuing to ride the elevator up in the stock market.

No news there (yet).

So, where is inflation? If you haven’t been to the grocery store yet, let’s get you up-to-speed.

Inflation Uptick

The latest inflation report has sparked some fresh debate on investment strategies for 2024.

The report revealed a 0.3% month-on-month increase in the consumer price index, surpassing Wall Street's consensus. AND in the face of rate cuts. We could see a higher uptick in the coming months / quarters.

Chief Investment Officer for Independent Advisor Alliance, Chris Zaccarelli, emphasized the importance of “focusing on companies with strong fundamentals in the face of potential economic downturns.” He recommended the obvious corporate speak, such as investing in companies like JPMorgan, Microsoft, Apple, and Alphabet.

However this time (and we tend to agree if you are in our FREE Telegram Channel where we post free trades, charts, and investment ideas) Zaccarelli suggested allocating a small portion of clients' portfolios to commodities and energy companies as a hedge against inflation. This approach represents an unconventional take on inflation-proof investing.

But it’s the norm for us at FTF. Now it’s been going mainstream.

All-in-all, despite the inflationary uptick, the overall market outlook for 2024 remains positive, buoyed by low unemployment and strong consumer spending.

Trump & Powell

In late 2018, high-ranking officials of the Federal Reserve proposed accelerating the frequency at which the U.S. central bank revised its economic data and interest rate forecasts, according to recently released transcripts from the Fed's December 2018 monetary policy meeting.

The newly released transcripts from 2018 Federal Reserve policy meetings reveal that then-President Donald Trump’s public criticisms of the Fed’s interest rate increases had little impact on the institution's decision-making.

According to the transcripts, not once did Jerome Powell, appointed by Trump as the Fed Chair, or any other policymakers mention Trump’s name or show concern over his criticisms.

Moral of this story is that the mainstream media may be trying to portray a degree of “uncorruptness” between the “private” institution we all know as the Federal Reserve and the Federal government. In a time of very high public scrutiny and what we imagine will be ever increasing going into this 2024 election season and beyond.

When the fireworks start to go off, the public will want heads. And it’s becoming increasingly obvious to the public just how much the Federal Reserve has impact on the economy and wealth inequality.

And they don’t want you to know that.

Rate Cuts

We are expecting between 3-5 rate cuts this year believe it or not. After the most historic rate hiking cycle in Federal Reserve history.

Most liken our friend Jay Powell to Paul Volcker “the inflation killer”. What most DON’T know is that Paul Volcker was also the fastest to cut rates and cut them by the most in history as well.

In the world of investing, growth and cuts often go hand in hand.

It might be unsettling at first, echoing the simple yet profound words of the character Chauncey Gardner in the classic satire film Being There, "There will be cuts in the spring." Just as a gardener prunes to allow growth, financial institutions must make necessary adjustments to maintain stability.

These cuts do present unique opportunities, opening the door for emerging industries and beaten down assets. As financial institutions rebalance their portfolios, investors who can identify these evolving opportunities may be poised for future growth.

If we’re continuing to cut rates into a recession and the market sells off, you are going to want to know what the charts look like and when the best time to may be to reallocating your portfolio.

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