Well that did not last long
The market had a brief relief rally on Wednesday afternoon after Papa Powell spoke about raising interest rates by 50 basis points (more on this below). But on Thursday, it went right back into its usual downward motion and like the McDonald's
Market Returns Last Week:
Tale of the Tape
Economy
Fed vs Inflation
Last week, Jerome Powell announced a 50 basis point (fancy way of saying 0.5%) increase in interest rates (specifically Fed Funds rate. Learn more about the FFR here). This was the first time since 2006 that the Fed has increased interest rates in back-to-back meetings and the largest rate increase since the year 2000. But with inflation at 8.5% as of March, the Fed is doing everything in its power to fight it back. Jerome Powell during the FOMC News Conference said:
Inflation is much too high, and we understand the hardship it is causing, and we’re moving expeditiously to bring it back down. We have both the tools we need and the resolve it will take to restore price stability.
Remember the Fed has two mandates:
Stable Prices aka manage inflation
Full employment
The only thing is when the Fed begins tightening and increasing interest rates, it typically throws the economy into a recession. However, Jerome believes that the #2 mandate will help ensure that we do not have the same outcome. The labor market is very strong currently with 4.5 million people quitting their jobs and 11.5 million job openings. In April, 428,000 jobs were added according to the Department of Labor’s nonfarm payrolls report.
Will he be able to turn up the heat without burning the economy? No idea but hopefully he can do it. Jerome in his words of the outcome he hopes to achieve:
I think we have a good chance to have a soft or SOFTISH landing, or outcome, if you will.
Stocks Keep Bleeding Out
Tech is a Bloodbath
If you have big exposure to tech (like me), you are really feeling the worst of the stock market pain right now. Companies that seem to be breaking the rules of gravity and growing more than ever thought possible during the pandemic seem to have run out of rocket fuel and are barreling back to earth.
All the Big Tech names (Apple, Microsoft, Google, Amazon) are in a more than 20% decline. This is despite making more than they ever have in history
Tech companies that did not make that much money and exploded during the pandemic are doing so much worse with some down more than 50%
Ecommerce darlings like Etsy, Shopify, and eBay are all getting absolutely destroyed as they keep reporting weak revenues and even weaker forward guidance on future earnings.
According to Bloomberg, "Roughly four in every 10 companies on the Nasdaq Composite Index have seen their market values cut in half from their 52-week highs."
THAT’S A LOT!
Well, we sure ain’t in space anymore and these stocks are coming back to Earth FAST & HARD!
No more free money, but when Buffett starts to buy that might be a sign for the rest of us. He spent $51 billion buying stocks last quarter. He has not spent that much on stocks in A LONG TIME! So if this market is good enough for the Greatest of All Time
It is perfect for me!!
Random Interesting Facts
TurboTax agreed to pay back $141 million to 4.4 million low-income customers who were eligible to receive free IRS tax filing but because capitalism, TurboTax abused the system.
TurboTax and HR Block are also the reason we have to actually go through the whole tax filing process every year.
The IRS could literally just send mail to our homes or set up a website where we can see how much we owe or how much we are owed in tax returns but NO
Because of Capitalism and lobbying, we have to stress ourselves every year to do taxes.
This is the percentage of new Fortune 500 Board appointees who are women in 2021. This is a new high
We are making progress but more progress is to be made
26% of all new appointees were Black
Why is this important?
Because a company’s board has a very direct say in how a company is managed. They are basically the bosses of the CEO of a company
They determine who gets hired on the executive levels of companies which determines a lot of other things within a company.
The amount the "Despicable Me" franchise has made from tickets sale worldwide
It is the highest-grossing animated film EVER!
"Minions: Rise of Gru" (watch the trailer) comes out July 1, which is around my birthday. Therefore I know what I will be doing on my BIRTHDAY!!
Looking Ahead
THE “I” WORD
On Wednesday, we get the Consumer Price Index aka Inflation numbers for April. Economists expect inflation to go down from 8.5% to 8.1%. I expect it to be lower than they expect and to be a nice surprise for everyone. I am predicting it to come in closer to 7%. I am basing this just on Year over Year comparison which is how Inflation is calculated. April 2021 was when Inflation really started flying so the comparison is a bit high already. If it comes in above 8.1%, I will be very WORRIED! There are additional pressures like China going into another lockdown mode
We also get Consumer Sentiment Index for May which I expect to be HORRIBLE. Ever since the invasion of Ukraine (by the way, the war is still happening), Consumer Sentiment has been destroyed. Most people say they are not excited about the economy and people we will be in a recession. But they keep spending all kinds of money on travel, leisure, and restaurants. So as always, what people say and what people do are not matching up. This is why surveys SUCK (Consumer Sentiment Index is a survey).
🥱Earnings
Unnecessary Man U Update
Man U Still SUCKS!
Real Madrid are kings (that comeback against Man City was GLORIOUS)
and the "Hand of God" sold for $9.3 million.
Back Story, before people call me Blasphemous and a Heathen.
"Hand of God" was a goal Diego Maradona scored during a World Cup final in 1986. The jersey he wore during the game was just sold last week for $9.3 million. This is a record for sports memorabilia.
Thank you for Rocking With ME
See y’all right here on Wednesday (maybe, gonna be a busy week)
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Remember GENEROSITY > greed
God bless Each and Everyone of y’all
✌🏾