This week’s market moves can be traced directly to commentary from several members of the Federal Reserve committee. Clearly there is growing concern surrounding getting inflation under control. While many economists feared that the Federal Reserve would act to slow in using measures at its disposal, i.e. raising interest rates and slowing the pace of easy monetary policy, now there is concern the Fed may act too aggressively in pulling in the reigns. Is it mixed messaging? Hard to say at this point, but certainly this perceived reversal spooked things a bit as downward selling pressure resumed this past week. The NASDAQ Index once again came under the most amount of pressure as the technology centric names traded lower. It seems like once again the “risk off” theme is prevailing as the underlying uncertainty has investors nervous.
Steven and I had the privilege of visiting several clients in South Carolina this past week and it was refreshing to be out and about. As I have mentioned previously, airports, restaurants and hotels were all brimming with people enjoying the more relaxed Covid protocols. I suspect the “spring break” and Easter factors to be a part of this recent surge in travel but it is hard to determine if this trend will continue given the current economic backdrop. Consumers appear to still be spending, even in the face of rising costs, but I think it is becoming more selective in nature. Sticker shock and simple financial fatigue will be factors in the coming months in my opinion, especially if the “R” word gains more traction (Recession….a word we do not like to hear!).
The markets are trying to find a rhythm here and the volatility index (VIX) has eased back down a bit which is always a good thing. No one likes uncertainty and in some ways I wish the Federal Reserve would just rip the band aid off and let the fresh spring air accelerate the healing process. In the meantime, I welcome the distractions of watching the Masters on TV this weekend and spending time with family!
Housekeeping note:
Many of you are receiving checks from the Kestra/SEC remediation settlement that was announced last fall. If the checks are payable outright to you individually or jointly, you may cash those checks. If they are made payable to NFS/FMTC FBO and your name, they should be sent to our office. Feel free to call us if you have any questions.
https://www.cnbc.com/2022/04/08/as-inflation-bites-higher-income-consumers-are-cutting-back-too.html