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Afternoon Note

Guessing Game

By Charles Payne, CEO & Principal Analyst
7/27/2022 1:30 PM

So, the Fed made the hike everyone was expecting. But now, the street has to deal with the guessing game on what’s next, making this question-and-answer period coming up more important than usual. 

There is a very serious dilemma here folks between the twin economic evils of runaway inflation and recession.

Think of it like football, where the wide receiver is runaway inflation.

It’s moving down the field at breakneck speed, and the quarterback has to throw the ball, which in this case is Fed policy in a way that makes the receiver turn around.

And that’s a mistake which could be made.  If policy isn’t precise, there could be an interception by the safety who in this case is recession.

If recession takes control and isn’t brought down, it’s a crushing blow as well.

In many ways, it feels like a no-win situation because both end zones mean economic pain for Main Street and the stock market.

I think what we need is for the Fed to be smart enough implementing its plans that keeps the economy on the field.

More Housing Market Pain

The Fed hiked rates 75 bps, as advertised, but the street is all over the place on what the Fed might and should do next.

My next guest has been in recession camp and his position got a huge boost from Pending Home Sales.

The National Association of Realtors say contracts won’t pick up until early 2023.

The housing market is the most important component of the wealth effect, and the Fed wants to reel it in big time.

It really is a shame it’s come to this.  The Fed blindly throwing up speedbumps to derail the economy.  And the federal government is still trying to find ways to pour billions of cash (aka vote-buying) into the economy at the same time.

If they all would only move out the way and restore the good old fashioned business cycle and allow a backdrop for earned prosperity, we would all be better off.

But this is where we are, and you have to make the most of it.

Today’s action is a reminder that the market at some point will turn higher and it won’t be a bear market bounce.  There are individual companies you want to own in a $23.0 trillion domestic economy and $100.0 trillion global economy.

Stand by for Powell and more on the rate decision.

You make it sound as if we have established a bottom? I am not inclined to agree at this time but agree with picking names that will be leading the turn around to nibble on!

FRANKLN ALLGAUER II on 7/27/2022 1:39:09 PM
I agree with Franklin.

Jeffrey J. Riddell on 7/27/2022 2:56:28 PM

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