Part of an old saying in a children’s rhyme is “words can never hurt me.” The falsehood in this belief became quite evident to investors yesterday as a bit of pain was felt just as certain words came from Fed Chairman Jerome Powell.
Upon learning the Fed-imposed rate increase was the widely-anticipated 75 basis points (0.75%), followed by the indication that future increases would be smaller, brightened to mood of many an investor … until the good Chairman pointed out that the end result … the “ultimate level” … would be higher than previously expected. In other words … rates might increase until the cows come home … and presently there are few signs of them planning to return any time soon. Upon hearing this news, a market that saw an immediate jump following the rate announcement completely turned around and headed south throughout the rest of the trading session.
By the way, how sharp have the rate increases been? Trust Advisory Services reports the pace of rate increases has been the fastest seen in 42 years! (I was going to say it was as far back as when the Jets were last good, but realized I would need to go back much further than that).
Speaking of a sports team … I found watching last night’s World Series game both interesting and ridiculous at the same time. Back when I was a kid, there was one “taboo” that was well-known, followed, respected … and kind of fun. During a game there was never to be any mention of a no-hitter by a broadcaster. Yes, they would find interesting ways to point it out (such as showing the box score) or giving other hints … but under no circumstances was it ever to be mentioned while in progress. Last night the announcers started talking about the no-hitter in the 5th inning … then they showed it in a graphic … and went on and on about the history of no-hitters … and the discussion was endless (kind of like some of my sentences, such as this one). It took a bit of the fun out of watching the game.
I guess I should get back to mentioning something about the market. Equities are down right now but off of the lows … and I do want to point out I saw one bit of news that us optimists might want to hold on to. The American Association of Individual Investors is pointing out that Americans are sitting on a heck of a lot of cash. Once stock pessimism shifts … and eventually it will shift … there seems to be quite a bit of kindling ready to toss onto a fire of a market that could heat up again.
Before I forget, nobody picked the Powerball numbers and the prize is now up to $1.5 billion for Saturday’s drawing. Yes, it sounds like a lot of money … though it is quite scary to realize this is what the U.S. government adds to its debt … I mean our debt … every 10 hours.
On a final note for today, we have another cheating scandal.
It is not fishing this time (where weights were put into fish recently) or chess or even elections … but in the sport of “cornhole” … due to alleged fudging with the beanbags.
It is certainly a shame …
… as this can really hurt the hole sport.
Have a great day,
Joseph G. Witthohn, CFA
Emerald Asset Management PA, LLC
610 Freedom Business Center Drive
King of Prussia, PA 19406
cell: (856) 625-7915