Close this search box.

Wait! High Inflation Is Good News?!?

Hello, and welcome to our Market Alert video for today, which is April 26, 2024. Thank you for watching, I hope you are doing very well all of you in SCWPer Nation, I hope you are doing what you are charged with, you’re supposed to be SCWPering your tail off, I hope there’s SCWPer tails everywhere. And for those of you who are not yet SCWPerS, our goal is to get you there. And in case you don’t know what a SCWPer is, it’s the acronym for second childhood without parental supervision. We want you to go play and have fun and enjoy. That’s what we’re all about. So I hope you’re doing that. We have a lot to talk about the PCE deflator came out today. That is the Federal Reserve’s favorite gauge of inflation. And it actually came in high, but it came in exactly as projected. And therefore the market took that very, very well. So why? Well, the fear was starting to build that not only is the Fed not going to lower interest rates this year, but they may actually have to raise interest rates this year. Oh, no, we don’t want that. And so because of that concern, the market has been behaving badly, as we all know if you’ve been watching it. And so we may be in the middle of a correction, which we said we would have a month ago now, actually, almost over a month. And so that the fact that the PCE deflator came in not so bad, kind of took off the table, the concerne that the Fed is actually going to raise interest rates so that the worst case scenario now is they’re going to leave them the same. But it also encouraged people who are thinking that they’re going to actually lower interest rates towards the end of this year. So generally speaking, the the inflation number came in basically in line with expectations. And when that happens, people have confidence that they kind of have a handle on this, they’re figuring it out. They’re, they’re forecasting properly, they get confident, and people buy. So we saw a nice surge in the market. So where do we go from here? Well, we continue to believe that in the probably the fourth quarter of this year, not, not before September now that the Fed might lower interest rates, as you guys know, for almost a year, we’ve been saying that we didn’t think the Fed will lower interest rates before July. And that was not the the mainstream thought because many people in fact, many of the largest banks in the United States, were saying seven rate cuts this year, starting in March. Well, that didn’t happen, did it? So we’re looking forward and the economy looks like it’s still holding, we’re gonna get consumer confidence numbers next week, which will tell us how the consumer feels about things. But as long as they feel good, they have jobs and they’re spending, then the economy should be okay. And so overall, the picture still looks to be what we think, which is that going into the end of this year, the market should be okay, the stock market, and the bond market should benefit greatly. Even if the Fed only lowers rates one time, and they do it in December, that will be a massive, massive move, we think on the bond market. In the meantime, in our bond portfolio, we have lost money on the price of the bonds. But keep in mind that there are two components to a bond. One is the price. But the other component is the interest, the dividend that you’re getting. And the dividend continues to be high because the Fed hasn’t lowered interest rates. So we’re getting paid to wait. And we think that by the end of this year, we should be rewarded for that. So overall, things are fine, nothing to be overly concerned about, despite the fact that the stock market and the bond market had been behaving badly here since the end of March. Now, having said all of that, we always always always are prepared for the worst right we have our sell strategy, our Invest and Protect Strategy ready to be enacted. We will act as you longtime clients know, back in November of ’07 is the biggest moment for our strategy which told us to sell before the stock crash of ’08. And so it is designed to help us to protect you from Big Bad bear markets and large losses. That’s what we want to hopefully help you avoid so you can live to fight another day and continue being a SCWPer. We want you to be a SCWPer forever. So that’s where we are Thank you for watching this video. Share this with your friends, your family, as many people as you as you can. We want to our singular goal is to create as many SCWPerS as we possibly can. That’s our goal. And so with your help, I think we can do that. So again, thanks for watching and we’ll talk soon.

Please note: transcript has been modified after the time of recording. 

Economic indicators and stock market performance cannot be predicted. Opinions expressed regarding the economy and the stock market belong solely to Ken Moraif on behalf of Retirement Planners of America and may not accurately portray actual future performance of the economy or stock market outcomes. Opinions expressed in this video is intended to be for informational purposes only and is not intended to be used as investment advice for individuals who are not clients of Retirement Planners of America. All content provided is the opinion of Ken Moraif, CEO and Founder of RPOA Advisors, Inc. (d/b/a Retirement Planners of America ) (“Retirement Planners of America”, “RPOA”). ©Copyright 2023