Your Weekly Blip 6/17/22

Your Weekly Blip 6/17/22

Your Weekly Blip,
The Markets and Economy
The Blip goes out today because the stock market will be closed on Monday in observance of Juneteenth, or June 20th, which celebrates the end of slavery in the US.
This week’s market action was rough sailing as the Dow fell 5.1% and is now at the 29,979 mark. As of yesterday the Dow is down 17% for the year while the S&P 500 is lower by 23% and the NASDAQ is down 32%. The bottom line is the Fed is raising interest rates in an environment wracked by supply chain issues in a effort to quell demand and thus bring down spiraling inflation. The odds of a recession are rising and market action is forecasting a possible recession later this year or next year. Market volatility will continue and gurus are concerned about a host of things to include an implosion in the Bitcoin market, recession, rising interest rates and policy moves from the White House particularly as they relate to oil which fell 6% in price today. Never a dull moment!
The Federal Reserve this week increased interest rates by an aggressive 0.75% and indicated that another 75 basis point hike is in the cards for July. The rate hike was the largest since 1994. The Federal Reserve discount rate target now stands at 1.5% to 1.75% and the 10 year Treasury yield yields 3.23%. The Fed also downgraded GDP growth estimates from 2.8% to 1.7% but expects the job market to remain strong and the unemployment rate to hover around current levels which is interesting given all the recent layoff notices from tech companies.
US economic optimism hit a low not seen since 2008 during the housing crisis. This gauge of consumer satisfaction has been falling for several months now and the most recent reading coming in less than what was seen during the 2020 pandemic is a telling sign that consumers are turning pessimistic. Wage gains have been hammered by inflation and people that I talk to usually ask this one simple question: “If inflation is 8.6% then why are things that I pay for 15% or more higher?”. That’s a good question.
Items of Interest
Seattle was named one of the host cities for the 2026 FIFA World Cup! This will be exciting because, as my old PE teacher Mr. Burkhalter (who thought soccer was a sissy sport) used to say “if you can’t kick the ball kick the guy next to you”. Even the Mayor of Seattle is excited about the world cup coming to town and when interviewed about it he pledged to have the Seattle police force fully rebuilt by the time the festivities begin so that everyone can be safe and have fun. Lets hope he is successful in this effort.