What You Need to Know Before This Fed Meeting, Pt 3

One thing is certain, the markets despise uncertainty

Managing Editor
Mar 15, 2022 at 6:30 PM
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    The Federal Open Market Committee's (FOMC) highly anticipated meeting will conclude at 2 p.m. on Wednesday, March 16, with comments from Fed Chair Jerome Powell about monetary policy and the overall state of the U.S. and global economy. CME Group's FedWatch tool projects a 25-50 basis-point rate hike from the central bank at the meeting's conclusion.

    It's safe to say all eyes are on the Fed. With Russia's invasion of Ukraine, inflation spiking stateside, and Covid-19 cases dropping, the Fed's actions and subsequent comments will go far in shaping how the rest of the year unfolds. To help unpack this monumental week for Wall Street, we asked Richard Miller, Market Researcher at TipRanks, to weigh in with some broader thoughts on the matters at hand.

    This is part three of a mega-Fed series, so stay tuned for more!

    In a recent congressional hearing, Fed president Jerome Powell stated that he expected to support a 0.25% rate hike at the Federal Reserve FOMC meeting scheduled for March 15th-16th.  However, just weeks before this, St. Louis Fed President James Bullard, one of the more hawkish members of the Federal Reserve, was advocating for a 1% rate hike by July 2022. This would have implied at least one 50 basis point rate hike at one of the next three FOMC meetings between March and July.  Needless to say, this hawkish tone sent ripples through the stock market.  However, these ripples were short lived as most other Fed presidents around the country went on a dovish media blitz to counteract any negative effects of James Bullard’s comments.
     
    Fast forward a matter of days and now the Fed has a new set of variables to consider when raising rates, the war between Russia & Ukraine. Although, we are less than 2 weeks into Russia’s invasion of Ukraine, the human and economic costs we experiencing are extreme but not yet fully realized. Here in the US, we are seeing record gas prices at the pump and increased energy costs during a brutally cold winter. Today, President Joe Biden, announced a ban on Russian energy imports and various western allies are considering similar measures.
     

    One thing is certain in this market, the markets despise uncertainty. Looking ahead as the Fed raises rates, the average investor can expect more volatility, especially in the already hard-hit tech and growth sectors of the stock market. Some investors are choosing to treat this downtrend as a buying opportunity while others are running for the hills.

    Mega-Fed Series Part 1

     

    Mega-Fed Series Part 2 

    *This article is published for purely informative purposes. Miller's opinions are not necessarily a reflection in any way of those of Schaeffer's Investment Research. We publish information about companies in which we believe our readers may be interested. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalized advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as SIR's solicitation to effect, or attempt to effect, any transaction in a security. Investments in the securities markets, and especially in options and futures, are speculative and involve substantial risk. The information that we provide or that is derived from our website should not be a substitute for advice from an investment professional. We encourage you to obtain personal advice from your professional investment advisor and to make independent investigations before acting on the information that you obtain from SIR or derive from our website.*

     




     
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