Which Way Wednesday – FOMC Edition

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2.25%.

That is the current Fed Funds Rate and they will add around 0.75% to that (plus or minus 0.25%) so let’s say it’s 3% by the end of the day.  As you can see from this chart, which tracks the Effective Rate against Core Inflation – there’s no surprise here.  Funds usually move in lock-step with inflation but, since 2009, in order to boost the economy from our last major crash – rates have been far below inflation and now it’s time to pay the piper.  

Still, you might notice that this has been going on since the 60s and, shockingly, the market has survived.  Corporations have survived.  People have survived.  Why then is the market acting like they won’t?  Prices go up – shocking!   Wages go up – shocking!  

When I had a paper route in the 70s, there was a highway sign I could see that said a VW Beetle was only $1,999 and I was 11 years old and made about $20 a week so, if I saved $5 a week I’d be able to buy it when I got my permit at 15 (I ended up getting a used Barracuda for $800 and went to Europe with the rest but I was a waiter by then and rolling in money).   

Now my daughter drives for Door Dash and makes $50-100 per night and a Beetle starts at about $30,000.  I don’t know what a paperboy makes but newspapers are now $2.50 – also up 10x from when I used to deliver them.   So there have been a lot of adjustments along the way in the past 50 years:  Wages have gone up, prices have gone up…  Newspapers barely exist anymore and neither do pre-teen paperboys (child labor laws), my daughter does a job that didn’t exist.   

Getting a job: 1970 vs today - 9GAG

The Internet that created my daughter’s job pretty much killed off my old paperboy job as nobody reads physical papers anymore.  Anyway, the point is the World changes, Society changes, the Economy changes and, generally, we all adapt and survive.  Heck, in the 1970s, the S&P 500 was at 100 and now it’s at 3,885 – up 39x in 50 years so, if I had taken my $2,000 and put it in SPY in 1978 (when I turned 15), I’d have $80,000 today – almost 3 VWs!  

S&P 500 - Wikipedia

My point is – stop freaking out and, more importantly, stop letting other people freak you out that a normal economic cycle means it’s the end of the World.  It’s not… probably…

What you do have to consider is your timeframe because, as we see, the market can correct or over-correct for a very long time and, though it’s likely to come back – you have to be able to ride it out or you’ll be forced to liquidate – often at the worst possible time.

That’s why we are currently cash-heavy with lots of hedges – better to be safe in this uncertain environment but, as long-term investors (20 years +), it would be crazy not to take advantage of stocks that have gone on sale – especially our beloved blue-chips.  

We will see what Powell has to say this afternoon but I don’t think it can be worse than expectations so I expect a relief rally into the end of the week.  

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Good morning, everyone. Here is the link to today’s webinar.

https://attendee.gotowebinar.com/register/5851132916993813259

why is nobody paying any attention to putins newest nuclear threats?

Biden is – he specifically said, Vlad, don’t do it, about three days ago. Didn’t see much coverage of it, though.

Good Morning.

snow i guess thats what i mean im in canada and hardly even a mention of it on tv news

oil report time

I spent a some time in canyons in tiny towns in AZ and UT – I don’t eat meat, and the only option was replacing a burger patty with a Beyond patty (and this option was available everywhere, very surprising and strange). I find the collaboration of BYND and MCD a little strange – people who want to give up meat for health reasons will first stop going to MCD rather than picking a beyond patty there. Vegans are not going to go to MCD. Is BYND thinking that some MCD patrons will want to give up on meat, and so will continue going to MCD? All this is for MCD in the US; europe is different; the MCD in Berlin had a veggie patty in 2004.

I think the expansion in BYND use across non-fast food chains is going to see more (maybe less sexy) growth.

My wife had an “Impossible Burger” at a bar we went to and said it blows away Beyond Meat. They discovered a molecule called “Heme” that gives meat it’s taste. The consistency is better than Beyond with less grease and mushiness.

I think they just inked a deal with Burger King. I bet the fast food guys are looking at eventually blending it with real meat to bring the costs down.

Last edited 6 days ago by jeddah62

PHIL
RE: Taco Bell post — 8000 x 20 = 160,000

Today I think there is something wrong with my computer ES/ +50 – 30 what is going on?

Man, T is down another 2% .. guess fears about their debt load and interest rates. Feels like I should put everything down on T and walk away