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THE 2024 FEDERAL RESERVE RATE HIKE

INFLATION –
Overall inflation across all items rose by just 3.1%, down from the 3.2% that we saw in October. In terms of the categories that saw a price increase, the largest gainer was car insurance, up 19.2% year over year. With the cost of repairs and replacement going higher, auto insurance companies have been raising their premiums by the biggest annual jump in 47 years – and since insurance premiums are generally set every 6-12 months – this just happens to be the month we see it show up in the inflation data.

We also have sporting events up 16.4% from a year ago, Veterinarian services up 9%, Shipping Fares up 8.4%, and rent of primary residence up 6.9%. The good news is that shelter-inflation does seem to be declining, with a drop of 2% year over year.

HOUSING PRICES –
The Federal Housing Finance Agency reported that home prices have increased by 5.5% year-over-year. As they explained, “home prices appreciated in almost all 50 states….Vermont, Maine, New Hampshire, Connecticut, and New Jersey recorded the highest annual appreciation rates, with the WORST markets coming in for “Hawaii and the District of Columbia, posting negative rates -0.9% and -0.8%.”

However, Goldman Sachs believes that the days of “insane price gains” are over – and, starting soon, “we’ll likely go back to a 2% type of house price appreciation environment, which is roughly around the trend of the last 30 years or so.”

A separate analyst also seconds this, saying that “national home prices will fall 1.7% in 2024, for the first time – in a decade” – although, that doesn’t mean that every area will go down; as they say, “of the 100 large metro areas included in the report, 63 are likely to see prices rise.”

STOCK PRICES – (CHECK OUT THE FINANCIAL SAMURAI BLOG)

As of recently, bond and money-market funds saw a RECORD influx as investors cashed in on guaranteed returns – but, this also suggests that there’s a LOT of money sitting on the sidelines that might continue to propel the stock market even higher.

In terms of where stock prices could go from here…the Financial Samurai Blog notes that JP Morgan believes that we’ll actually see the SP500 DECLINE to 4200 in the next year, saying that: “With a step down in economic growth next year, eroding household excess savings and liquidity, and tightening credit, we see the 2024 growth unrealistic… Negative corporate sentiment should be a catalyst for sharply lower estimates early next year.”

However, Wells Fargo is slightly more optimistic, with the SP500 closing out at 4625 – From their perspective, “with VIX low, credit spreads tight, equities rallying, and cost of capital higher, it’s time to downshift. Expect a volatile and ultimately flattish SP in 2024, as valuation limits upside and rate uncertainty elevates downside risk.“

Even further down the list, RBC Capital Markets thinks we’ll see 5000 – and BMO believes we’ll hit 5100, and that “stocks will attain another year of positive returns in 2024, albeit while demonstrating more sanguine, broadly distributed, and fundamentally defined performance relative to the last decade or so. In other words, normal and typical.“

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LEARN ABOUT: Investing During Inflation

REVEALED: Best Investment During Inflation

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Urgent news has just come in from the Federal Reserve – they have announced that they will be ending their cycle of interest rate hikes. This move comes as a shock to many, as just a few months ago the Fed had been signaling their intention to continue raising rates in order to combat inflation. However, the recent economic data has shown signs of weakness, and the Fed has decided to change course in response.

This news has had an immediate impact on the financial markets, with stock prices falling sharply in response to the announcement. Investors had been expecting the Fed to continue raising rates, and this abrupt change in policy has caused a massive pivot in market sentiment. Many are now scrambling to reassess their investment strategies in light of this unexpected development.

The decision to end the rate hikes is a significant one, as it marks a turning point in the Fed’s approach to monetary policy. For the past few years, the central bank has been gradually raising rates in an effort to keep inflation in check and prevent the economy from overheating. However, with signs of a slowing economy and an uncertain global outlook, the Fed has decided to pause and take a more cautious approach.

This change in policy has raised questions about the future direction of interest rates, as well as the broader outlook for the economy. Some analysts believe that the Fed’s decision to end the rate hikes could be a signal that they are concerned about the economic outlook and are preparing to take a more accommodative stance. Others see it as a necessary recalibration in response to changing economic conditions.

Whatever the case may be, the Fed’s decision to end the rate hikes has sent shockwaves through the financial markets, and has left many investors and analysts scrambling to reassess their outlook for the future. It remains to be seen how this will play out in the weeks and months ahead, but one thing is clear – a massive pivot in market sentiment is underway, and investors will need to be nimble and adaptive in order to navigate the new landscape.

In conclusion, the Federal Reserve’s decision to end the cycle of rate hikes has caused a sharp reaction in the financial markets, with stock prices falling and investors scrambling to reassess their investment strategies. This unexpected move by the Fed signals a significant pivot in market sentiment and raises questions about the future direction of interest rates and the broader economic outlook. As the dust settles, investors will need to stay vigilant and adaptable in order to navigate the new landscape.