Fed Chairman Jerome Powell has raised interest rates consistently all year and has signaled another increase in a few weeks. The Fed Funds rate is now 2.25%
Are the Fed rate hikes biting? Are they high enough to slow the economy?
The job of the Fed is, they say, to take away the punch bowl just as the party gets good.
Certainly, the economy has been booming by any measure.
I believe that the Fed has almost gotten to the point where they are slowing the economy.
Why? Several reasons.
The stock market is wobbly. The stock market is a leading indicator of the economy. It’s off about 10% from it’s highs.
The housing market is the biggest sector of the economy. It too is wobbly. That is slowing the economy.
Corporate credit is getting squeezed by the recent rate hikes. We are all time highs in the number of companies who are making less money than they pay in interest payments.
Defaults are also rising sharply in the junk bond sector. This is one of the things shaking the stock market.
For more details on this, please download my Financial Crisis Special Report by clicking here.
The bottom line is that we are at the beginning of the phase where the Fed’s interest rate hikes are starting to bite the economy and the stock market. They are not to the point to expect a true bear market but they will keep a cap on stock market gains.
The best way to profit from the current market situation is to subscribe to Wall Street Winners which you can learn more about by clicking here now.