Fed Meeting This Week
What is it?
This week the Fed is meeting to announce their next policy decision.* The main focus for investors is on interest rates. After that investors will be keying in on the words of Federal Chair Jerome Powell. During his meeting minutes, he will discuss what went into the interest rate decision, and an outlook for the months to come. That is followed by questions that may provide more insight into how the Federal reserve views the current state of the economy and markets as a whole.
Why does it matter?
If the Fed decides to adjust interest rates, that would surprise many investors.* They have mentioned a plan to hold interest rates constant to see how that impacts things such as inflation and employment. Markets have been consolidating lately, so any directional bias by the Fed may be enough to move markets one way or another. Regardless of what the Fed says this week we feel confident in the flexibility of our strategies to adapt to the market conditions we are given.
Oil Prices
What is it?
“Gas prices hit new 2023 highs Monday as a squeeze on oil supply sent prices of refined products higher.”**
Why does it matter?
Oil is a key component of inflation data. With oil still moving higher, we can see the Fed does not control the price of all goods or services. Oil’s high price has helped certain ETFs to continue to appreciate in value. If inflation really starts coming down then things could change. For now those ETFs are up and we plan on holding them. As long as the positive trend continues we will hold our positions or add more to them.
If oil prices accelerate very high, very fast then we would sell some positions related to that. However, if things change for the worse then we would reduce our positioning or sell out if the risk is high. Some of this could be impacted by the Fed’s decision this week, but our positioning is not expected to change very much before then.
Other articles we found interesting this week:
China Evergrande shares sink 25% after wealth unit staff detained
UAW strike: Stellantis ups offer; Ford, GM to lay off workers
Big central bank week starts quietly
Current 401(k) portfolio
Our last 401(k) portfolio reallocation: 8/14/2023.
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Our process attempts to identify trends and momentum in the financial markets. With that information, we align our clients’ portfolio accordingly in the hope to help our clients accomplish their life goals while attempting to lower the risk of a large drop in their portfolio.
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Sources:
*Jennifer Schonberger. “Fed expected to hold rates steady while keeping door open to more hikes.” Yahoo Finance. 9/18/2023. https://finance.yahoo.com/news/fed-expected-to-hold-rates-steady-while-keeping-door-open-to-more-hikes-105415879.html
**Ines Ferré. “Gas prices hit 2023 highs as oil chugs higher”. Yahoo Finance. 9/18/2023.
https://finance.yahoo.com/news/gas-prices-hit-2023-highs-as-oil-chugs-higher-144446834.html
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