Fed Moves to Slow Down Inflation
What is it?
“The Board of Governors of the Federal Reserve System voted unanimously to approve a 3/4 percentage point increase in the primary credit rate to 1.75 percent, effective June 16, 2022.”*
The prime credit rate is “the basic interest rate charged to most banks”.** As inflation seems to continue, the Fed is trying to slow inflation while sustaining a good labor market.
Why does it matter?
Markets rallied briefly after the news before continuing down on Thursday. The markets were quite active last week. This was shown in the sell-off continuing from earlier. As of Thursday, June 16 this year, the Vanguard Total World Stock Index Fund (VT) reached its lowest price since late 2020.
Source: StockCharts.com
Last Week’s Risk Management Adjustment
What is it?
One of the things we consider when making investment management decisions are the market reactions to important economic events. Last week’s awaited Federal Reserve meeting decision was inline with expectations and immediate market movement seemed positive. However, the market bears took over on Thursday, as the volatility pushed us to slowly continue to reduce our stock market exposure.
Why does it matter?
As the markets are digesting economic news it is important to be patient with adding risk. Once the trend reverses and the stock markets start to gain traction, we plan to aggressively take advantage of the opportunities that this bear market is creating for us.
Other articles we found interesting this week:
ProShares Aims to Let Investors Bet Against Bitcoin With New ETF
State securities regulators investigating Celsius accounts freeze
Cooling yields hit the greenback
Current 401(k) portfolio
Our last portfolio reallocation: 5/19/2022.
Want more information?
The weekly market insight provides a window into the process we use in our investment management process. At Breakaway, we believe markets are always changing and require a nimble yet data-oriented approach.
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.
Click here for more details about our investment management
Sources:
*Federal Reserve. “Implementation Note issued June 15, 2022”. 6/15/2022. Federal Reserve https://www.federalreserve.gov/newsevents/pressreleases/monetary20220615a1.htm
**Kimberly Amadeo. “What Is the Federal Reserve Discount Rate?”. 5/2/2022. The Balance. https://www.thebalance.com/federal-reserve-discount-rate-3305922#:~:text=The%20primary%20credit%20rate%2C%20the,than%20the%20primary%20credit%20rate
IMPORTANT DISCLOSURES:
Educational use Only. The market update published by Breakaway Financial Group LLC (“Breakaway”) is intended to be educational in nature and is not intended to be a recommendation for any specific investment product, strategy, plan feature or other purposes. Accordingly, it should not be construed by any consumer and/or prospective client as solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation.
Advertising and Marketing. Communications such as this are not impartial and are provided in connection with advertising and marketing. This material is not suggesting a specific course of action or any action at all. Prior to making any investment or financial decisions, an investor should seek individualized advice from a personal financial, insurance, legal or tax professional that takes into account all of the particular facts and circumstances of an investor’s own situation. No person associated with Breakaway is a licensed attorney or tax professional and the information contained herein should not be considered tax or legal advice.
Links to Third Party Content. This Market Update contains links to articles or other information maintained by unrelated third parties. You acknowledge and agree to the following: All such information is provided solely for convenience purposes only because we believe that it may provide useful content. and all users thereof should be guided accordingly. We disclaim any responsibility for the link’s performance or interaction with your computer, its security and privacy policies and practices, and any consequences that may result from visiting it. We do not control the content published by the third-party; we do not guarantee any claims made on it, nor do we endorse its sponsor or any of the content, policies, activities, products or services offered by any advertiser on the site. Breakaway assumes no liability for any inaccuracies, errors or omissions in or from any data or other information provided by the third party and inclusion or reference by Breakaway to any third party link should not be construed by any consumer and/or prospective client as a solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation, over the Internet.
Important Information regarding Registration Breakaway and/or Patrick Traverse offer Investment advisory and financial planning services through Belpointe Asset Management, LLC, (“Belpointe”) 500 Damonte Ranch, Parkway Building 700, Unit 700, Reno, NV 89521, an investment adviser registered with the Securities and Exchange Commission (“SEC”). Registration with the SEC should not be construed to imply that the SEC has approved or endorsed qualifications or the services Belpointe offers, or that its personnel possess a particular level of skill, expertise or training. It is important to read disclosures pertaining to Belpointe Asset Management at this link https://belpointeasset.com/disclosure/. Breakaway is not affiliated with Belpointe. Additional information about Belpointe and Patrick Traverse is available on the SEC’s website at www.adviserinfo.sec.gov.
