Broker Check

Weekly Market Update March 22, 2024

March 24, 2024

Fed Funds 5.25% - 5.5%, US Ten Year 4.21%, Oil $80.81

As expected, interest rates remained unchanged after the March FOMC meeting this week. The likelihood of a rate reduction in the June meeting declined, with the investors expecting three rate reductions this year, beginning in July. The Fed dot plot indicates that over the next three years there may be nine reductions, bringing Fed Funds down to the 3% range.

This will depend on inflation approaching the 2% target, as Fed chief Powell reemphasized in his remarks. The media and government are touting the most recent annual CPI of 3.2%, and 3.8% ex. food and energy, as a sign of progress, but overlooked is the February month-over-month rate of 0.4%. That annualizes to 4.9%, a reason to question these sanguine inflation forecasts.

One factor that bodes well for continued stock market strength is the record amount of cash sitting in money market accounts, which may very easily find its way into stocks if current positive trends in company earnings growth, higher revenue and operating margins persist.

As of one year ago, according to a Federal Reserve survey, a record 58% of American households owned stocks, either directly or through retirement plans. American’s appetite for stocks shows little sign of being filled, barring a macro event such as the 2007 – 2009 financial crisis. And even after such events, stocks invariably recover.

 Have a Great Week,