The Fed Meets and ...

Good Morning,

Yesterday Marketwatch reported that the Federal Reserve met and decided to not raise short-term interest rates this quarter. The biggest takeaway from the article was that the Fed was pleased with the economy and job growth rate, but is still keeping an eye on inflation. Now there is a likely chance that the Federal Reserve can raise short-term interest rates.

What this means for investors is that the Federal Reserve will continue to keep considering raising rates (next meeting in December, and their current rate of increase has been done in 25 bps increments) until it sees that the inflation is in line with their goal. The current economy has taken some losses and come down from record highs due to:

1. Increased volatility
2. Concern about dim future growth prospects in 2019
3. Global markets slowing down during the year

This domestic bull market is over eight years and just like everything, all good things must come to an end. The biggest issue with this year was that tax changes created a one-time financially engineered boost to earnings which gets people excited but in reality, it isn't sustainable. Our markets are currently behaving like children coming off a sugar high. Are we going to crash and go in a recession? I do not know that answer but based on the data and information that has come out over the past couple of months the next two years could be a tough period.  With a lot of speculative investments already experienced price crashes and more businesses mentioning uncertainty about operating environments going forward (in particular trade tariffs), proceeding with caution might be the best move.

https://www.marketwatch.com/story/fed-holds-rates-steady-and-stays-on-course-for-more-gradual-hikes-2018-11-08

#financialliteracy #marketwatch #federalreserve #stockmarket #economy #taxreform #tariffs #financialfloyd #phillyfinance

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