 |
| By Kenny Polcari |
Welcome to another episode of Wealth & Wisdom! Let’s get right into everything that happened in the markets last week, and boy, it was a lot …
But first, let’s talk about Silicon Valley Bank’s collapse on Friday. Although the writing had been on the wall for quite some time — indeed, Weiss Ratings has been pointing out that investors take caution in the space for a while now — it still sent shockwaves through the markets on Friday.
In any case, last week’s drama started on Tuesday and Wednesday with Federal Reserve Chair Jerome Powell’s testimony to the Senate and House Banking Committee. Powell talked about policy, where interest rates are going, what inflation is doing and why he needs to remain aggressive and take the terminal rate to at least 6% or very close to that target.
Then the Silicon Valley Bank drama began on Wednesday night and continued all the way to Friday, dragging the banking industry lower, especially the regional, mid-sized and small-cap banks.
Now, all the SVB drama dominated the headlines and ended up overshadowing the nonfarm payroll report that came out on Friday. The report showed an increase in payrolls — which, as you know, is not helpful to Powell and Co.
However, at the same time, it showed easing pressure on wages, which is an improvement. Plus, it showed an uptick in the unemployment rate, going from 3.4% to 3.6%. While that is helpful, Powell has said that he needs to see the unemployment rate tick higher — more than 5% — in order for the Fed to be successful in tamping down inflation.
After much speculation and panic regarding the next rate hike, the market is once again prepared for a 25-basis-point move. On the other hand, if the SVB situation should happen to spin out of control, you could expect the Fed to take a pause until they can take control and bring the level of fear down.
This all brings us to …
The Week Ahead
There is a ton of macro data coming our way this week, but guess what? There are really only two data points that are very important …
You guessed it — the Consumer Price Index and the Producer Price Index reports.
And that’s because both are going to tell us about the ongoing inflationary pressures and will dictate what actions the Fed is going to take depending on the data, as well as how the SVB drama plays out.
I go into more detail about last week’s data and market action, as well as this week’s data and expectations all down below, so make sure you don’t miss it!
Click here to watch the video.
Click here to get my rundown and be sure to check your inboxes tomorrow for the next installment of my weekly video interview series, Wealth & Wisdom.
To your Wealth & Wisdom,
Kenny Polcari
Host
P.S. The Fed’s actions should have investors concerned for their financial well-being.
Starting as soon as May 2023, their insidious “Fed Control” powers could go live, which means that any accounts linked with the U.S. banking system could soon be at risk for surveillance of all transactions … or worse.
Investors who want to take action to protect their money should click here for four steps to take now to stay safe and grow their wealth.
