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Prices Rise 3% As Inflation Continues to Cool – The New York Times

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June CPI Report: Prices Rise 3% As Inflation Continues to Cool – The New York Times

Some investors believe that a recession warning that has been flashing on Wall Street for the past year may be sending a false signal and that the Federal Reserve will be able to tame inflation and still escape a deep downturn.

The signal — called the yield curve — has continued to reverberate in 2023 and is now sending its strongest warning since the early 1980s of a coming downturn. But despite the alarms becoming louder, the stock market has rallied and the economy has remained resilient, prompting some analysts and investors to rethink its predictive power. On Wednesday, the Consumer Price Index report showed a sharp decline in inflation last month, further buoying investor optimism and pushing stocks higher.

Fed pauses rate hikes, sees two more ahead this year

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Fed rate decision June 2023: Fed pauses rate hikes, sees two more ahead this year

After a two-day meeting, the Federal Reserve decided to leave interest rates unchanged. “Holding the target range steady at this meeting allows the Committee to assess additional information and its implications for monetary policy,” the central bank’s post-meeting statement said. The surprising aspect of the decision came with the “dot plot” in which the individual members of the FOMC indicate their expectations for rates further out. The dots moved decidedly upward, pushing the median expectation to a funds rate of 5.6% by the end of 2023.

Don’t buy commodities these days 🛢

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A lot of advertising is popping up these days urging folks to buy various commodities to fight inflation. Sounds like a dumb idea as commodities are likely already overpriced and at some point in the future will come crashing back down.

While I wish now that I had bought more energy stock years ago, I stayed away from adding more due to the high level of dividend payments. Paying taxes on dividends you reinvest sucks. It’s just money out of your pocket to the tax department every four months that your not seeing until you cash out. My original idea was to hedge against inflation but I feel like it just makes you more vulnerable to the ups and downs of one sector rather than cheaper index funds.

Inflation is a problem it kind of bites. The markets are down although nothing like what they’ve been up the past ten years. A slight dip today shouldn’t take away from long term thinking. It’s sucks to look at your portfolio and think your spinning wheels, with values only increasing slightly over the past year even though the total number of shares actually is getting a boost due to the down markets.