Fed Officials Preparing to Lift Interest Rates by Another 0.75 Percentage Point; The humbug economy; A Warren Buffett Protégée Strikes Out on Her Own; Minimalist packing tips
1) Markets are rallying today after the Fed indicated that it would "only" raise its benchmark interest rate by 0.75% rather than a full percentage point at its next meeting later this month. Fed Officials Preparing to Lift Interest Rates by Another 0.75 Percentage Point. Excerpt:
Federal Reserve officials have signaled they are likely to raise interest rates by 0.75 percentage point later this month, for the second straight meeting, as part of an aggressive effort to combat high inflation.
Policy makers left the door open to a larger, full-percentage-point increase at the July 26-27 gathering. But some of them simultaneously poured cold water on the idea in recent interviews and public comments ahead of their premeeting quiet period, which began Saturday.
Some officials pointed to signs that economic activity was softening as they raise rates at a historically brisk pace. "You don't want to overdo the rate increases. A 75-basis-point hike, folks, is huge," Fed governor Christopher Waller said Thursday at a conference in Victor, Idaho. "Don't say, 'Because you're not going 100, you're not doing your job.'"
Before last week, officials had signaled they were leaning toward a 0.75-point, or 75-basis-point, increase this month. After another scorching inflation report was released Wednesday, however, they indicated they would consider a full-point increase.
"We knew this inflation report was going to be ugly, and it was. It was just uglier than we thought," said Mr. Waller. But, he added, "we don't want to make policy on one data point, and that's kind of a critical thing"...
On Friday, a University of Michigan survey of consumers' long-term inflation expectations fell to its lowest level in a year, which weakened the case for a 1-percentage-point rate rise. Fed officials keep a close watch on households' and businesses' expectations of future inflation because they believe such expectations can be self-fulfilling.
Market-based measures of future inflation have also drifted to their lowest levels since Russian President Vladimir Putin's invasion of Ukraine in late February.
"They can take comfort from that," said Laurence Meyer, a former Fed governor. "This takes the pressure off of them. I don't think they want to go 100."
I'm glad the Fed isn't overreacting.
As I wrote in Friday's e-mail, I think inflation has peaked and will fall sharply over the rest of this year, which is very bullish for stocks, especially if I'm right that any recession we might have will be brief and mild.
And when it comes to specific stocks, a historic unveiling on August 29 in downtown Houston, Texas is set to open a universe of stocks poised for massive gains ahead, whose names are still unknown to the broad public... at prices you may never see again.
My colleague Louis Navellier and I put together a special presentation with all the details – watch it right here.
2) At the same time, I approach my forecast of inflation and the economy with an especially large dollop of humility right now because, as Nobel Prize-winning economist and New York Times columnist Paul Krugman notes, the economic data is as confusing and contradictory as it's ever been: The humbug economy. Excerpt:
I'm not suggesting anyone is faking the data, but the different pieces of information we have don't seem to line up – they almost seem to come from different countries. Some data suggest a weakening economy, maybe even on the verge of recession. Some suggest an economy still going strong. Some data suggest very tight labor markets; others, not so much.
Let's talk about the numbers, and how they don't add up...
Are you confused? You should be. I've been in this business a long time, and I can't remember any period when economic numbers were telling such different stories. On the other hand, we've never before faced the kind of shocks we've gone through in the past few years: Both the pandemic-induced recession and the recovery from that recession were, to use the technical term, weird, and maybe we shouldn't be surprised the measures we normally use to track the economy aren't working too well.
My guess about what's really happening is that the economy is indeed slowing, but probably not into a recession, at least so far. And a moderate slowdown is actually what we want to see.
At the beginning of 2022, the U.S. economy was almost surely overheated, and this overheating was contributing to (although not the only source of) inflation. We wanted to see the economy cool down before inflation got entrenched in expectations, and that's an area where all the available data – slowing wage growth, inflation expectations in the financial markets, surveys that ask consumers what inflation rate they expect over the next few years – are telling the same story: Inflation is not, in fact, getting entrenched.
Overall, the picture appears consistent with a "soft landing" – a slowdown that falls short of a full-on recession, or involves a mild recession at worst, together with stabilizing inflation.
But, of course, we don't know that. In fact, given the wide discrepancies in economic data, economic pundits (including me) have unusual freedom to believe whatever they want to believe. Just pick and choose the numbers that tell you what you want to hear and glue them together.
3) This is a nice story from the front page of yesterday's New York Times business section about Warren Buffett's protégée, Tracy Britt Cool (who has the coolest name ever!): A Warren Buffett Protégée Strikes Out on Her Own. Excerpt:
Tracy Britt Cool always knew she wanted to work in business. So, not unlike the star of a high school musical asking Steven Spielberg for a part, she figured she should start at the top.
At 24, fresh out of business school with barely any formal work experience, Ms. Britt Cool mailed a letter to Warren E. Buffett asking the Oracle of Omaha if she could work for him. Soon, his office address became hers, too.
Ms. Britt Cool joined Mr. Buffett's conglomerate, Berkshire Hathaway (BRK-B), in the fall of 2009 as financial assistant to the chairman – a title that Mr. Buffett, the chief executive and chairman of Berkshire, made up. She became one of his top lieutenants along with the Berkshire investment managers Todd Combs and Ted Weschler – Mr. Buffett called them "the three T's" – and one of the company's few senior female executives.
In early 2020, not long after people began to include Ms. Britt Cool on a short list of potential successors to Mr. Buffett, she left. The move surprised many because Berkshire executives rarely leave.
Now, Ms. Britt Cool, 37, is parlaying her nearly unparalleled access to the mind and methods of one of the world's most renowned investors to build her own investment firm, Kanbrick. In doing so, she is perhaps the most direct inheritor of a style of investing that Mr. Buffett perfected over many decades and distilled into pithy principles.
4) As I wrote last week, if you're taking a flight these days, avoid checking a bag! To do so, you need to pack like a minimalist.
It's how I did my entire recent 16-day trip to Italy, France, and the U.K. with just this small backpack/roller-bag ($80 on Amazon):
Minimalist packing is a fun game for me – and saves me a lot of money flying because airlines not only charge for checked bags but also increasingly for any carry-on bag that doesn't fit under the seat in front of you.
Here's a six-minute video I taped last July before my trip to Uzbekistan with all of my packing tips (note that I made a mistake bringing a backpack rather than the roller-bag pictured above – it's so much easier to pull a heavy bag rather than carry it).
And here's a recent Wall Street Journal article on the same topic: How to Pack Your Carry-On Travel Bag Like a Pro. Excerpt:
Your carry-on will be your best travel companion this summer.
Checked luggage is being mishandled at a higher rate this year compared with the pre-COVID era. During the first three months of 2022, roughly 6.5 out of every 1,000 bags checked on a flight by a U.S. airline were mishandled, according to U.S. Transportation Department data. That rate is up around 12% from the same period in 2019. Some travelers to Europe have also reported widespread problems with mishandled bags.
Missing or damaged luggage can ruin a trip, so skipping the checked bag can be a practical move. Fitting everything you need for a long-awaited getaway into a smaller suitcase is a big challenge for many, but it could save you money. It can be done if you give priority to saving space when deciding what to bring, according to travel pros and organizing experts.
If you have no choice but to check a bag, however, here are some tips: Checking a bag is a total nightmare this summer. Excerpt:
- Try luggage shipping services
- Know your bag
- Arrive early
- Don't check anything crucial
- Use a tracking device
Best regards,
Whitney
P.S. I welcome your feedback at WTDfeedback@empirefinancialresearch.com.