Dan Passarelli, CEO - Market Taker Mentoring

There was a pretty good update in the market today, right around up 2% in the S&P 500. And it played out a little bit like I talked about in yesterday's video. We got that jump up above the 20 day moving average, which is not a real major surprise based on some of the things, just some of the psychology going on in the market. And when we see a move through the 20 day moving average, it's very common to see some follow through.

And again, like I said the last couple of days, I'm not expecting to see any new all time highs anytime soon, but we could see a little bit of a trend higher in the short term. Now, the question is that's technically what has occurred, but fundamentally what occurred? Why did this happen? Well, we had some of the Fed governors doing some chatting today and the Feds daily had some really great things to say. It was almost scripted, like exactly what the market wants to hear.

And it didn't seem overly warm and fuzzy either. It seemed pretty real. He said that first of all, he thinks that the July meeting is going to be a good discussion. He says that they're working on getting inflation down without stalling the economy. Just such a simple sentence, but that's exactly what I think the market needed to hear and that is what the Fed cares about.

There's been a lot of messages communicated in a way that maybe wasn't as clear and direct as that that leads to some market confusion and sometimes some panic. Right. He also pointed out that inflation has lasted longer than hoped because Covid is still rampant, obviously. Right. And then the war, the price of gas is high because of market factors that are relating to the war.

So kind of pointing out some of these straightforward things and I think calming a lot of nerves in a lot of ways. Right. He also said that he doesn't expect mortgage rates to keep marching up as they have been. And also he said that the Fed is not talking about raising rates to extreme highs, probably ending up more like in the 3% range. And also that he sees signs that inflation might be coming down based on the University of Michigan data on consumer inflation expectations.

So Daly had a whole bunch of really good things to say. Now, Bullard also talked today and said some things that seem promising too. He said that the Fed may have to get the funds rate to 3.75% to 4% by year end. So maybe not as drastic as some people were thinking. But I believe it was him that also pointed out that yeah, he said that if inflation can come down relatively quickly down to the 2% range over the next 18 months, if the Fed plays its cards right, and also that if the economy moves in ways consistent with a 2% inflation target, we will stop raising rates, and if not, we won't.

So, like, I mean, to me, like, just communicating these very straightforward messages in such a way that it doesn't create confusion, right. That can be a good thing for the market.

We also don't want that to be overdone. Right. We don't want the Fed or anybody else to paint an overly rosy picture. But I just feel just when I read some of these headlines, I feel like there was very effective communication, and that's kind of congruent with some of the things that I've been talking about in some of our videos lately. So, my friends, I hope that that helps, and I hope that you have a fabulous weekend and I can't wait to talk to you next Monday.