Your Survival Guy

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Interest Rates Need to be Higher Pronto

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FOMC Chairman Powell answers a reporter’s question at the press conference.

Inflation? Yes it’s a thing. Anyone living in the real world recognizes it at the grocery store, in the real estate section of their local newspaper, and the stock market for that matter. Those in retirement trying to live off of their portfolio are paying the price for a reckless monetary policy. Rates need to be higher pronto.

The editors of The Wall Street Journal write:

Investors briefly bid up the 10-year Treasury yield above 3% on the news before it fell back to 2.97%. But forward guidance has always seemed overrated as a policy tool, and with growth picking up it was becoming a threat to the Fed’s credibility going forward.

All the more so with Wednesday’s report that producer prices rose 0.5% in May, putting them up 3.1% for the last 12 months. The biggest lift was from oil prices, but the increase was 0.3% even without food and energy, or 2.4% in the last year. That’s above the Fed’s inflation target of 2%. Inflation is clearly on the rise, and the Fed has to be alert that it doesn’t let expectations of price increases insinuate themselves into business decisions. Then the FOMC may want to start smoking something to forget the risks it might pose to what for now is an excellent economic outlook.

Read more here.

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E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.