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What We Learned from the Federal Reserve Yesterday

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

What we learned from the Federal Reserve yesterday was just how tightly the market holds on to every word from Fed Chairman Jerome Powell. No sooner did he alter his language on potential rate cuts and markets sold off, especially the speculative Nasdaq.

Look at the long-term path of interest rates above and the DJIA, and you can see the connection between interest rates and prices. Now we’re stuck in this no man’s land where finally fixed income investors can get some interest on their savings, and sure enough, the market has a fit.

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Interest rates are hardly in need of a cut. Inflation is not under control when you consider how high it has risen. Anyone who’s gone grocery shopping, out to dinner, turned on the lights, AC, and/or heat understands how ridiculous it is to look at month-to-month changes. Prices are way too high.

This market is thin. It’s like a frozen lake where only a few can walk. That’s not a robust indicator for the future. Now is the time to get your fixed-income house in order. Get your lazy cash working and focus on building your margin of safety.

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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 (RIP JB) 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.
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