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M Notes:  Mon, 1-3 Thumbnail

M Notes: Mon, 1-3


  • THE FED.  In an effort to fight inflation, the Federal Reserve will likely end their Asset Purchases in March.  Expectations are for three interest rate hikes.  While the moves appear to be transparent and communicated well in advance, how will Markets respond when it actually happens?
  • INFLATION.  Consumer inflation is 6.8%.  Wholesale inflation is 9.6%.  The Federal Reserve’s target is 2.0%.  Expectations are inflation will come down some in 2022, but the question is just how far?
  • GEO-POLITICAL EVENTS.  Russia and the Ukraine.  China and Taiwan.  Will we see invasions?  And what will a Biden led response be if they do?
  • UNEMPLOYMENT.  Two years ago, we were at 3.5% (which is just amazing).  Then the pandemic hit.  Now we’re back down to 4.2% (which is still amazing…considering).  Are we headed lower?
  • JOE MANCHIN.   Since Democrats only have 50 seats in the Senate (actually 2 Independents sit with 48 Democrats), there is no room for dissent for Democrat legislation to get out of the senior body.  Manchin’s been attacked from colleagues on the Left for not rubber stamping the Build Back Better plan.  But he comes from a State where Trump won by +39%.  If the flack continues will Manchin switch parties?  Or will Manchin broker a different deal?  
  • THE ELECTION.  Will Democrats keep the House?  Will Democrats keep the Senate?  A lot of attention will be focused on the Mid-Terms.  
  • MY FORECAST:  Markets will continue to be volatile.  Companies with good earnings, good profits, low debt, and strong cash flow will weather 2022 pretty well.  I believe Markets will be up +8% or +9% in 2022.