Market Commentary

The FED

investment vehicle

After the meeting today the Fed is likely to increase the Fed Funds rate. Everyone will be paying little attention to what the Fed does, but they will focus on what Fed President Powell says about the future direction of rates.

The recent stock market weakness may well give the Fed pause but it shouldn’t be the determining factor on rate policy. It is one of many, but with the EU weakening and China’s growth slowing there are plenty of reasons for the Fed to change course. If they suggest that they might do that then the stock market will calm down.

However, the stock market is a good predictor of recessions and if investors feel that the Fed’s change is too little and too late things could get ugly for stocks and the economy will weaken. The recession word might be too early but a slowdown in our economy is probable for 2019.

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