One of the more notable memes in the stock market from the last 2 years is the Jerome Powell money printer image, which was an exaggeration, but not really. To get out of the hole the pandemic put us in, the government pushed heavy stimulus, and overseeing monetary policy the Fed borrowed a lot and injected massive amounts of cash. Jerome Powell, the leader, was seen as the poster child for this, and a lot of inflation jokes were made.
These inflation jokes turned into reality, and although Powell’s work helped the economy a lot, it’s his job to bring us out of this too. It’s surreal how quick the opinion has changed; in September, half of the Fed officials believed that interest rate hikes could wait until early 2023. The meeting revealed that their end to asset purchases, which got moved from June to March, will be met with an interest rate hike in mid to late March, which was a lot sooner than investors expected. The reasons behind this are a slow, tight labor market along with rising inflation, which hit a multi-decade high, leading most officials to plan 3 quarter percentage point increases this year alone. Powell, the man who stressed inflation was transitory, has now decided that it’s otherwise, and he very well could be right. This gave the stock market chills, with the NASDAQ seeing one of its worst days in the last few months. However, this could provide us the value opportunities we all love, but it’s important to be aware of the macroeconomic picture going forward.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.