Jerome Powell Plays “Captain Obvious” in Fed Press Conference
Did we really need the roller-coaster ride to get to this point? Scheduling a much-anticipated press conference midway through a week of selloffs and mood-swings was bad enough. The content of that presser was worse. Jerome Powell told us absolutely nothing new. He stood up, put on his best “I’m important” face, and stated the obvious.
There’s a risk that inflation will stay high. Labor force participation is down. Interest rates will likely be hiked in 2022. Most of this can be blamed on the pandemic. Seriously, Jerome? At least Dr. Fauci throws some science into his ambiguities. What I heard today was uncertainty and assumptions, nothing more. I wish I could say that was unexpected.
Fed Finally Acknowledges Inflation is Real
No, Mr. Powell, the earth is not flat. Sorry, wrong argument. Listening to the ludicrous claims from the Fed about “transitory inflation” made me forget which rebuttal I needed. After months of living in denial, they finally acknowledged that prices would continue to rise. Powell even stated that they’ll do something about it, several months from now.
According to this latest Federal Reserve report, twelve of the eighteen Federal Open Market Committee (FOMC) members are projecting three interest rate hikes in 2022, with the first one happening in March. Back in September, only nine FOMC members thought even one would be necessary. Apparently, they stepped outside and realized it’s raining.
The delayed actions are going to cost us. Between accelerated tapering and higher interest rates, home buyers are looking at more expensive mortgages after the first quarter next year. That should set off a feeding frenzy in the real estate market in Q1, shooting already over-inflated property values through the roof. Buy now if you have the chance.
Inflation is now forecasted (by the Fed) at 2.5% to 3% next year. Some economists believe they can get that back under control. I’m not so certain. While doing my budget this December, I’m going to plan for epic price increases. Cost-cutting is also at the top of my list. Santa will be giving the children Bitcoin (BTC). It’s not a hedge. I’m just buying the dip.
Cybercrime Mentioned as a Major Threat
Somewhere in yesterday’s maunderings, Jerome Powell mentioned that cybercrime remains a major threat to our financial system. He also brought it up back in November, so there’s some consistently there. Of course, the rest of us here in the real world have known this for years. That’s why there are cybersecurity companies out there.
I recently read an article on MarketBeat that profiled three newcomers on the Nasdaq 100. The one that jumped out at me was Fortinet (FTNT). They’re a multinational cybersecurity firm and their share prices are up 131% this year. Yes, I added them to my portfolio. And just for kicks, I decided to look at the rest of that sector. Are there other big earners in this space?
Palo Alto Networks (PANW) looks like a solid buy. They offer a platform with advanced firewalls that’s currently being used by 85 of the Fortune 100 companies. The stock is up 53% this year. Another good pick is Crowdstrike Holdings (CRWD). Their return isn’t as high as SentinelOne (S), but JP Morgan just upgraded them. It looks like a good buy for a long-term stash.
The Fed is not going to pull us out of the mess we’re in. Stop looking for them to announce a panacea for economic conditions they had no hand in creating. Press conferences like we saw this week are held to pacify the masses. Investors need to see past that. Inflation will continue and interest rates will rise next year. I didn’t need Captain Obvious to tell me that.