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To date, the Fed has not raised its target rate four consecutive times by 75 basis points each. They still have to beat inflation.
Today, they’re damaging retailer inventories, harming consumers, and reducing real estate values.
Granny Retail is going strong, demonstrating Triple Play’s momentum leadership and positive price action until the Fed broke the news. This stresses retailers and consumers.
On Tuesday, retailers sold out in large numbers along with the rest of the market. Granny Retail (XRT), or SPDR S&P Retail ETF, fell 4%, above the 50-day moving average.
We look at Granny Retail (XRT) to assess how the hike will affect consumer behavior, address rising consumer debt, and dig deeper into what makes up CPI.
Click the links to learn more about CPI, consumer spending, and actionable ETF levels.
There is uncertainty about the effect of these rate hikes on inflation, which is still far from 2%. Economic data are mixed.
Corporate earnings are stable for now. However, given the uncertain economic environment, investors should exercise their governance of risk.
Shelter accounts for a third of CPI, up from 6.6% last month. Rents will continue to rise, while food and energy will continue to rise and carry a large CPI weight.
Mortgage interest rates have risen from 3.5% to 7%, making it impossible for some families to buy property.
Those who can’t afford will have to live somewhere else, which will continue to put pressure on rental prices.
In addition, the US savings rate is also 3%, the lowest in 15 years. Consumers are actively using their savings, charging their credit cards, and borrowing more, all while real income growth stagnates.
Total consumer credit balances in the US have reached record levels shown below.
Total U.S. consumer credit outstanding from Q3 2006 to Q2 2022.
Property owners can also access home equity credit at variable interest rates.
There is little evidence to support the Fed’s claim that it has made great strides in fighting inflation.
Stock Market ETF Trading Analysis and Overview:
S&P 500 (SPY) 370 support, 377 resistance
Russell 2000 (IWM) 174 support, 181 resistance
Dow (DIA) 318 Support and 324 Resistance
Nasdaq (QQQ) 261 support and 269 resistance
KRE (regional bank) 62 support and 65 resistance.same as before
SMH (semiconductor) 182 support, 189 resistance
IYT (Transportation) 204 support and 210 resistance
IBB (Biotechnology) 127 support and 132 first resistance.same as before
XRT (Retail) 61 support, 65 resistance.same as before
twitter: @market minutes
Authors may hold titles in the securities referred to at the time of publication. All opinions expressed herein are those of the author and do not represent the views or opinions of any other person or entity.
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