Medicare Agent News: Defining the Pain

Tuesday, September 27, 2022

Defining the Pain

By Alex Eule | Tuesday, September 20

Fed Time. As investors await the Federal Reserve's next move, bond yields continued to move higher and stocks continued to fall. It's part of a pattern ever since Fed Chair Jerome Powell reminded investors during a late August speech that he was serious about bringing down inflation, even if the cure required hurting the economy and financial assets. "While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses. These are the unfortunate costs of reducing inflation," Powell said during the Aug. 26 speech from Jackson Hole, Wyo. Since then, the S&P 500 is down 7.1% and the Nasdaq Composite has fallen 9.6%.

It's all been building up to tomorrow, when the Fed concludes its September policy meeting and announces its next rate move, along with a new set of forecasts for 2023. By now, you've probably heard that traders expect either a three-quarter or full-percentage point increase.

Today, Jeffrey Roach, chief economist for LPL Financial, wrote that the Fed could also better define the pain that Powell referred to in Jackson Hole. Among his predictions for tomorrow, Roach wrote, "Expect a broad-based uptick in unemployment projections for next year as the Fed further explains what it means by necessary 'pain' for the economy."

In the meantime, investors will eventually have to turn their attention to earnings and that's where the news could be tough for stocks regardless of what the Fed says tomorrow. A warning last night from Ford Motor about its third-quarter earnings builds on last week's dour commentary from FedEx. More on that below.

On the day, the S&P 500 fell 1.1%, putting it back down nearly 20% from its Jan 3. record close. The Nasdaq was off 1% today, as was the Dow Jones Industrial Average. Bond yields continued to head higher, with the 2-year Treasury settling at 3.962% and the 10-Year at 3.571%. On Jan. 3, when the S&P500 hit its record, the 10-year yield was just 1.628%.