Some of it’s individual companies having bad earnings reports, but a lot of it is also the macroeconomics.
SCHIPPER: Traditionally, when the Fed starts to do what we call tightening monetary policy, they’re trying to gradually raise interest rates so that people spend a little bit less, and corporations spend a little bit less.
For most people, you have your money in a 401K, 403B, whatever that financial instrument is, and you leave it in there for years and years and years, and that’s where you get the long-run gains of the stock market.
If you’re a retiree who has a fixed income, it means that you don’t have a job that you can go make more money at to afford those essentials.
That gives the Fed some wiggle room to be aggressive about inflation, so hopefully, that gives them enough wiggle room that it’s not imminent that they mess up and put us into a recession.
And I did one of these interviews maybe a couple of weeks ago, and I said, you know, if inflation data keeps coming out bad, it’s out there — not seeing it talked about yet — but .75% could happen.
If markets had been reacting to Jerome Powell saying that, that would have been much different than just one of the Federal Reserve presidents, but the Fed has taken this, what we call a hawkish turn where they’re more concerned about inflation than job growth right now.
I think he’s been trying to formulate consensus ahead of time by announcing this, letting everyone take it in and adjust to it a little bit.