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We Have Fed Lift Off

The Federal Reserve (Fed) is widely expected to hike rates this week for the first hike since December 2018, but the worries about Ukraine are still swirling. This week in our latest LPL Market Signals podcast, Jeff Buchbinder and Ryan Detrick discuss it all, while also taking a look at the economy.

Here's the Hike, Now What?

The strategists discuss that rate hikes by themselves aren’t a bad thing. In fact, Ryan notes there are usually years left of stock and economic gains after the first rate hike. Jeff adds that the market might be looking for six hikes this year, but we think four or five makes more sense given the continued geopolitical worries. Lastly, they discuss the record-breaking consumer inflation and why a peak in inflation is still likely during the second quarter.

The Latest on Ukraine

The strategists discuss the huge moves we’ve seen from various commodities and why that is likely to impact Europe more than the U.S. Jeff notes the U.S. doesn’t trade much at all with Russia, while Germany gets nearly half of the energy (crude oil and natural gas) from Russia. For this reason, LPL Research is more cautious on developed international, while they see more opportunity in the U.S.

The Economy is Slowing, but Not Stopping

LPL Research recently lowered their 2022 GDP forecast to 3.7% from 4-4.5%, but Jeff adds that we made that call back in October and a lot has changed, and 3.7% growth is still a very solid number. Ryan mentions that S&P 500 Index earnings have been very solid so far in 2022, with estimates actually up nearly 3% so far this year. Overall, the economy is slowing some, but it isn’t coming to a halt.

Source: LPL Research, Bureau of Economic Analysis 3/04/22

Economic forecasts may not develop as predicted.

Gross Domestic Product (GDP) is the monetary value of all the finished goods and services produced within a country’s borders in a specific time period

Tune in now

Listen to the entire podcast to get the LPL strategists’ views and insights on current market trends in the US and global economies. To listen to previous podcasts go to Market Signals podcast. You can subscribe to Market Signals on iTunes, Google Podcasts, or Spotify and find us on the LPL Research YouTube channel.

 

IMPORTANT DISCLOSURES

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth in the podcast may not develop as predicted and are subject to change.

References to markets, asset classes, and sectors are generally regarding the corresponding market index. All indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities. All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

All index data is from FactSet.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

This Research material was prepared by LPL Financial, LLC. 

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