The Fed likes what it sees, but not enough to cut rates... yet

[] when will it be enough？ [View in browser]( [View in browser]( [] JULY 4, 2024 [] [] PROSPERITY PUB MARKET TALK The Fed Likes What It Sees, but Not Enough To Cut Rates… Yet Jerome Powell recently highlighted the Fed’s cautious stance on cutting interest rates, despite seeing more of the kind of economic data that they’d like to see before issuing a rate cut. While Powell acknowledged the significant progress in taming inflation — falling from 5.6% in mid-2022 to 2.6% — he emphasized that the Fed is waiting for more consistent evidence before making any moves to lower rates. “We want to have more confidence inflation is moving down” to the Fed’s 2% goal before trimming rates, Powell stated at a forum hosted by the European Central Bank in Portugal. This echoes the cautious tone Powell has maintained since mid-June, despite inflation measures showing notable softening. For instance, the core inflation reading that excludes volatile food and energy items edged up by just 0.1% in May, bringing the annual increase down to 2.6%, the lowest since March 2021. However, Powell underscored, “That’s one month of 2.6%.” Adding to the complexity is the state of the job market. While the economy has shown resilience, with a robust 272,000 jobs added in May and an average of 248,000 per month so far this year, Powell highlighted the need for caution. “Because the U.S. economy is strong… we can afford to take our time and get this right,” he said. The Fed’s decision-making process is a balancing act between curbing inflation and avoiding a recession. While high-interest rates have helped cool down inflation, they also pose a risk of slowing down economic growth too much. The Fed’s key interest rate, which surged from near zero in March 2022 to a range of 5 to 5.25% by July 2023, is at a 23-year high. And even though inflation eased significantly in the second half of last year, it picked up again in the first quarter of this year, making Fed officials wary of cutting rates prematurely. Interestingly, this cautious approach contrasts sharply with market expectations from last year, when many anticipated 4-5 Fed rate cuts in 2024. Our own Jeffry Turnmire has warned many times about such market expectations, consistently warning that the economic conditions didn’t support multiple rate cuts. His caution seems to have been right on the money, as the conversation has shifted to possibly just one rate cut in September or later. He’s also been quick to remind viewers that rate cuts are not bullish. And while the market seems addicted to them, in reality low rates mean weak economic conditions. Adding fuel to the fire is the anticipation of the jobs numbers coming out tomorrow. A weaker-than-expected report could increase pressure on the Fed to consider a rate cut sooner rather than later. But with the unemployment rate still at a relatively low 4%, the Fed remains focused on achieving a more sustained reduction in inflation before making any moves. So long story short, while the Fed likes the progress it sees, it’s not enough to cut rates just yet. As Powell said, “We can afford to take our time and get this right.” For now, the markets will have to wait a little longer for any rate cuts, with the next few months of economic data being crucial in shaping the Fed’s decisions. — The Prosperity Pub Team [] [] Liberty Trades [Special 4th of July Discount] Unlock Monthly Income with Liberty Income Alerts! Join the exclusive Liberty Income Alerts today… And discover how to trade the unique end-of-month pattern he’s discovered on TLT! [Discover the power of trading TLT — and claim your special $1000 discount — now!]( [] [] TUCCI'S TWO CENTS The Art Of Timing The Trade Time — something we wish we all had more of and could manage better. And traders know this better than most. One of the most challenging parts of trading is timing your trades: When to get in, and when to get out… Not to mention, choosing an expiration if you are trading options. It can feel like a real guessing game when it comes to time. Like I said, this is especially true in options trading because we’re battling time decay from the moment we place a trade. Time decay is also known as theta decay. It’s the decrease in value of an options contract as it approaches its expiration date. It's caused by the diminishing of extrinsic value, which is the cost of owning an options contract. Time decay doesn't happen at a fixed rate either, the closer an option gets to its expiration date, the less time value it holds, and the more time decay increases on an exponential curve. What that means in reality is that as a trade gets longer in the tooth, the more desperate your situation as an options buyer becomes as the trade loses value in a hurry. That’s a very painful thing, because you could be in a perfectly good trade but then run out of time and lose money. [Let’s look at a hypothetical trade on Tesla.]( — Geof Smith [] [] [] [] JULY 4, 2024 [] [] PROSPERITY PUB MARKET TALK The Fed Likes What It Sees, but Not Enough To Cut Rates… Yet Jerome Powell recently highlighted the Fed’s cautious stance on cutting interest rates, despite seeing more of the kind of economic data that they’d like to see before issuing a rate cut. While Powell acknowledged the significant progress in taming inflation — falling from 5.6% in mid-2022 to 2.6% — he emphasized that the Fed is waiting for more consistent evidence before making any moves to lower rates. “We want to have more confidence inflation is moving down” to the Fed’s 2% goal before trimming rates, Powell stated at a forum hosted by the European Central Bank in Portugal. This echoes the cautious tone Powell has maintained since mid-June, despite inflation measures showing notable softening. For instance, the core inflation reading that excludes volatile food and energy items edged up by just 0.1% in May, bringing the annual increase down to 2.6%, the lowest since March 2021. However, Powell underscored, “That’s one month of 2.6%.” Adding to the complexity is the state of the job market. While the economy has shown resilience, with a robust 272,000 jobs added in May and an average of 248,000 per month so far this year, Powell highlighted the need for caution. “Because the U.S. economy is strong… we can afford to take our time and get this right,” he said. The Fed’s decision-making process is a balancing act between curbing inflation and avoiding a recession. While high-interest rates have helped cool down inflation, they also pose a risk of slowing down economic growth too much. The Fed’s key interest rate, which surged from near zero in March 2022 to a range of 5 to 5.25% by July 2023, is at a 23-year high. And even though inflation eased significantly in the second half of last year, it picked up again in the first quarter of this year, making Fed officials wary of cutting rates prematurely. Interestingly, this cautious approach contrasts sharply with market expectations from last year, when many anticipated 4-5 Fed rate cuts in 2024. Our own Jeffry Turnmire has warned many times about such market expectations, consistently warning that the economic conditions didn’t support multiple rate cuts. His caution seems to have been right on the money, as the conversation has shifted to possibly just one rate cut in September or later. He’s also been quick to remind viewers that rate cuts are not bullish. And while the market seems addicted to them, in reality low rates mean weak economic conditions. Adding fuel to the fire is the anticipation of the jobs numbers coming out tomorrow. A weaker-than-expected report could increase pressure on the Fed to consider a rate cut sooner rather than later. But with the unemployment rate still at a relatively low 4%, the Fed remains focused on achieving a more sustained reduction in inflation before making any moves. So long story short, while the Fed likes the progress it sees, it’s not enough to cut rates just yet. As Powell said, “We can afford to take our time and get this right.” For now, the markets will have to wait a little longer for any rate cuts, with the next few months of economic data being crucial in shaping the Fed’s decisions. — The Prosperity Pub Team [] [] Liberty Trades [Special 4th of July Discount] Unlock Monthly Income with Liberty Income Alerts! Join the exclusive Liberty Income Alerts today… And discover how to trade the unique end-of-month pattern he’s discovered on TLT! [Discover the power of trading TLT — and claim your special $1000 discount — now!]( [] [] TUCCI'S TWO CENTS The Art Of Timing The Trade Time — something we wish we all had more of and could manage better. And traders know this better than most. One of the most challenging parts of trading is timing your trades: When to get in, and when to get out… Not to mention, choosing an expiration if you are trading options. It can feel like a real guessing game when it comes to time. Like I said, this is especially true in options trading because we’re battling time decay from the moment we place a trade. Time decay is also known as theta decay. It’s the decrease in value of an options contract as it approaches its expiration date. It's caused by the diminishing of extrinsic value, which is the cost of owning an options contract. Time decay doesn't happen at a fixed rate either, the closer an option gets to its expiration date, the less time value it holds, and the more time decay increases on an exponential curve. What that means in reality is that as a trade gets longer in the tooth, the more desperate your situation as an options buyer becomes as the trade loses value in a hurry. That’s a very painful thing, because you could be in a perfectly good trade but then run out of time and lose money. [Let’s look at a hypothetical trade on Tesla.]( — Geof Smith [] [] [] [] ABOUT US: We believe that the opportunity for financial literacy and freedom belongs to all people, not just those who already have years of investing experience. Prosperity Pub provides an array of educational services and products that will help you navigate the markets and become a better investor. Trading is made simple through our online forum full of trading techniques to give you the best tools to kick-start your investing journey. We offer collaborative webinars and training; we love to teach. No matter the opportunity, we bring together a strong community of like-minded traders to focus on analyzing market news as it’s presented each day. DISCLAIMER: FOR INFORMATION PURPOSES ONLY. The materials presented from Prosperity Pub are for your informational purposes only. Neither Prosperity Pub nor its employees offer investment, legal or tax advice of any kind, and the analysis displayed with various tools does not constitute investment, legal or tax advice and should not be interpreted as such. Using the data and analysis contained in the materials for reasons other than the informational purposes intended is at the user’s own risk. DISCLAIMER: TRADE AT YOUR OWN RISK; TRADING INVOLVES RISK OF LOSS; SEEK PROFESSIONAL ADVICE. Prosperity Pub is not responsible for any losses that may occur from transactions effected based upon information or analysis contained in the presented. To the extent that you make use of the concepts with the presentation material, you are solely responsible for the applicable trading or investment decision. Trading activity, including options transactions, can involve the risk of loss, so use caution when entering any option transaction. You trade at your own risk, and it is recommended you consult with a financial advisor for investment, legal or tax advice relating to options transactions. Please visit [( for our full Terms and Conditions. [Unsubscribe]( This email was sent to {EMAIL} by Prosperity Pub 101 Marketside Ave, Suite 404 PMB 318, Ponte Vedra, Florida 32081, United States [Prosperity Pub]( [] ABOUT US: We believe that the opportunity for financial literacy and freedom belongs to all people, not just those who already have years of investing experience. Prosperity Pub provides an array of educational services and products that will help you navigate the markets and become a better investor. Trading is made simple through our online forum full of trading techniques to give you the best tools to kick-start your investing journey. We offer collaborative webinars and training; we love to teach. No matter the opportunity, we bring together a strong community of like-minded traders to focus on analyzing market news as it’s presented each day. DISCLAIMER: FOR INFORMATION PURPOSES ONLY. The materials presented from Prosperity Pub are for your informational purposes only. Neither Prosperity Pub nor its employees offer investment, legal or tax advice of any kind, and the analysis displayed with various tools does not constitute investment, legal or tax advice and should not be interpreted as such. Using the data and analysis contained in the materials for reasons other than the informational purposes intended is at the user’s own risk. DISCLAIMER: TRADE AT YOUR OWN RISK; TRADING INVOLVES RISK OF LOSS; SEEK PROFESSIONAL ADVICE. Prosperity Pub is not responsible for any losses that may occur from transactions effected based upon information or analysis contained in the presented. To the extent that you make use of the concepts with the presentation material, you are solely responsible for the applicable trading or investment decision. Trading activity, including options transactions, can involve the risk of loss, so use caution when entering any option transaction. You trade at your own risk, and it is recommended you consult with a financial advisor for investment, legal or tax advice relating to options transactions. Please visit [( for our full Terms and Conditions. [Unsubscribe]( This email was sent to {EMAIL} by Prosperity Pub 101 Marketside Ave, Suite 404 PMB 318, Ponte Vedra, Florida 32081, United States [Prosperity Pub](