How the Week Ended

Took some vacation. Business matters handled as needed. (The small business owner is never fully detached from work. Not sure Millennials get this, but if they figure out how to run a small business without being "on the hook," I'd like to hear about it.) 

Despite the business running smoothly, markets didn't. On Wednesday, Powell reported on the Fed meeting. He took what's come to be characterized as a "hawkish" stance. Me thinks these days hawkish means the Fed doesn't swear it will hold rates low forever, until the Lord returns from on high. What he actually said, though, was that the Fed would likely raise rates starting in 2023 - almost two years from now. Yeah, hawkish.

The stock market, which purportedly doesn't like a hawkish Fed responded by dropping - sort of. Ultimately, though, it held its head high and locked into its recent trading range. No big deal. As for bonds, the yields bumped up after their recent trip down the escalator. Nothing too dramatic. 

Then, two days later, came Friday. One of the Fed governors sounded the inflation alarm. Now, recall that Powell took his sort-of hawkish stance because of the possibility that inflation would get the better of the almighty Fed's tinkering. So why this governor's comments on Friday lit the fuse as it did is beyond my pay grade. But it did. Stocks dutifully dropped, with the Dow down over 500 points, the S&P over 50 points. That's more like it. With that, bond yields sunk back to the correction ooze 10-year around 1.45, 30-year around 2.01. Low - meaning bonds rose.

Gold, on the other hand, dropped quite a bit on Wednesday, after the Fed announcement. And they continued drooping the rest of the past week. This all as the US dollar rallied, firing up to the heaven's more than it has in many months. But rather than opine on the reported "reasons" why all this happened (e.g., strong dollar, weak gold, weak oil; inflation threat, Fed tightening (rates higher, bond purchase taper, blah-blah-blah), for Gold a correction was due after its recent run-up. For those increasing exposure to precious metals, this could be the time to consider adding to positions, if that's true.

Commodities and resource stocks took it on the chin in the midst of all this - before the general stock market did on Friday. Having had a big run up, they were due for a correction. As for the general stock market, what's up with Friday's drop? A long-expected correction after recent all-time highs, with new highs coming soon?

Well, after weeks of quietude in the markets (with the possible exception of gold and silver which did have a bit of a run some weeks ago), things sparked while I was on vacation. Thanks be to the market gods we have a plan in place for our buys and sells, with the somewhat noisey action not requiring any action - at least for now. So vacation remained peaceful despite the noise.

As for next week, well, vacation will be over. We'll be ready for what comes. Are you?