This week’s prime rate cut of .5% by the Federal Open Market Committee of the Federal reserve System says it all. Chairman Powell said that the economy is continuing its healthy growth and all economic indicators are headed in the right direction. Inflation is very close to the 2% mark–the FMOC target. Wages are rising faster than inflation which means that more people will be able to buy more goods and services because they have more disposable income. Unemployment continues at historic lows. The US dollar is strong against other world currencies. And stock market indexes are at historic highs. Typically the stock market is ahead of whatever “big money” thinks will happen in the near term future. So when the Dow, the S&P 500 and the smaller stock indexes (NASDAQ and RUSSELL 2000) all show record upward movement it is an indication that large investors are willing to take on the risks that buying stocks involve. In other words, money managers, investment firms, foundation trustees and very wealthy individuals–all expect a profitable investment climate for the foreseeable future. It also means that whatever the Biden team is doing–despite the constant chaos from the Trump camp–is clearly working. Think about it–if the current administration is so successful why would anyone consider replacing it with a team that condemns every policy now in play? Remember in November.
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