Posted October 30, 2023
By Matt Insley
Bond Yields, Powell and FOMC Policy
Once again, all eyes are on Jerome Powell’s Federal Reserve as the FOMC gathers for its two-day policy meeting on Halloween.
“The central bank, which lifted its benchmark short-term rate to a 22-year high in July, is expected to hold it steady this week,” says an article this morning at The Wall Street Journal.
Paradigm will keep you up-to-date.
That said: “The impact of higher yields on the economy is set to feature prominently in deliberations…
“Higher yields can tighten financial conditions through lower stock valuations, a stronger dollar and wider spreads between Treasury yields and private lending rates,” the article notes.
Concerning lower stock valuations…
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Your Rundown for Monday, October 30, 2023...
“The Type of Market We’re In Right Now”
“As investors, we have to think carefully about offense and defense,” says Paradigm’s income-investing ace Zach Scheidt.
“During bull markets when stocks trend higher, it’s important to stay invested and give your bullish plays the benefit of the doubt,” he says.
“That means when a quality stock pulls back, you should be willing to hold on, knowing that it’s likely to rebound after a few days.
“That's how you play offense. And it's how you accumulate wealth when stocks trade higher.
“On the other hand, when markets weaken, you want to keep your investments on a shorter leash,” Zach says.
“Sure, your best stocks will hold up better than the rest of the market. And you want to keep your capital in these plays.
“But many of your more speculative trades may turn lower…
“That's the type of market we're in right now.
“So for speculative positions like popular growth stocks or unprofitable tech companies, it's better to sell once these stocks turn lower.
“That way if this market continues to sink, less of your capital is at risk.
“I hope you'll look through your investment portfolio and pick out which vulnerable stocks you should cut this week.
“This market pullback will eventually find support,” Zach says. “But given the risks in play right now, it's important to protect the wealth you have worked so hard to save.”
Market Rundown for Monday, Oct. 30, 2023
The S&P 500 is rebounding somewhat this morning, up 0.75% to 4,145.
Oil’s down almost 2% to $83.90 for a barrel of WTI.
Gold, according to Kitco, is at a key level: above $2,000 per ounce.
And Bitcoin is up 0.30% to 0.30% to $34,700.
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