From the desk of Vance Howard:
The Fed meeting yesterday shed a bit of light on the current monetary situation with inflation rising. We are somewhat concerned that inflation and inflation expectations are running above the Fed’s long-term target of 2%, but we have not hit maximum employment yet. We think the Fed should not be overly concerned with a low-2s inflation expectation-reading for a quarter or two.
However, if inflation persists or moves higher, the Fed will need to react. The Fed is assuming inflationary pressures are largely transitory and that long-term inflation expectations will be well-anchored around 2%. So, the Treasury market needs to prepare for higher short-term rates, but ultimately the Fed will not let inflation get out of control, which could temper any rise in longer-term yields.
The data points this week hardly seem to support strengthening inflationary conditions. In fact, look at some of the commodities below:
- Lumber rolling over
- Copper might be rolling over
- Producer Price Index ex-food ex-Energy at +0.7% vs 0.5%
So, from the market's perspective, the FOMC is not on its heels if it continues to suggest "transitory" inflation. In any case, I do not have a strong view on market direction this week.
Also, this week:
- single stock option expiration
- single stock futures expirations
- index option expiration
- index futures expiration
This happens four times per year and will cause some unusual trading this week.
Copyright © 2021, All rights reserved.
Our mailing address is:
Howard Capital Management Inc.
1145 Hembree Rd
Roswell, GA 30076
This newsletter is a publication of Howard Capital Management, Inc. It should not be regarded as a complete analysis of the subjects discussed nor should the newsletter be construed as personalized investment advice. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. It should not be viewed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation.
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Howard Capital Management, Inc. (“HCM”), or any non-investment related content, made reference to directly or indirectly in this commentary will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this commentary serves as the receipt of, or as a substitute for, personalized investment advice from HCM. Please remember to contact your primary investment professional, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising HCM’s investment management services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment management services. HCM is neither a law firm nor a certified public accounting firm and no portion of the commentary content should be construed as legal or accounting advice. A copy of the HCM’s current written disclosure Brochure discussing our advisory services and fees continues to remain available upon request.
© 2021 Howard Capital Management, Inc. All rights reserved. Intended for receipt only and not for further distribution without the consent of Howard Capital Management, Inc.