9.25.23: Stocks rise and Bonds fall as Market digests Fed Talk

For Public Readers: Weekly Key U.S. and China brief market notes by Larry Cheung's Analyst Staff Team for our Public Email List

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Sep 25, 2023

Make sure to check out Interactive Brokers above as idle cash now will yield more than 4.5% as the Fed just raised rates.

Note from Tim Chang: After the central bank decisions last week, analysts are increasingly concerned that rising oil prices risk bringing back inflation, which will make it difficult for policymakers to reduce rates anytime soon. Hedge funds boosted exposure to oil, betting that tightening supplies will stoke demand.

Key Investing Resource: Strategist Larry uses Interactive Brokers as his core brokerage. Feel free to check out IB. I currently park excess cash at Interactive Brokers. Check it out. It’s a great brokerage.

In our emails, we will provide the following coverage points:

Brief Overview of U.S. & China Markets
Macro Chart in Focus
U.S. & China Upcoming Economic Calendar
Chart That Caught Our Eye

U.S and China Markets Brief Snapshot 🇺🇸 🇨🇳

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S&P 500 Index: 4320.06

KWEB (Chinese Internet) ETF: $27.51

Analyst Team Note:

Macro Chart In Focus

Analyst Team Note:
Global debt reached a staggering $307 trillion in the first half of 2023. As higher interest rates begin to impact consumers and companies, some are skeptical of a smooth economic transition. Signs of economic weakenss are evident, with challenges such as rising fuel prices in the US and China turning to policy support. Additionally, countries like the UK, which amassed significant debt during the pandemic, now face the challenges of higher interest rates, with global debt projected to reach 337% of GDP by the end of 2023.

Upcoming Economic Calendar

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U.S Economic Calendar (Upcoming Data Points)

China Economic Calendar (Upcoming Data Points)

Analyst Team Note:
A study from the Fed found that 80% of American households, excluding the top 20% wealthiest, have depleted their extra savings and possess fewer liquid assets as of June this year compared to March 2020, when adjusted for inflation.
While the richest 20% saw their cash savings grow by 8% since the onset of the pandemic, the poorest 40% witnessed an 8% decline, and the middle 40% experienced a dip below pre-pandemic levels.
Despite this, the total household net worth surged by $5.5 trillion from April to June due to gains in housing and stocks, which primarily benefit the wealthier segments.

Chart That Caught Our Eye

Analyst Team Note:
Republicans anticipate a 5% inflation rate over the coming year, surpassing even the most pessimistic predictions from the FOMC's recent "dot plot," while Democrats expect a 2% rate. What’s fascinating is that even Democrats foresee inflation surpassing 2.5% in the longer term, a perspective that could be concerning for the Federal Reserve.