Markets barely achieved a positive close on Wednesday, to create a string of positive action for the first five trading days in January. (Markets are closed today in honor of the late President Jimmy Carter.) There's a market consolidation underway, with the 20-DMA and 50-DMA about to cross. Lance & Michael discuss the Fed's sentiment shift about inflation, and the non-corellation between interest rates and inflation. The Fed may have cut interest rates, but markets have raised them; the actual effects of Fed rate cuts are deflationary. Fed policy is still restrictive; economy is back to "normal" with higher rates. Lance & Michael discuss interest rates: The cost of money. Unlike short- and medium-term gyrations in stock prices, which are often due to changes in investor sentiment, the bond market has a much more fundamental grounding. Interest rates, representing the cost of money, strongly impact economic activity and inflation in a highly leveraged economy like ours. Thus, economic growth, inflation, and Treasury bond yields are highly correlated. The death-defying Dollar as fiat currency (what is currency?) Gold is not a currency; the Dollar vs the Euro. What is driving sentiment? a.) Deficits & Debt, and b.) inflation. NOTE: 1/3 of inflation is shelter costs, data collection for which is flawed.
SEG-1: Markets Eke Out Winning First Five Days of January
SEG-2: The Fed's Sentiment Shift About Inflation
SEG-3: Explaining our Fundamental Bond Model
SEG-4: The Death-defying US Dollar
Hosted by RIA Advisors Chief Investment Strategist Lance Roberts, CIO, w Portfolio Manager Michael Lebowitz, CFA
Produced by Brent Clanton, Executive Producer
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Watch today's show video here:
https://www.youtube.com/watch?v=hx9jVRa0-gc&list=PLVT8LcWPeAugpcGzM8hHyEP11lE87RYPe&index=1&t=3s
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Articles mentioned in this report:
"Why Are Bond Yields Rising?"
https://realinvestmentadvice.com/resources/blog/why-are-bond-yields-rising/
"Curb Your Enthusiasm” In 2025"
https://realinvestmentadvice.com/resources/blog/curb-your-enthusiasm-in-2025/
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The latest installment of our new feature, Before the Bell, "DMA Crossovers Are Not a Death Knell," is here:
https://www.youtube.com/watch?v=RCfM5mTOJBc&list=PLwNgo56zE4RAbkqxgdj-8GOvjZTp9_Zlz&index=1
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Our previous show is here: "Market Reversal: Implications Now,"
https://www.youtube.com/watch?v=56z2LmMIvrQ&list=PLVT8LcWPeAugpcGzM8hHyEP11lE87RYPe&index=1&t=1s
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