All Eyes On The Fed Decision This Week

Is this the start of a new Bull Market?

Author

Mark Roussin
June 12, 2023

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Market Talk ⏪

We always begin with 5 important topics from the week prior and/or related to the week ahead for investors to be mindful of:

  1. Market continues to remain TOP heavy. As we did last week, we looked at the difference between the equal weight S&P 500 ETF (RSP) compared to the market cap weighted S&P 500, which showed the mega tech stocks have largely pushed the total market higher. As of the end of last week, the equal weight S&P 500 ETF is up 2.9% compared to the S&P 500 being up 12.9%, which is a huge gap. Once there is a crack in a few of these mega tech stocks, it could send the total market into an area of concern, testing the true resiliency of this rally.

  2. The Start of a NEW Bull Market. Last week the S&P 500 ended the bear market that it has been in for the past 18 months, as the S&P 500 climbed over 20% from its 52-week highs. Can this new bull market be trusted or is this one final fake out before we pullback. I am in the latter camp, as I believe the move is much too top heavy and the rest of the market being left behind is not a healthy rally.

  3. Student Loan Repayments Begin. For the past three years, those that had student loans were not required to make any payments, which certainly contributed to the high inflation we have seen for the past year. However, as part of the recent debt ceiling agreement that was made, student loan repayments will once again be required to be made. This is going to lower the amount of discretionary spending consumers can make, which will pull out nearly $16 billion from consumers pockets.

  4. Will the Federal Reserve hike, skip, or pause. The Federal Reserve is once again scheduled to meet this week and make their next decision as to interest rates. Many economists are split as to the route the Federal Reserve will make over the course of their next two meetings. Some believe the Fed will skip this month before doing one final hike in July, meanwhile, others believe they will get the hike over with before pausing for an extended period. 74% believe the Fed will make no rate hike this month. It is becoming more and more clear that no rate cuts are expected to take place in 2023, which is a position I have held for the majority of the year.

  5. CPI data due out this week. The Fed’s interest rate decision is not the only big data point for investors this week. On Tuesday when the Fed begins their meeting, investors will be focused on the May CPI report, showing how the rising interest rates have impacted the high inflation over the past month. Investors are expecting a reading of 4.1%, which would be a nice decrease from the 4.9% increase in the prior year.

Deep Dive 📰

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  • Monthly Portfolio Updates

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This past week, PREMIUM subscribers were sent my latest Monthly Dividend Portfolio review, showing all my positions, my monthly dividend income, and all my buys and sells for the month.

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US Markets 🇺🇸

Here is a performance summary for US Equities:

Here is a look at US Treasuries:

The Fear & Greed Index measures market sentiment based on the following seven factors: put/call ratios, junk bond demand, stock price breadth, market volatility, stock price strength, safe-haven demand, and market momentum.

The Fear and Greed Index made a big move this past week and moved into EXTREME GREED territory, which is further putting me in a state of worry for the near-term. Currently, the index has a reading of 77, which is in line with the prior week reading of 65.

Earnings on Deck 💰

Earnings season is pretty much over as we have a quiet week on the earnings front this week. Here is a look at who's reporting this week:

Dividend News 📝

Here are some notable analyst upgrade/downgrades from the previous week:

  • Deutsche Bank upgrades Rio Tinto to buy from hold

  • Citi upgrades Rio Tinto to buy from neutral

  • KeyBanc downgrades Target to sector weight from overweight

  • Citi downgrades Target to neutral from buy

  • Oppenheimer names Costco a top pick

  • Wells Fargo names Nike a top pick

  • Morgan Stanley downgrades Dollar General to equal weight from overweight

  • D.A. Davidson downgrades Apple to hold from buy

  • Bank of America double upgrades McCormick to buy from underperform

  • Bank of America upgrades Molson Coors to neutral from underperform

  • MoffettNathanson upgrades AT&T to market perform from underperform

  • Bank of America upgrades Cigna to buy from neutral

  • Atlantic Equities initiated FedEx as overweight

Economic Data This Week 📆

Monday

  • None

Tuesday

  • Consumer price index (May)

  • Fed policy meeting starts

Wednesday

  • Producer price index (May)

  • Fed decision and statement

  • Fed chair Jerome Powell press conference

Thursday

  • Import/export prices (May)

  • Philadelphia Fed survey (June)

  • Empire Fed survey (June)

  • Retail sales (May)

  • Industrial production (May)

Friday

  • University of Michigan consumer sentiment and inflation expectations

Other Resources 📺

If you have not done so yet, check out my growing YouTube community where I publish weekly videos focused on building wealth through investing.

Here is the latest video I put out last week: Ranking These 10 REITs From BEST to WORST:

Here is another video I put out last week: Dividend Portfolio Update: My Top 5 Dividend Stocks:

Here are a few others of my latest videos:

If you enjoyed the newsletter, leave a LIKE and COMMENT down below. Also, if there is someone that could benefit from this newsletter, consider sharing it.

Have questions? You can email me directly at [email protected].

Happy Investing!

Mark

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