A decidedly pessimistic week for investors, particularly on Friday when the PCE Price Index was released, indicating inflation still rising(!) and suggesting the Fed’s rate increases to date have had no effect yet on lowering consumer prices.
The PCE (personal consumption expenditures) Index measures the price of basic consumer goods, not business goods, and is the main index watched by the Fed. With investors looking to consumer spending as the cure for the current recession as they have in recessions past, rising prices was not good news. It also means higher rates by the Fed for longer periods of time than previously anticipated, extending the recession. On that, stock prices plunged on Friday as alarmed investors panicked out of stocks.
Once again, though, analytics suggest institutional investors were not among the sellers – they are still holding. So we still hold as well, but giving back a large chunk of our gains in long positions. Very few trades signaled despite most stocks declining significantly.
All in all, another unproductive week with the exception of our short positions, most of which saw gains increase. These highly volatile market conditions remain tough even for traders like us to significant forward progress, but at least we are better off than investors in Warren Buffett’s Berkshire Hathaway which reported record losses for 2022.
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