Financial Trends
The Fed’s Delicate Balancing Act
The Federal Reserve of the U.S. issued a dual mandate which requires the central bank to keep their prices at a reasonable price and to maximize employment in the midst of inflation. The U.S. has suffered from inflation for months now, and markets and policymakers have been able to adapt to the situation and make money, but the Fed’s employment mandate is starting to cause concerns with the economy's growth. A report by Forbes expressed the need for the Fed to fight inflation by raising their interest rates aggressively. The tighter the monetary policy, the more likely the pace of the economic growth of the country will slow down.
Inflation had briefly fallen in April for the first time in eight months and the latest report of the U.S.'s GDP (Gross Domestic Product) showed that first-quarter economic contraction was worse than originally projected. Currently, participants in the market have lowered their expectations for how aggressive policymakers will be in raising the Fed funds rates in the upcoming FOMC (Federal Open Markets Committee) meeting. During May, the federal funds rate was approximately a 50 bps raise, but in the upcoming months of June, July, and August, it is likely to see a 75 bps raise.
Supply Management Hiccups
The Institute for Supply Management (ISM) increased by 0.7 points to 56.1% in June due to there being more new and export orders, and employment levels growing at a faster rate. Fifteen industries reported significant growth, including various chemical products. The only industry that reported a decrease is furniture and furniture-related products. The industry, coupled with new orders, production, and inventories, dealt with backlogs of orders as they struggled to keep up. The ISM in the furniture industry measured how much inefficiency there is in the supply chain and noticed that delivery times for furniture were increasingly delayed. According to JP Morgan Global Manufacturing PMI, manufacturing started to increase on a global scale towards the end of May as it rose 0.1 points to 52.4.
However, the output started to decline because of the tighter and stricter regulations that China imposed on their manufacturers, limiting their production. China enforced these regulations because of the input prices and inflation remaining high. Despite these regulations that China has imposed, numerous national manufacturing companies in China have continued to expand, demonstrating their resilience in late May, and are projected to continue expanding for the rest of 2022.
Financial Guidance
“A formal education will make you a living; self-education will make you a fortune.” ― Jim Rohn
While education is very important, the things that you learn outside the classroom and in real life are just as important in making money, if not more.
Money Fact
Besides being the medium which you buy everything with, money can also serve other purposes. Pennies can be used as a pest deterrent, as if buried in soil, the zinc and copper in the pennies create an electrical current for garden pests.