So the consumer price index came in right about as expected—must be time for equities to party at least that is what is happening. Back in July the S&P500 had a setback of about 5%, but other than that there have been no setbacks that are worth noting. Buckets full of money overcome everything–and there remains plenty of cash rolling around to fuel stocks even higher. Even as equities go higher and higher the amount of money in money market funds continues to grow. ‘Katie bar the door’ if we get any kind of shift in allocations of these funds. I don’t see that happening with rates in the 4.50% area—maybe below 4% we will see some movement—no one knows, but for now I like a 4.5% rate for idle cash.
This is a monthly chart on money market funds.
Interest rates are flat or up or down 1 basis point. The talk now is a cut and then a pause by the FOMC–even heard talk of a reversal and potential for rate hikes next year. The latest forecast from the Atlanta Fed is for 3.3% GDP growth for the current quarter—with decent employment and good GDP growth, but inflation numbers above target, it is hard to make a strong case for rate cuts.
The uncertainty for the next few months keeps me from going ‘all in’ on perpetuals, but with plenty of shorter duration baby bonds out there to buy with yields in the 7-8% area I am not going to lose sleep over allocations too much right now.
