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Market Rates Might Meander Higher

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In his podcast addressing the markets today, while commenting on market rates, Louis Navellier offered the following commentary.

If you wish to listen to this commentary, please click here. 

Market Rates Meandering Higher

We are having a nice rebound today from Friday’s sell-off, and I just wanna reiterate that this is a natural oscillation. If history repeats, we could be down tomorrow, then up on Wednesday, then down on Thursday, and possibly up on Friday. So just get used to these up-down, up-down oscillations because they are going to continue.

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The 10-year Treasury is yielding 3.02% today. The Fed is withdrawing its quantitative easing pretty aggressively right now so market rates might meander higher. 

Saudi Arabia has raised the price of its oil because Asian economies are coming back a little faster than anticipated. So crude oil is $118 right now, but it could be $130 in several weeks because we're in peak summer driving demand. 

Load Up on Energy

The CPI is going to come out on Friday and we expect it to still be very high but possibly show some moderation since March, but not by a lot because energy prices and food prices are still sky-high. In the event that inflation goes higher than it was in March, it would not be a good thing.

The big news for June is usually the annual Russell realignment. What Russell does is announce their list and they keep refining it in the next few weeks. We are very fortunate that many of our stocks were named to be added to the Russell indices. So, we will be benefiting from that annual Russell realignment.

I want to remind investors to not get too excited when the market rallies because it is going to continue to oscillate. There is just too much uncertainty out there. All I can say is to buy energy stocks when you can because they are overpowering our portfolios and they are going to continue to overpower our portfolios for the foreseeable future.

Finally, the Fed is expected to raise rates three times. They are going to get the Fed funds rate up to 2.25% come September, and then I expect them to pause. The main reason is the Fed does not normally raise rates a week before the midterm elections. We are looking at the fed to literally triple the federal funds rate from 0.75% to 2.25% after three consecutive half a percent rate increases, and then that will get the Fed closer to market rates. The Fed will probably observe things after.

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Louis Navellier

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