Inflation and Interest Rates and Supply Chain Issues, Oh My!
The HCM-BuyLine® is still negative, and the intermediate-term trend is still down. We are sitting on a reasonable amount of cash and 1–3-month T-Bills. The market appears to be stabilizing after a very nasty selloff with the news of Russia pulling back troops from Ukraine. There are still a lot of negatives facing the market this year, with inflation at a 40-year high and interest rates moving up. Bonds are in a clear downtrend, and it looks like this is just the beginning of the pain for bond holders. This goes without saying but expect volatility the first half of 2022. From a chart pattern it looks like we are setting high highs and higher lows on a short-term basis, and this is encouraging.
Similarly, wait times for truck drivers are starting to improve in Newark, Miami, Houston, and Savannah. On the other hand, California is not. Could this be due to excessive restrictions?
If this data is correct, it could signal that supply chain tightness is easing. COVID-19 protocols are contributing to tightness, so as COVID-19 eases, inflationary pressures cool. At least this is the hope, now let’s see how it pans out. Finally, we do not see the Fed rising rates .50bp in March; .25bp makes more sense in our opinion.
