To The Moon

I have just posted about “views & reviews” on US interest rate on last day of May 2023 - “US Fed's Interest Hike In June. 3 Factors To Decide”.

If you haven’t read it yet, feel free to click above BLUE title to read. Give a “Like” after ok. Thanks.

In less than 24 hours, things have taken a “big” turn?

FOMC member Ms Loretta Mester have spoken about raising US interest rate by another 0.25% during the forthcoming FOMC meeting, June 13-14.

In her interview with The Financial Times, she said “I would see more of a compelling case for bringing [rates] up . . . and then holding for a while until you get less uncertain about where the economy is going.”

On the run up to a FOMC meeting, Fed members will usually socialize with press & media.

We should be coming across more news on “interest hike” in the 2 days before the “Blackout’ period starts (see below).

Therefore, “do not” be overtly surprised should the Fed decides to raise terminal rate from 5.0% to 5.25%, on 14 Jun 2023.

As with every interest hike, we will “witness” US market’s reaction in the following day/s.

So far, out of the past 10 interest hikes; it is with certainty that 90% of the time, market reacted “adversely”.

Take a look (see below) S&P 500’s movements immediately after interest hike and subsequently. Interesting data?

US Market (S&P 500 index) Reaction to 2022 & 2023 Interest Hikes (sampling):

Un-verified & un-validated data extracted from internet

Despite the multiple interest hikes, US inflation has not responded as “positively” to the Fed’s stimulus, as it has hoped.

I think the Fed must be out of its wits wondering what else could be done to bring inflation back to the comfort zone as quickly as possible.

Will it be another 0.25% come 14 Jun 2023? Your guess is as good as mine! LOL!

In the midst of doing my homework, I have come across a stock (there should be many out there, I managed to find one) that has “consistently” defied the market based on latest 5 interest hikes.

Not egging anyone to purchase, just sharing what I have found.

The stock is $Starbucks(SBUX)$ .

• Regardless of whether the stock was on an “upswing” or “downswing” movement, it somehow managed to “recover”.

• Now that Starbucks is on the down trend momentum, will it be able to repeat its feat again?

• One thing I am inclined to “not notice too much” is a stock’s price movement for year 2021 and 2022.

• This was the period when US market was awashed with a lot of liquidity due to quantitative easing (QE) adopted by the Fed.

Are you as surprised as I am about Starbucks bucking the trend overall?

• Do you think the Fed will proceed to raise interest rate by +0.25% in 2 weeks time?

• Do you think US market will react adversely to the interest hike, IF it takes place?

• Do you think Starbucks is a Buy?

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