The stock market has had significant recovery. The S&P was down 13% at one point this year, but recovered to ~4.9% in Q1. Data continues to show an inflation problem along with supply chains challenges (including China).
- 8 of last 11 tightening cycles have led to recession
- With inflation so high, this tightening will be aggressive
- Wages aren’t keeping up with inflation (5.6% vs. 7.9%)
- Fed funds futures pricing in a 2.50% Fed funds rate by end of year
The Center for Retirement Research at Boston College estimates that approximately half of working-age households are “at risk,” meaning that they’re on track to fall more than 10% short of the income that they’ll need to retire comfortably. As of December, ~1/3 of people aged 65 – 69 were employed, and as of 2018, life expectancy was 77 for men and 82 for women.
- By 2030, there will be more than 73MM people age 65 and over
- 21% of total U.S. population
- On average, people require ~75% of pre-retirement income to ensure a comfortable
- The well-off might be fine with 50%
- Poorer people might need 100%
Strategic Petroleum Reserve
Biden announced a 1MM barrel release of oil per day for six months. Making this the largest release of SPR ever (180MM barrels total). OPEC+ is increasing output by 432K barrels per day. Biden criticized American oil and gas companies for prioritizing shareholders over customers – saying that they made $80B in profit last year all while sitting on 9,000 approved, but unused, drilling permits on federal lands.
- SPR holds ~568MM barrels
- Would leave us with ~400MM barrels (lowest since 1984)
- Earlier this month, Biden had announced release of 30MM barrels from US +
30MM from international partners
- OPEC+ is increasing output by 432K barrels per day