Who’s to Blame for the Market’s Roller-Coaster Ride

|October 8, 2022
federa reserve roller coaster

The market’s roller-coaster ride this week can be summed up easily…

This is what happens when you pin all your hopes and dreams on one person.

The market is hoping and praying Jay Powell and his Federal Reserve will finally reverse course on interest rate hikes.

Every piece of news, every word spoken, every data point released… sent the markets into a tizzy.

And that’s causing a lot of grief for investors.

The markets shot 4% higher earlier this week in a series of “bad news is good news” trading.

The Bank of England’s decision to buy bonds in order to stabilize the U.K.’s free-falling debt market, combined with Australia’s decision on Tuesday to slow its pace of rate hikes, raised hopes the trend would continue here…

We also got word that U.S. job openings saw their biggest fall in more than two years in August.

Did the news mean the Fed would pull back on rate hikes or even cut rates?


The folks at the Fed came out in droves this week to defend their rate hike efforts. In separate remarks, we heard from…

  • Fed Governor Christopher Waller
  • Chicago Fed President Charles Evans
  • Minneapolis Fed President Neel Kashkari
  • Cleveland Fed President Loretta Mester
  • Fed Governor Lisa Cook
  • Fed Governor Philip Jefferson.

All were united in the message that they will keep raising rates until inflation is properly tamed.

And then…

The other shoe dropped.

On Friday, the Labor Department reported that employers added a larger-than-expected total of 263,000 jobs last month. As a result, the unemployment rate fell from 3.7% to 3.5%.

It was the opposite of what the markets wanted.

Slowing labor demand is at the center of the Fed’s battle against inflation. And the persistent strength of the jobs market means the Fed has more work to do.

That means more rate hikes… Another 75-basis-point hike next month now seems all but certain.

The markets reacted to this news as you’d expect… falling off a cliff at Friday’s opening bell and trending down from there.

Chart: S&P 500
In this week’s monthly video call with his paid subscribers, Andy talked about the tough road ahead for the Fed.

He said, “This is going to take a long to time play out, and the markets aren’t going to like that. It’s going to be volatile.”

He continued, “But to save the nation and its currency, I think rates have to go higher. To save the stock market, that’s a different story. That’s not the Fed’s job.”

Sure seems like the markets need a reminder.

Amanda Heckman
Amanda Heckman|Editorial Director

Amanda Heckman is the editorial director of Manward Press. With unrivaled meticulousness, she has spent the past dozen or so years – give or take a few sabbaticals – sharpening Andy’s already razorlike wit. A classically trained musician and a skilled writer in her own right, Amanda takes an artistic approach to the complex world of investing. Her skill has led her to work with numerous bestselling authors, award-winning financial gurus and – lucky for us – the fine folks at Manward Press.