Inflation current is running near its highest levels in more than 40 years and is well above the Fed's 2% target. "I do know we have a job to do and I know we're committed to doing it," he said. Though he traditionally has been more dovish, or in favor of lower rates, in his approach to monetary policy, his remarks Thursday echoed some of his recent comments that he thinks the central bank needs to stay aggressive. Kashkari did not indicate whether he would be in favor of a third consecutive three-quarter-point interest rate hike at the Fed's next meeting in September. "We know we have more work to do in raising rates to bring inflation down." "The question right now is, can we bring inflation down without triggering a recession? And my answer to that question is, I don't know," he during a luncheon Q&A in his home district. He indicated that's a price the economy may have to pay. Minneapolis Federal Reserve President Neel Kashkari said Thursday that he's not sure whether raising interest rates to halt inflation will lead to a recession. GMO managed almost $72 billion as of the end of the first quarter 2022. inflation is assumed to mean revert to long-term inflation of 2.2% over 15 years." GMO pegs the long term historical U.S. The returns are projected in after-inflation real terms, in local currency and assume a return on U.S. bonds -2.4% and international bonds (hedged for currency) at -3.4% per annum. inflation-linked bonds are forecast to return - 1.8%, U.S. The only positive return GMO projects in fixed income is emerging market debt, at 2.7% annually over the seven years. smallcaps are projected to return -1.9% each year and U.S. Emerging market stocks as a whole are estimated to return 4.9% annually, international smallcap stocks 3.2% and international large stocks 1.6%. Emerging market value stocks are forecast to return 8.5% annually over the next seven years, the best among five classes of stocks measured. Grantham Mayo van Otterloo, the Boston-based money manager co-founded by noted investor Jeremy Grantham in 1977, is out with its latest forecasts for stock and bond returns over the next seven years, and it again favors emerging market stocks over U.S. "I think the market is going to bounce a little bit back and forth probably for the foreseeable future, right now with a positive trend, because the market is still embedding within it the hope that the Fed is wrestling down inflation." "The thing in the driver's seat is the Fed and what's propelling them - the gas in the Fed's tank - is inflation," said Cliff Corso, chief investment officer at Advisors Asset Management. Investors had hoped the Fed might slow the pace of its rate hikes after July's better-than-expected consumer price index. The central bank said it remains committed to fighting inflation, but indicated it could adjust its pace of tightening based on market conditions. Thursday's moves came after the Dow on Wednesday fell nearly 172 points - snapping a five-day winning streak - as traders parsed through the minutes from the Federal Reserve's July meeting. 13, while existing home sales dropped nearly 6% in July. Initial jobless claims fell to 250,000 for the week ended Aug. More data released Thursday provided clues into the state of both the jobs and housing markets. Kohl's shares slid after the company cut its guidance while BJ's Wholesale jumped after topping estimates.
The results offered insight into the health of the consumer. Retail earnings continued Thursday with reports from Kohl's, Bath & Body Works and BJ's Wholesale. Thursday's move bring the Dow and S&P 500 into positive territory for the week, up 0.7% and 0.08%, respectively. The Dow Jones Industrial Average added 0.06%, or 18.72 points, to 33,999.04. The S&P 500 and Nasdaq Composite rose slightly higher Thursday as traders fought to resurrect the recent market rally that slowed earlier this week.
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