After they witnessed a record run of seven consecutive interest rate hikes by the Federal Reserve, markets expect more of the same.

In the following months, the Fed plans to raise interest rates to 5.00%–5.25%. That’s an increase of 0.7pp to 0.9pp this year.

That’s an outlook for at least the first half of 2023. By the end of the year, though, economists expect interest rates to drop.

Estimates point to a drop back to 4.4%. That’s where they are today. Eventually, the market hopes that the “pivot” will happen this year.

The Fed indeed has a long-term target to lower inflation and keep interest rates at around 2%. But it doesn’t sound confident about getting there within a year. It maintained a hawkish tone and planned to keep rates high throughout the year. At least officially…

At the same time, markets are more optimistic about the economy. They almost deny the possibility of a recession. That’s wrong, as most economic indicators are flashing red.

It’s true—initial jobless claims remain low, but that can change quickly. Once businesses begin facing lower sales, cutting their growth outlooks, and laying off massive numbers of employees, we’ll likely face a full-scale recession.

In the next couple of months, watch the labor market data. Investors could do worse than exercise caution, at least when it comes to the popular stock indexes.

We are still in the bear market with high odds of a recession. Be prepared.

The White House Announces Long-Awaited Support for the Nuclear Sector

Before the end of 2022, the US Department of Energy (DoE) awarded four uranium supply contracts to US-based companies.

These contracts are part of a plan to build strategic uranium reserves and support the domestic nuclear industry.

In recent years, uranium prices have been depressed, and most American uranium miners halted their activity. If they continued producing uranium, they would be losing money.

Now it’s about to change.

Most of the world’s uranium supply is controlled by Kazakhstan, a country aligned with the aggressive Russian regime. The White House is looking to cut the country’s reliance on foreign uranium and rebuild its domestic nuclear supply chain.

That’s why DoE is building strategic uranium reserves right now. The first round includes contracts for up to 1 million pounds of uranium.

So far, the awarded contracts secure at least 700,000 pounds of uranium. The fourth contract is not disclosed in terms of volume but carries a value of $18.5 million.

Altogether, the total volume of uranium awarded for strategic reserves should be close to 1 million pounds. Exactly in line with DoE’s target.

Moreover, the White House’s press release indicates that the US government will be willing to pay a premium over the metal’s market prices. DoE is paying more for domestic uranium, and this policy will likely persist.

This is bullish for US-based uranium miners. They can now restart their mines and help the US reduce its reliance on imported nuclear fuel.

We are optimistic about the US nuclear industry. Whether the country’s economy is about to face a recession or not, the uranium mining sector has just got a boost from the White House itself.

Thank you for your loyal readership,

The Financial Star team