Clients & Friends
As-strong-as the economy is, reported inflation is still too high. Overall, recent inflation data showed a (continued) upward trend. It was slight, but the markets were expecting those numbers to start trending lower. The market doesn’t like uncertainty, and therefore we saw a selloff.
If you read my market update titled “The Ultra-Sensitive Market” from June, you can see that not much has changed. However, inflation is flattening, but the markets want to see a downward trend. The most noticeable (and significant) prices that have retreated are energy, which is a good start; I’m sure that you’ve noticed at the gas pump. Food prices, car prices, real estate, rents, etc. are still trending higher, the market doesn’t like it and is patiently waiting to rally.
If we look ahead, managing expectations seem easy, but not optimistically pleasant, and now we must wait until mid-October for the next round of data. Between now & then, the markets will likely continue to teeter without the hope of a significant rally, and the Fed was expected to raise rates, once again, and did so by another 75 basis points to continue their fight against inflation. Wages are still elevated, and the labor market is still strong, so the Fed still has a lot of work to do. These things should be good for the economy, right? Yes, they are, unless inflation is running rampant. Unfortunately, this is not an easy fix, and we can expect it to trickle into next year.
On a positive note, supply chains are significantly improving which will help put relief on (some) prices. Also, many big box retailers are still holding onto record levels of inventory (from Covid) that they need to unload. As a result, you can expect competitive price wars on these items as the holiday season approaches, which should help lower prices.
We are not out of the woods yet, and a market rally is taking longer than we hoped. Warren Buffet quoted “The stock market is a device for transferring money from the impatient to the patient”, he couldn’t have said it any better because patience is key to a successful long-term investment strategy.
We continue to stay committed to our strategy and remain selective on asset selection. If you have any questions about your investments, please don’t hesitate to contact us.
Andy Roberts
Private Wealth Advisor
RDG + Partners | RDG Wealth Management
10 Winthrop St. Rochester, NY 14607
(585) 673-2600 office | (585) 704-9043 cell
ARoberts@rdgwealth.com
www.rdg-ers.com
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