Markets Focus on the Fed
What is it?
So far this year investors have been calling the Fed’s bluff of keeping rates higher for longer. However, the Fed may not be bluffing as they continue to hold that stance.* Some inflation data has subsided but not down to the long term goal levels that the Fed has in mind. So really, inflation has continued on above the Fed’s target rate after the rapid rise in prices last year. Also, employment data has shown resilience while it is not as good as it was before the Fed raised interest rates.
Why does it matter?
“Fed Chair Jerome Powell has once again reinforced the “higher for longer” mantra that has underpinned most of his, and his officials’, communications this year, no matter how much market participants have bet otherwise.”*
So the end may be near, but not inherently as near as some investors believe. Whatever the Fed decides could impact the markets especially if they do so in a surprising way. There is currently “anticipation of at least one more Fed rate hike before 2023 draws to a close.”*
Global Growth may Slow Down
What is it?
After flooding the economy with money and low interest rates, places across the world tried to gauge when that free money would be paid for. It may come back to hit the working class as businesses prepared for these changes ahead of time. The U.S. is not alone in this interconnected global economy.
Why does it matter?
Inflation of prices may be a reason for revenue growth as companies struggle to grow when adjusted for inflation. The government helped many people with low income early on, but that money just pushed inflation higher. Soon the economy may feel the contraction imposed by the economic tools of the Fed or taxes. That could mean less variable spending as wages struggle to keep up with spending. Many people may need to adjust their budgets with student loans and other costs coming back into play coupled with higher interest rates. If inflation really does get tamed then economic growth could be in for a rude awakening that shows not much growth has taken place. If that is true for companies then their investors could be wary of the possible downside impacting their performance. We will continue to analyze what parts of the world are outperforming others in the stock market.
Other articles we found interesting this week:
Current 401(k) portfolio
Our last 401(k) portfolio reallocation: 8/14/2023.
Want more information?
The weekly market insight provides a window into the process we use in our investment management process. At Breakaway, we believe markets are always changing and require a nimble yet data-oriented approach.
Our process attempts to identify trends and momentum in the financial markets. With that information, we align our clients’ portfolio accordingly in the hope to help our clients accomplish their life goals while attempting to lower the risk of a large drop in their portfolio.
*Amanda Cooper. “Powell signals no retreat, no surrender”. Reuters. 8/28/2023. https://www.reuters.com/markets/us/global-markets-view-usa-pix-2023-08-28/
**Howard Schneider. “Post-pandemic, world facing gloomy stew of debt, trade wars and poor productivity”. Reuters. 8/28/2023. https://www.reuters.com/business/post-pandemic-world-facing-gloomy-stew-debt-trade-wars-poor-productivity-2023-08-28/
Educational use Only. The market update published by Breakaway Financial Group LLC (“Breakaway”) is intended to be educational in nature and is not intended to be a recommendation for any specific investment product, strategy, plan feature or other purposes. Accordingly, it should not be construed by any consumer and/or prospective client as solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation.
Advertising and Marketing. Communications such as this are not impartial and are provided in connection with advertising and marketing. This material is not suggesting a specific course of action or any action at all. Prior to making any investment or financial decisions, an investor should seek individualized advice from a personal financial, insurance, legal or tax professional that takes into account all of the particular facts and circumstances of an investor’s own situation. No person associated with Breakaway is a licensed attorney or tax professional and the information contained herein should not be considered tax or legal advice.
Links to Third Party Content. This Market Update contains links to articles or other information maintained by unrelated third parties. You acknowledge and agree to the following: All such information is provided solely for convenience purposes only because we believe that it may provide useful content. and all users thereof should be guided accordingly. We disclaim any responsibility for the link’s performance or interaction with your computer, its security and privacy policies and practices, and any consequences that may result from visiting it. We do not control the content published by the third-party; we do not guarantee any claims made on it, nor do we endorse its sponsor or any of the content, policies, activities, products or services offered by any advertiser on the site. Breakaway assumes no liability for any inaccuracies, errors or omissions in or from any data or other information provided by the third party and inclusion or reference by Breakaway to any third party link should not be construed by any consumer and/or prospective client as a solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation, over the Internet.
Important Information regarding Registration Breakaway Financial Group, LLC and/or Patrick Traverse offer investment advisory and financial planning services through Belpointe Asset Management, LLC, (“Belpointe”)500 Damonte Ranch, Parkway Building 700, Unit 700, Reno, NV 89521, an investment adviser registered with the Securities and Exchange Commission (“SEC”). Registration with the SEC should not be construed to imply that the SEC has approved or endorsed qualifications or the services Belpointe offers, or that its personnel possess a particular level of skill, expertise or training. It is important to read disclosures pertaining to Belpointe Asset Management at this link https://belpointeasset.com/disclosure/. Additional information about Belpointe and Patrick Traverse is available on the SEC’s website at www.adviserinfo.sec.gov.