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<\/figure><\/div>\n\n\nShould this be a surprise?<\/strong> Not really!<\/strong> With gas prices moderating over the last several months, the average income taxpayer has more money to spend elsewhere, regardless of the higher prices (for now). Combine this with a current extraordinarily strong labor market and excess household savings, it is hard to imagine winning<\/strong> the inflation battle in a straight line<\/strong>.<\/p>\n\n\n\n As expected, the stock market<\/strong> sold down last week<\/strong>, obviously concerned the Fed may become more hawkish going forward. Prior to the last<\/strong> three inflation readings<\/strong>, investors were banking on 2 more rate hikes of .25%<\/strong> each, and then rate cuts<\/strong> later this year, as the economy slows due to higher interest rates.<\/p>\n\n\n\n Unless the economy starts to truly slow<\/strong>, I do not believe the Fed will be considering lowering rates in 2023. More likely, we will get a few more rate hikes <\/strong>and then rates will be left alone for several months, if not longer.<\/p>\n\n\n\n When this inflation issue is finally in the rear-view mirror<\/strong>, I do not see inflation reverting to 2019 levels of 2% and below. With the sheer number and strength of the millennial generation, overall spending on goods and services should be high for many years. I\u2019m thinking inflation in the 3%-3.5%<\/strong> range is likely at this point.\u00a0 <\/p>\n\n\n Corporate Earnings Winding Down<\/strong><\/p>\n\n\n\n 465 out of the 500 S&P 500 companies have reported 4th<\/sup> quarter<\/strong><\/a> profits, with 70% beating<\/strong> the consensus estimates. Profits have fallen by (3.2%).<\/strong> This is a true reflection of higher wage costs and higher supply costs that most business are grappling with. <\/p>\n\n\n\n This is where the rubber hits the road for the markets. How much further do profits need to fall before we see a reverse higher? I wish I knew the definitive answer, however keep in mind, consumers will spend as long as they have resources… whether that is income, cash, credit, or home equity!!<\/p>\n\n\n\n Markets<\/strong><\/p>\n\n\n\n All major indexes fell last week<\/strong> on the heels of inflation. The Dow dropped<\/strong> (2.99%),<\/strong> the S&P 500 (2.67%),<\/strong> the Nasdaq (3.33%)<\/strong> and the Russell 2000 (2.87%).<\/strong><\/p>\n\n\n\n Over the pond, foreign stocks fell (2.79%)<\/strong> and Emerging Markets (3.48%).<\/strong><\/p>\n\n\n\n The Yield on the 10-Year US Treasury this morning is 3.92%.<\/strong><\/p>\n\n\n\n So far in 2023, the Dow is down (.7%)<\/strong> the S&P 500 up 3.7%<\/strong>, the Nasdaq higher<\/strong> by 9%<\/strong> and the Russell 2000 7.5%.<\/strong> Foreign stocks are higher by 4.9%<\/strong> and Emerging Markets up 1.7%.<\/strong><\/p>\n\n\n\n I would expect volatility to continue for the foreseeable future…. Keep in mind, volatility does not always move in the down direction. Plenty back & forth should be expected for the next few months.<\/p>\n\n\n\n The best course of action<\/em><\/strong> is to make sure you have a comprehensive financial plan, and your portfolio is properly aligned with your goals\/desires, represented in your plan. If you have any questions about your situation, please do not hesitate to schedule a consultation.<\/a><\/p>\n\n\n\n![\"\"](\"https:\/\/www.retirementrefined.com\/wp-content\/uploads\/2023\/02\/shutterstock_1142276006.jpg\")
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