Hi, I’m Erik Wolfers, founder and managing member of First & Main Financial. We’ve been helping clients with perfectly personalized financial solutions since 2001, almost 21 years now. I want to give a quick market update.
Markets have been dicey this year—mostly down. We did enter bear market territory, which is more than a 20% drop for the S&P 500— which is the most broadly viewed measure. A lot of people watch the Dow Jones Industrial Average. The Dow is only 30 stocks, but it does move mostly with the rest of the stock market. Stocks are down because inflation is high. We do have some structural constraints with respect to the production of gasoline and of oil and food, and we do have some constraints in the housing market with respect to the number of people wanting form households. The age of 33 is about the average age when people form households, and they want to buy a house and we’re short on houses right now.
So we do have some structural constraints that are contributing to inflation; inflation is the top line number which some people say and it includes food and housing and gas was up 8% last month. Core CPI, which excludes those three items, was down a little bit, just under 6%, so we’re sort of in a wait-and-see mode with respect to what happens with inflation. If inflation starts to come down a little bit next month or moderate, that’ll be a good sign.
The Federal Reserve is supposed to keep raising rates for a while, but there are already signs that the economy is softening somewhat and so the FED may not have to raise rates too far because the natural demand for items will reduce or has been reducing as it cost a lot to fill your gas tank right now, or to rent an apartment, or rent a house, or buy normal groceries. People are having to substitute for things that they might rather not have to substitute for at the grocery store.
So, it’s a frustrating time. Things can get worse. During the financial crisis, markets were down pretty significantly more than they are now. Bond markets have also been challenged due to rising interest rates. The U.S. 10-year note has stabilized somewhat at about 3.2% now, so we’re in a wait-and-see mode. We will be doing some rebalancing eventually, tax-loss harvesting, but we’re watching every day just to see how it unfolds and it helps that we take a long-term perspective on things.
If you are looking for some financial guidance; whether for a one time financial plan or continuing advice on your investments, we invite you to meet with a First & Main Financial planner for a free consultation. We would be more than happy to sit down with you, assess your situation and review our services to help navigate your financial future.
Thank you,
Erik S. Wolfers, MBA, CFP®
