Mid-Year Update
Hello Clients and Friends!
With half of the year already in the rear-view mirror, we are taking stock of where we have been and looking forward to the second half. Reviewing some of the headlines so far this year, it sometimes seems that they come straight from a sci-fi story. Artificial intelligence has gone mainstream, we have had novel forms of drone warfare, orcas are purposefully sinking ships, the world watched a tourist submarine tragedy unfold, and now two billionaires are taunting each other towards a “cage match” fight. Even after having recently experienced a toilet paper shortage due to a pandemic, these headlines are wild.
Financial markets have been much calmer this year than last, with more stability and positive returns. There have been many interesting news stories in the financial world as well, including large bank failures and crypto currency scandals. Perhaps the biggest story that we followed closely was the potential default due to the debt ceiling and all the political posturing leading up to the deadline last month. Realistically the probability of Washington not getting its act together and causing a default was always very small, but if everything went wrong and the US did default on its debt the repercussions in the financial markets would have been unprecedented and potentially devastating. Fortunately, the crisis was averted, and while we will likely have the same showdown in a few years it should not be a cause for concern for a little while.
The economy here in the US remains strong, and in fact, stronger than economists had predicted. To combat the high inflation we were experiencing last year the Fed raised interest rates aggressively, with the goal of slowing the economy to hopefully bring down inflation. Inflation has come down, even faster than some people expected. Just this week the June consumer-price index (CPI), a favored measure of inflation, was reported at 3% year-over-year. That same reading was over 9% in June of 2022. And yet, the economy has not slowed as the textbook models implied. As a result, while things are still currently looking very good, there is the concern that inflation could remain higher than desired for longer, and so the Fed might need to raise interest rates further, or keep them higher for longer than was expected at the beginning of the year. As always, no one knows what will happen in the short-term, but it does seem like we are closer to the end of this narrative than the beginning. And, as you have likely heard from us before, we recommend staying the course and tuning out the “noise” of all the news and predictions.
The summer for our team here at Advanced Wealth Management (as for many people) is filled with vacations, travel, summer camps, gardening, sports, family BBQs, and much more. We assume the second half of the year will fly by just as the first half did, and before long we will be getting ready for the holiday season. For now though, we hope you are enjoying your summer, and we will look forward to the next time we can talk with you!
Best Wishes,
Ted Haley, CFP® AIF®
President, CEO