Recently we held our 2023 Question and Answer breakfast at the historic Rowan Museum. While I am used to tough questions, the one above caught me a bit off guard. However, in a world where disaster sells there are impending doom headlines everywhere. After giving it some thought, I was thankful that the question was asked, as I was able to reassure everyone that nothing relating to this is on the horizon. Let me take a couple of topics from our gathering and give you a refresher or an update on my thoughts:
ECONOMY: I describe it as a “stubborn as a mule” economy, no matter how many rate increases the Federal Reserve institutes to slow things down, the economy continues to chug along…although at a slower pace. The consumer continues to spend, keeping the economy moving forward.
INFLATION: After peaking, the core inflation rate is dropping. However, I do not think the rate will get to the Federal Reserve target of 2%, it appears that it will stall in 4-4.5% range. I believe there will be a bounce higher mid-year before gradually lowering to the range above.
RATES: Interest rates have moved up as quickly as I have witnessed over my decades in this business. The Federal Reserve will probably continue to raise at a slower pace and is likely to leave rates higher for longer. Keep this in mind as you consider major purchases that require borrowing.
JOBS: Last month over 500,000 jobs were added to the US economy and with unemployment at 3.4%, a recession may not materialize, or it may be so slight it will be unnoticeable in many industries.
OPPORTUNITIES: This was the most welcome question of all as the right mindset in any market is to look for opportunities. THE DRAMATIC RISE IN RATES HAS GIVEN US AN OPPORTUNITY TO LOCK IN OUTSTANDING BOND RETURNS NOT SEEN IN 20-25 YEARS. With current US Treasury bond yields over 5%, and corporate bonds over 7%, we have an opportunity to lock in some solid interest rates. Now remember bonds have their own risks primarily interest rate risk and issuer financial strength, but I have not been this excited about rates in many years!!! Keep this in mind if you have excess cash in low yielding bank accounts.
Also, dividend paying stocks continue to be the investment that allows you to leave a legacy to your loved ones, and I expect more opportunities to be created due to uncertainty.
Our first client group gathering after Covid did not disappoint, as I was able to answer all questions and we spent some quality time together. If you have any questions on any of the topics above or want to discuss interest rates and other opportunities, please let me know. In a world of headlines filled with doom and gloom, do not hesitate to contact me with any questions you may have. Remember, there is no such thing as a dumb question…maybe only a dumb sounding answer from me. Also feel free to pass this along to any friend you may have.
May God bless you and your family with health and happiness.
Securities offered through Commonwealth Financial Network, Member FINRA/SIPC. C F Parks Inc is a Registered Investment Adviser. Advisory services and fixed insurance products and services offered by C F Parks Inc are separate and unrelated to Commonwealth.
Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is no guarantee of future results. Talk to your financial advisor before making any investing decisions.