07/21/2023
July 21, 2023
Dear Friends and Clients:
LPL recently released their 2023 Mid-Year Outlook which is linked below. I hope we continue to seek balance on a path towards stability. Here’s my main takeaways and thoughts. Inflation is down less than 5% compared to 8.3% last year at this time. There is belief that the Fed Funds rate is reaching its high point even with another anticipated rate hike at the next FOMC meeting.
The biggest and continued unknown is a recession. When it will hit, how long, and how significant? As I think back on my career in finance, I think a 20% one day decline might be easier on all of us than anticipating a recession for over a year or more. Economic forecasts are that the recession hits later in 2023. Lower job growth will have families experiencing lower disposable income which could be the catalyst for the recession as spending decreases.
Until there is more clarity on the recession stocks are projected to show modest gains with more elevated volatility. Those with larger cash deposits should look at longer maturity bonds to lock in higher interest rates.
The US dollar is trending lower against other major currencies. However, global usage of the dollar is stable with 90% of foreign currency transactions involving the dollar. Fears of the dollar collapsing have never been a major concern of mine as an advisor. It is hard to wrap my head around that concept.
Global news is always mostly negative, so here goes. The Russian-Ukraine conflict has heightened with both sides determined to win. China is offering a framework to end the conflict which is a broader attempt to establish a larger global leadership position. China and US relations are tenuous as there is the belief China is working to intensify its miliary technology.
Reach out with thoughts, questions, and concerns.
Be well,
Emily
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance is historical and not guarantee of future results. All indices are unmanaged and may not be invested to directly.
