Market Update 7/31/23
In my May 2023 Market Update, I stated that a “soft landing” is upon us, and incoming data since then has confirmed such. The economy continues to perform and inflation continues to fall. CPI hit 3% in the last report, down from 9.1% a year ago.
Falling inflation and economic growth beguiles intelligent capital and properly invested accounts have enjoyed blockbuster returns this year. Stock markets worldwide are up 15% or more depending on the region and many individual equities have far outpaced those gains. Simultaneously, 90-day treasury bills yield 5.4%, the highest rate in 22 years. Simply put, a moderate investment portfolio split between 75% equity and 25% fixed income is up 11% this year. Very few predicted such at the beginning of the year, yet our team has remained steadfast to our client’s benefit. But what I found as we’ve transferred in numerous new accounts under our management this year is that many of our competitors haven’t accepted and recognized the benefits of this new rate environment. Their loss is our gain and this rate environment is here to stay.
Yesterday, the Fed lifted the Fed funds rate to the range of 5.25-5.5%, reinforcing higher rates. That ECB followed with another 25 basis points this morning. The strategy is designed to push CPI to 2% or lower and I expect it will take a few quarters to achieve such. So all my readers who DON’T have accounts with Warcap, know that idle cash is a mistake. Contact my team to learn why.
As always, I appreciate your continued trust and confidence.