facebook twitter instagram linkedin google youtube vimeo tumblr yelp rss email podcast phone blog external search brokercheck brokercheck Play Pause
Random Gleanings: Inflation Down & Markets Too?!? WHAT!? Thumbnail

Random Gleanings: Inflation Down & Markets Too?!? WHAT!?

Random Gleanings


Inflation is down... YEAH!

Markets went down too... WHAT THE HECK!?  


The PP&W team talk the good news of headline inflation (#CPI) continuing to cool off, while tempering their excitement on this news based on the same day market ($SPX) reaction which was nasty.  


If a bad market day has you thinking it's now time to bring your entire future financial goals to the bank... the fellas provide some reasons to think again, and an alternative which may make for a better short-term holding spot.  


Finally, the passing of Her Majesty (RIP QUEEN) had Chris and Jesse looking at her reign as you might expect... from the markets point of view.  


Hope you'll Enjoy, Share & Subscribe! Send any thoughts or questions on the content to the team at info@proplanwealth.com  


THANKS!!


Charts & Write-up below...


Another week, another opportunity to share our most up to date thoughts on what’s happening with investment markets, the economy and other Random Gleanings across the spectrum to help you stay informed and work to get ahead.  Recorded on Tuesday, September 13th the same day the CPI (Inflation) data was reported showing a second consecutive month of cooling inflation.  Despite that “better” inflation news, the market was looking for something more convincing.  As such, both inflation and the market were down.  Unusual for sure.  We discuss that and some reasons not to get too negative despite a tough day.  We go on to reflect a bit on the passing of Queen Elizabeth.  Enjoy this version of “Just the Charts” or find the video at www.youtube.com/c/proplanwealth ...THANKS!

Chris kicks things off with sharing the prevailing news of the day, CPI was down some more in August.  The year-over-year number now stands at 8.3%, cooling from 8.5% a month ago, and 9.1% back in June.  The prevailing positivity for most consumers was a lower cost at the pump (see our last episode where we talked about this).  


Borrowing from another topic from last week’s Random Gleanings, Chris points out that the 8.3% CPI number for August falls in line with some projections that could bring us back to a more normal inflation environment sooner than most expect.   Plenty of work ahead of the Fed, but a respectable start to “less bad” news working towards the possibility of better outcomes.

 

Understandably, many people remain concerned about what the future holds for markets.  This is not unusual after a challenging year - stocks are down 16.9% and bonds are down 12.9% year-to-date through September 13.   In such challenging times, it is no surprise that the lack of volatility in bank instruments start to look awfully compelling.  With appreciation for the fact that flat performance (0%) is better than negative performance in an investment portfolio, there has been a dramatic shift in how banks have “rewarded” their savers over the past 50 years.

Jesse brings this chart from JPMorgan Asset Management to show the astounding difference in what a saver has earned by decade on savings against various inflation indicators.  The chart speaks for itself that the last 50 years (for a multitude of reasons) have not been kind to cash savers.  Jesse added the compound annual growth rate (CAGR) for stocks during each decade (red).  His notion here is that find one’s time horizon for the use of dollars should help point to where dollars will be best served - AND that banks are unlikely to serve longer-term goals effectively against inflation.


Chris begs the question why bank deposit rate remain nationally at 0.13% when loan rates have risen so much?  He shared there are some fantastic alternatives to consider in ultra-short treasury bonds (30-90 days) that were paying 0.04% a year ago which are now paying 3.2%!  

  Given the sad news of Queen Elizabeth’s passing Jesse shared this tweet noting the amazing historical fact of the longevity of her reign.  As you might expect, team PP&W figured it would be equally amazing to look back at what happened in (US) markets while the Queen sat on the throne.

Chris shared this chart on the 16 Bear Markets Her Majesty was witness to over the 70 years of occupying the throne.  Noting that had she invested in US stocks even the Queen Mother would not have avoided her share of challenging markets, but a long-term perspective would have paid off royally…

 

 …as a single investment of $10,000 on June 2nd, 1953 when she ascended to the throne, through September 8th, 2022 would have turned into nearly $1.2 million.  

A whopping 1,178% return!

If you found this information informative, we hope you may share it with someone else who may benefit from a different perspective than what is coming from the mainstream purveyors of information.  As always, we gladly welcome dialogue.  Thank you for reading or watching and thank you for the privilege to serve you and your family.