January 1, 2023
What a year! Like most investors we are happy to put 2022 clearly in the rear-view mirror. Between interest rate hikes by the Federal Reserve, record consumer price inflation, bear markets for both stocks and bonds, the war between Russia and Ukraine and turmoil in the crypto currency markets, it has been a trying year. We have been through this type of year before; they are never fun in the short term, and persistence pays off for investors over the long term.
Although it is hard to predict how the economy will react to even higher interest rates, we know that the Fed will continue to raise short term rates to bring inflation down closer to its 2% target. We may begin to see the rate of increase be less dramatic going forward as the Fed tries to engineer a soft landing for the economy and avoid even a mild recession. The deceleration of the CPI data is good news for the Fed but unfortunately, this will mean slower wage growth, higher unemployment, and a slowing of the economy. Housing prices are expected to moderate with mortgage rates doubling from a year ago.
Globally, as China reopens, supply chain flows will help in bringing consumer prices down. Energy prices seem to be stabilizing at a rate higher than 2019, despite the continued conflict between Ukraine and Russia. Russia continues to sell its oil around the world, just more indirectly.
January begins tax season and documents should begin to arrive late January to mid-February. Please be sure to gather all tax documents and information in a central location for tax preparation.
We wish you and your family a healthy and happy 2023 and a safe, healthy, and prosperous New Year.
*Disclaimer: This report is a publication of Marchand Faries Financial Management, Inc. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgement of the author as of the date of publication and are subject to change.