Geopolitics
As we ended the first quarter and tiptoed into the second, geopolitics were front and center. The transport of oil was greatly slowed via the straight of Hormuz shutdown, leading to much higher oil prices. This filtered right through the US Economic system almost in textbook like format. Interest rates latched on to oil prices and begin rising, only to be followed by lagging economic indicators. CPI – Consumer Price Index a blunt measure of inflation, along with its close relative and federal reserve favorite, Personal Consumption Expenditures a.k.a. PCE both increased dramatically year over year.
The unwind similar to the rewind?
As mentioned in our Summer Newsletter, the reversal of all of the afore mentioned push through costs and data points is likely to occur. While the lump through the python a.k.a. higher oil prices through our economic system, will take some time as oil prices do not filter back into the system at lower prices as fast as they raise. Should the economy slow, but not fall, bright events could be on the horizon for interest rates and an entire industry, the residential housing market, in the near future. First looks at the coming inflation and economic data point toward a slowing of inflation and interest rates.
A new sheriff in town
Kevin Warsh, the new FOMC– Federal Open Market Committee, chairman and head of the federal reserve had his first cameo appearance. It was a startling of capital market participants. Many expected talk of lowering interest rates, Warsh waived his sword towards higher interest rates. Given inflation indicators most likely have already peaked, Warsh will likely put his sword back in it’s sheath and resume a more softer tone towards interest rates. If things play out the way expected, he may even lower interest rates in the not too distant future.
Midterms in View and 30th Annual Holiday Party
As we near the end of this quarter, we most certainly will be very much in the middle of midterm election season. This is always interesting and makes for rhetoric throughout the process.
Lastly, we are putting the final touches on our 30th Annual Holiday Party and would really like to see you there! The location and the date are still being firmed, but we hope to have more information to you soon!
Thanks for your time, talk to you in the early part of fall!
John A. Kvale CFA, CFP
AI Content Authenticity: All of the following text content has been completed by myself and has not been edited or created by AI. Occasionally we do use AI for images and will note when appropriate.
Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
