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4 Your Money is brought to you by NelsonCorp Wealth Management.
Brandy Auterson-Hurst:
It’s now time for 4 Your Money. We’re joined by David Nelson, CEO of NelsonCorp Wealth Management. Welcome back, David.
David Nelson:
Brandy, thank you.
Brandy Auterson-Hurst:
So the latest inflation number came in slightly below expectations. That seems like a positive sign. Is that how you are seeing it?
David Nelson:
Pretty much. There’s so many variables these days as far as inflation, and we’ve got the banking crisis. We’ve got a lot of moving parts, but we’ve been discussing this inflation issue for quite some time and saying that it’s peaked and it seems to be as far as this is the second month that the CPI, Consumer Price Index came in below expectations. That’s pretty good news overall.
A chart that I brought along today gives people, again, a nice visual as far as pertaining to this. It’s looking at year over year CPI and that’s in blue, and it shows the Feds fund rate, that’s in red. Where I basically have circled in yellow is a recent reading, and it shows that these two series have just crossed. Really important. So, you can now point to the Fed fund rate exceeding the rate of inflation.
Historically, this is a sign that the Fed hiking cycle is coming close to an end or it has already ended, so we don’t know for sure, but it appears that it’s quite close, if not finally done. Investors believe, this is the other piece of that, is there’s a 75% chance being factored in the market rate now, that there will be a rate cut by the end of the year, which again, we’re not sure we agree with, but that’s what the markets are telling us today.
Brandy Auterson-Hurst:
Okay, so what does this mean for viewers as we progress through the rest of 2023?
David Nelson:
So, Fed policy is always a major force pertaining to financial assets. We just continually emphasize this is just one piece of the weight of the evidence, that people need to look at sentiment, as well as the market action itself.
Brandy Auterson-Hurst:
All right, David, as always, thanks for joining us.