Announcer:
It’s time now on KROS for Financial Focus, brought to you by NelsonCorp Wealth Management. The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. Any indices mentioned are unmanaged and cannot be invested into directly. Registered representative securities offered through Cambridge Investment Research Incorporated, a broker, dealer, member of FINRA, SIPC, investment advisor representative, Cambridge Investment Research Advisors Incorporated, a registered investment advisor, Cambridge and NelsonCorp Wealth Management are not affiliated. Cambridge does not offer tax advice. Now here’s today’s financial focus program.
Nate Kreinbrink:
Good morning and welcome to this week’s financial focus brought to you each and every Wednesday morning right here on KROS. Well, this is Nate. I got James joining me today. Nice morning to walk up the hill. Although it looks like as the afternoon goes, it’s going to get pretty warm again, a little more humidity, I think, they’re calling for over the next couple of days compared to what we have been.
James Nelson:
Yeah, no doubt. It’s going to be warm for some of our kids sporting events this week and we’ve got our Lumber Kings event tonight for the office, so things are heating up, but we’re used to having the hot nights for those events.
Nate Kreinbrink:
You hit it on the head. I know soccer season, as you’ve mentioned, I think is pretty much wrapping up, but now we’re hitting full steam into to youth baseball, baseball season, softball season, all those fun outdoor activities and make sure you have gallons and gallons of bug spray, Nat spray, because they are definitely in full force.
James Nelson:
Yeah, I don’t even know if that stuff works anymore, but you’re right, they’ve been bad.
Nate Kreinbrink:
Yeah, I think they mutate and they develop a protection against the new one, so you got to keep doing it. But again, it’s enjoyable time. I know we talked a little bit as far as outdoor seasons, a lot of the schools, I think Clinton may have a few days yet heading into next week, I believe, before they’re out. But a lot of the other area schools are on summer break. So excitement in my household, I know that at least as far as they are on break and it is, you can officially say, summertime now.
James Nelson:
Yeah, exactly. That’s always a fun time of year.
Nate Kreinbrink:
So getting into today’s program, I know we had Mike on last week and we spent some time talking about the debt ceiling. At that point in time, they were still in negotiations and trying to see if they were going to reach an agreement as far as extending that debt ceiling. Over the weekend some big steps happened as far as the first initial proposal that was agreed upon. Had some few developments tonight, just, I think, waiting for officially the approval between House and Senate. But again, from the markets, from where we expected it to happen in the way it did, again towards the last minute they’re going to get together. They got an agreement in place. So again, we can move forward, I think, hopefully, now with the debt ceiling talks.
James Nelson:
Yeah, don’t you love that, all the buildup and it’s always last minute type decision that, oh yeah, just before the deadline, they actually get something done. But you’re right, that’s created a lot of uncertainty. That’s all we’ve heard about in the news for the last several weeks. So like you said, it’s a tentative deal, not formally done quite yet, but that takes some uncertainty out of the markets and that’s a good thing from our perspective moving forward. So the other, I would say positive thing that’s developed here recently, is the Feds wrapped up their interest rate hikes. Again, we knew that plan and we’re anticipating that, but the Fed doing their part and getting out of the way now and seeing how things go has also probably been a good thing for markets where we’re not seeing a half a percent or a three-quarter percent increase, it felt like every quarter there for a long time. So those two big items certainly help get people a little bit, I think more comfortable here recently, and again, remove some of that uncertainty.
Nate Kreinbrink:
And I think some of that uncertainty is just headlines as far as the unknown. When they were still negotiating back and forth, are they going to be able to reach a deal or not. There was a lot of headlines and a lot of hot button topics, I guess you would say, that were floated around in headlines with social security payments, with disability payments, with Medicare payments. There was just a lot of stuff. And again, a lot of uncertainty that if they do not reach a deal, how is this going to play out and who is going to be impacted? And again, when you start looking at cashflow, when you start looking at insurance, and those are some of the items that get thrown into the headlines, into the articles as far as what that will be impacted, that starts creating a little bit of panic.
And I think you saw that play out a little bit, just big scale with the markets as far as the last couple of weeks, some of the volatility that you continued to see in there after we had a little bit of a positive momentum, now you seen this and it stalled back out again. So again, hopefully again, maybe later today, in the next day or so, get that finalized, see for sure what’s going to be in it. And again, start moving and trudging forward a little bit with some of the markets and hopefully some positive momentum.
James Nelson:
Right. That’s exactly right. Getting that momentum back because typically markets feed on themselves and if we can get some momentum and get things moving in the right direction, that can carry you for a while. The other big thing that we’ve seen is inflation. That was a huge topic all of last year. It’s been a big topic to start this year too, but inflation is slowly coming down, not as quickly as any of us want it to come down, but still trending pretty much in the right direction. And that hopefully will alleviate things as we move throughout the year too. That was a big story last year, a big story this year to watch those numbers and see how that’s calculated each time those figures are thrown out there and slowly but surely things are still moving in the right direction. And to us that’s a positive sign. And markets generally like those periods of time when inflation are coming down.
Nate Kreinbrink:
Right and again, you look at… Inflation in and of itself is not a bad thing. And I think it’s expected that you want a little bit of inflation. But again, seeing it peak at 9.1% last summer, nearly doubled to triple as far as where that healthy range has been projected at. And again, you’ve seen it spike up and hit that plateau last summer starting to come down. People were hoping that it was just going to be a straight line fall back down to so-called normal times. Obviously that has not played out. It’s been more of a bungee cord, seeing it come down where it’s came down and then maybe stepped back up and then came down. And I think that’s going to be the path forward, seeing that come down. But again, you mentioned interest rates and what the Fed…
And again, backing off a little bit, but the underlier with all that is people are still spending money and the Fed views that as that the economy can still handle a little bit more of an increase with that, so again, it’s like this catch 22 where again, we know we have to maybe back off on raising interest rates, but inflation isn’t coming down as fast as what maybe people had hoped, maybe what the Fed had hoped to get it back down to by this summer. People still spending money, well, maybe we can still raise interest rates, which that brings in a whole another list of issues that come into it. So again, some stuff to still play out, but again, hopefully getting that debt ceiling off the radar and some of the panic levels I guess and now focusing on everything else.
James Nelson:
And the real estate market stayed pretty strong too. That was the big scare leading up to all these interest rate hikes. Oh, it’s going to decimate the real estate market, it’s going to wipe people out type thing. All the action there is going to dry up. And that really hasn’t been the case. The real estate market has surprisingly held up pretty doggone well and stayed pretty strong even through all of these rate increases. So we started at a pretty low level. We were at 10 or 12 years of near 0% interest rates, not quite, but very, very low. And now we’re back up towards more historical averages. But in the short term, it looks like we’ve had significant rate increases and it looks scary and it looks like a big number, but when you put things in perspective, not too far off of where historical average has fallen.
Nate Kreinbrink:
And again, it goes back to do you have a plan and are you going to be able to weather maybe a prolonged lull in the markets? I think you had, 08/09 was the last big market correction. You had 2020 with Covid, but that year you saw that sharp decline, but then it hit that low and then spiked right back up again.
James Nelson:
Yes.
Nate Kreinbrink:
So that lull in the market was, again, if you didn’t look at your statements over a few months, you maybe didn’t even notice that it was down for where it was at. Now we’re starting to see this play out into 10 months, 12 months and beyond as far as where this is. And again, are you able to handle this kind of duration of a downturn in a market and what are you going to do to combat it moving forward? Because again, hopefully we’re wrong, but again, I don’t see this as that sharp spike to come back out of it again. I heard it described the one day as far as it’s our path forward is trudging through mud, and if you picture you’re trudging through mud one step at a time, that may be where we’re going to be at with that and are you going to be able to handle this going forward.
James Nelson:
And are you going to be patient enough?
Nate Kreinbrink:
Right.
James Nelson:
That’s the big thing. Warren Buffett’s famous quote, “Patience pays.” And it definitely feels like we’re in that mode right now. Like you just said, Nate, it’s probably not going to be a spike right back up to all time highs like all of us would like, it’s probably going to take a little bit of time and sticking to that plan and having that patience to not do anything extreme during a period of time right now can really pay dividends long term.
Nate Kreinbrink:
So again, you got questions and you see some of these headlines and how is it impacting you? Understand where you’re at, give us a call, be happy to sit down and help people through some of these discussions, some of these decisions, news headlines, what it means to you, how it is going to impact you. Be happy to help out in any way that we can. Before we do run out of time, did want to mention that every Friday, NelsonCorp Wealth Management is wearing jeans for charity. Money raised in the month of May will be donated to the YWCA Children’s Center. As always, James, I appreciate you joining me this morning.
James Nelson:
Absolutely.
Nate Kreinbrink:
Nate and James with NelsonCorp Wealth Management, bringing you this week’s financial focus. Thanks for tuning in and have a great rest of your week.
Announcer:
Financial Focus is a production of NelsonCorp Wealth Management in Clinton and Davenport. The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. Any indices mentioned are unmanaged and cannot be invested into directly. Registered representative securities offered through Cambridge Investment Research Incorporated, a broker, dealer, member of FINRA, SIPC, investment advisor representative, Cambridge Investment Research Advisors Incorporated, a registered investment advisor. Cambridge and NelsonCorp Wealth Management are not affiliated. Cambridge does not offer tax advice. For more information, visit our website at www.nelsoncorp.com.