Wesley's Rant: Summertime Blues and Fireworks of Hope
Thursday, July 08, 2021
Summer is officially here, and yes, it is too early to have the summertime blues! Before the holiday weekend last week, we were all a little pessimistic around the office dealing with close to two weeks' worth of rain. However, after last weekend, I believe there is hope for better days, summer days ahead, and a brighter outlook after celebrating our country's birthday with fireworks and parades with no limitations to our gatherings compared to last summer.
Looking back at this past holiday weekend, I hope that you and yours enjoyed a lovely long 4th of July, full of good weather and with a more promising summer ahead compared to last year's 4th of July.
While fully embracing our patriotism can provide more powerful feelings of hope for better days ahead, you might ask whether we can have the same thoughts regarding investing and the future of the equity and fixed income markets? In my opinion, the answer is yes! Full of fireworks and all. At this time, it appears all our states have lifted the restrictions when it comes to travel, the ability to work and to exercise the freedoms we have in this country. The expectation is that the demand for goods and services will increase as we travel and perhaps spend some of the money that we have saved over the last 15 months. This expectation applies not only to our country but also to the rest of the world. As internationally, countries outside the United States will continue to catch up to our nation's progress regarding vaccinations and herd immunity. An increase in demand for goods and services will be a global event as the world’s economies open post-pandemic.
Do not get me wrong; I expect a choppy summer in the equity and bond markets. If you have ordered anything lately, especially from a big box store, I would imagine that you have already experienced a delay in receiving what you ordered. I think we all can expect that a new demand on the system will not help that problem anytime soon.
The supply chain system is under stress, and it is going to get more complicated when an increase in demand hits that system. The automobile lots look empty, companies are having a hard time finding employees who are willing to work, and the shortage of employees will be an issue all summer.
However, those issues should begin to change as the early fall arrives in 2021. Hopefully, the government stops paying people not to work, ending the extra unemployment payments. Additionally, we can only hope the dramatic rise in materials prices begins to taper back down to regular price increases.
Inflation is all the talking heads on television have focused on recently. We are all experiencing a dramatic increase in the price of lumber, housing, steel, aluminum, food, and gas, to name a few. Should we be worried about higher prices? Persistent inflation can harm economies and, if not controlled, can be very harmful to individuals and governments.
While this dramatic increase in prices is all part of the “noisy” inflation numbers consistently reported, Federal Reserve Chairman, Jerome Powell and the rest of the Fed believe the current jump in inflation is related to supply chain and reopening constraints. They think it will be transitory and short-term. I suggest that would need to consider that possibility and explanation until it is disproven.
Real GDP growth in this country is expected to be 7% or more this year. Real growth is fundamental because it is the core source of real asset growth, the real source of wage growth, and the real source of an overall improvement in the quality of life. Interest rates remain low; the economy is more productive than before COVID-19, so I would recommend staying optimistic and believing that economic growth will continue throughout the rest of this year. Even with all of the news of this "noisy" inflation and speculation of the remainder of the year, it is essential that you continue to invest and intentionally have discipline when it comes to achieving your financial independence. If you do not have a financial advisor or coach, I suggest you get one. In today’s world, the noise around you is only going to get louder!
Again, I hope you and yours had a great holiday weekend, and I hope you continue to make the best of your summer by spending time with your friends and family.
Managing Partner, The Wiser Financial Group
Securities are offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services are offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Wiser Financial Group is not affiliated with Kestra IS or Kestra AS. Investor Disclosures https://bit.ly/KF-Disclosures
The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC, or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor about your individual situation. Comments concerning the past performance are not intended to be forward-looking and should not be viewed as an indication of future results.