Lorraine’s October Update
November 17, 2022
Hello Friends,
Since my last update, we have had two significant events occur – the U.S. Midterm Elections and my 50th birthday. It really is a toss-up as to which one was more disruptive, prolonged or surprising!! Neither were over in just one day, in fact, with the Georgia run-off election dragging on to early December we should be wrapping up related events around the same time.
Now, let’s get into the news for the month
If this election has taught us anything, it’s that the polls, the pundits and predictions are completely meaningless. We did not see a ‘red wave’ (it was barely a ripple) and we are still waiting for final numbers to confirm a Republican majority in the House, but not the Senate. For the markets, the biggest factor is the split Congress which will likely result in blockage on further spending, stymieing of any tax increase and generally making it more difficult for the current Administration to function or focus on its agenda, i.e. Gridlock.
Although the ‘peak inflation’ narrative has taken hold with the October CPI numbers, some inflation contributors (like rent) are going to be stickier and take longer to reign in. The Fed has made it clear they do not want to ‘stop and go’ on their interest rate policies. They would rather raise rates more than necessary than not enough. Although there is a definite lag in the impact from Fed policy, another 0.50% increase is expected in December.
We are seeing value return to fixed income, and volatility has created more opportunity, especially in short-term instruments.
The recent equity rally is on the heels of stock buyback programs, slightly cooler inflation pressure, and a slightly weaker dollar. We do not see this as a clear signal we are out of the woods yet. We remain cautious with a tilt towards quality and strong balance sheets.
We have had a few questions about the collapse of FTX and its implications on cryptocurrency. As many of you know, we do not make recommendations or trade in that space. Over the years, we have been asked time and again about what it means, its legitimacy as an investment, and guidance on allocating funds to it. My answer has pretty much always been the same: if you are very young (under 30) and want to take a small percentage of your cash and ‘play’ in that space – be my guest. For everyone else, I recommend against it- primarily because of its lack of oversight and regulation. If anything good comes out of the FTX situation it will be a push for regulation and oversight – and lots of it.
Turning fifty has been a very joyous occasion for me. I spent a few, wonderful days in wine country in late October with a group of amazing friends. There have been dinners, lunches, gifts, cards and messages of love. One of my delightful (very young) co-workers even signed me up for an AARP subscription! I am so incredibly lucky to have spent more than half of my life in this industry, working with wonderful people and helping people through all kinds of financial ups and downs. As I ‘take stock’ of things at fifty, I can honestly say I have never been happier or more fulfilled personally or professionally.
However, while celebrating over wine, one of my dearest friends asked me “now what?”. I was a little taken aback, disclaiming “What do you mean, haven’t I done enough!”. She said something that has ruminated in my mind ever since : “You have more to give”. I am taking her words seriously and intend to use the next decade to broaden my scoop and try new things – I am not exactly sure what that will look like yet – but I will keep you all posted.
Here’s to 50 more!
L
