In today’s Steady Investor, we look at key factors that we believe are currently impacting the market and what could be next for the markets such as:
Inflation Keeps Going Up – The biggest news to hit the tape this week was the sizable increase in U.S. inflation. According to the Labor Department, the consumer price index – which roughly measures what consumers spend on a basket of goods and services – soared by 6.2% in October from the previous year. This level of price increase marks a 30-year high and follows five straight months where inflation has topped 5%. The question of inflation in 2021 has never been about whether prices would go up – it’s been about how much and for how long. So far, the answers to the latter seem to be that inflation is going up more than expected and for longer than expected, though the Federal Reserve continues to lean into the notion that inflation is ‘transitory,’ largely a product of temporary supply chain issues being met with record consumer demand. Inflation is not uniquely a U.S. problem – nations around the world are seeing increased consumer demand as the pandemic risk fades, and supply chains simply have not been able to keep up. In theory, once supply chains ‘catch up’ to meet demand and inventory needs, the price pressures should fade. The question is, what is the actual timeline for supply chains being fixed? If the answer is a few months, it would ultimately make the current spike in inflation less worrisome. If it’s longer, the Federal Reserve may need to step in sooner – and more aggressively than originally planned – to raise interest rates, which could potentially start the clock at the end of this profit cycle.1
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Trading Your Retirement Could Be Hazardous to Your Financial Health…Here’s Why!
It’s no secret that many investors let their emotions and fear drive their investments. Even if you’re a seasoned investor, trying to self-direct your retirement investments leads to extremely high risk – not because you aren’t competent, but because you are human. Instead of letting your emotions take control, it is essential to focus on the long-term outlook and the hard data.
If you have $500,000 or more to invest, get our free guide, “Why Trading Your Own Retirement Can Be Hazardous to Your Financial Health”—it offers some compelling reasons—backed by facts and research—why trading your retirement assets can be hazardous to your financial health.
Download Your Copy of “Why Trading Your Own Retirement Can Be Hazardous to Your Financial Health.”2
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Producer Prices Also Jumped, in the U.S. and China – An equally important, but far less acknowledged, gauge of inflation is producer prices, as measured by the producer-price index (PPI). A good way to understand the PPI is in relation to the consumer price index, or the CPI. The CPI measures the change in prices from the consumer’s point of view, while the PPI measures the change in prices from the business’s point of view. In a sign inflation is currently broad-based, the U.S. PPI also soared in October, recording its biggest increase on record at 8.6%. It’s not a forgone conclusion that higher business prices translate into higher consumer prices, as in some cases the businesses will absorb higher costs (which tends to squeeze profit margins). Understanding the full effect of increases in the PPI is best observed in analyzing corporate earnings, and corporate earnings calls and estimates. China is also experiencing higher producer prices, with factory gate prices soaring by 13.5% from a year earlier, following a 10.7% rise in September. That’s the fastest pace of increase in 26 years, which could trickle as a factor driving global inflation.3
The U.K. also Experiences a Soft Patch – Figures released this week released by the U.K. Office for National Statistics showed the U.K. also hitting a soft patch this summer, no doubt driven by surging Delta cases and slowdowns in Europe and the U.S. The U.K. reported a Q3 GDP increase of 1.3% compared to 2020, which was a notable deceleration from the 5.5% GDP growth pace set in Q2. Supply chain bottlenecks and a somewhat messy transition out of the European Union have contributed to headwinds, but the U.K. also has an issue the U.S. doesn’t — the prospect of weaker consumer spending.4
Protect Your Retirement – It’s common for investors to make knee-jerk decisions instead of focusing on their long-term goals. If you are managing your own retirement assets, this could be jeopardizing your financial security. Trading for short-term profits and investing for long-term goals are two very different things.
If you have $500,000 or more to invest, get our free guide, “Why Trading Your Own Retirement Can Be Hazardous to Your Financial Health”5—it offers some compelling reasons—backed by facts and research—why trading your retirement assets can be hazardous to your financial health.
This guide explores some of the key differences between trading and investing for retirement:
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