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Latest on the Fed: Last week, stocks finished lower after Fed Chair, Powell, issued a few remarks—among them being that interest rates may need to rise above the 4.6% previously estimated. As expected, the Fed issued another 0.75% rate hike. That’s the fourth in a row, only the fifth hike of this magnitude over the past thirty years.

Some notable quotes from Powell, along with a graphic of how the market responded on Wednesday in real-time:

  • “We have got to get inflation behind us. I wish there were a painless way to do that. There isn’t.”
  •  “The chance of a soft landing is likely to diminish.”
  •  “The world is not going to be better off if we fail [to get inflation under control].”

CASH IS TRASH, NO MORE: This has been the mantra for investors over the last decade-plus of loose monetary policy. The low-interest rate environment made holding excess cash a challenge as equities rose higher and the rates paid by banks and other money markets were near zero. Those times have come to a quick end thanks to the FED raising rates the way they have.

In recent weeks, we have identified a way to invest our clients’ cash reserves in a better-yielding money market.

What do you need to know?

  • The money market we will use has no trading fees whatsoever.
  • Currently yields 3% per year and will likely continue to rise. This is prior to the latest 0.75% rate increase by the Federal Reserve.
  • No sacrifice in liquidity and provides stability and certainty to your cash investments.

What do you need to do?

  • Nothing at all; as of Friday, we have moved over $30mm in reserves to this new cash position.
  • In some cases, you may notice the cash available on our TD portal shows less than you thought you had, and that’s simply because the Schwab money market we’re using isn’t showing rightly on the portal yet. We’re working to remedy this optic for the portal and your paper statements.
  • As you may notice, some of your local bank assets have yet to yield more than 1%– please know we’d be happy to change that for you. Simply give us a call, and we can walk you through how to best maximize yield in this rate climate.

Flush with Cash: One of the contributing components of this strange economic season, particularly as many dollars are chasing few goods, can be seen in the chart below. The glaringly obvious—we’re stockpiling money across the socio-economic board.

Multi-Generational Live-In: Nearly four in ten men aged 25-29 now live with older relatives. The percentage of young adults living with older family members has been creeping upward for the past fifty years, but according to the Pew Research Center, that figure has had a notable increase driven by financial hardship.

Moving Farther Away: Meanwhile, another trend has been setting in among home buyers. As remote work became the norm and housing costs dramatically increased, buyers have started moving much farther away from their previous residences. For years, the average distance was 15 miles. This year, that figure has jumped to 50 miles.

Maybe Start Thinking about that Christmas Tree: The onslaught of supply chain problems appears to be coming for the Christmas Tree market. Real trees are likely to be more expensive this year, given the increasing costs for raising them—labor, fertilizer, and the like. Meanwhile, artificial trees are being sought online much earlier than usual, given that last year’s supply chain disruption left people receiving their tree orders well after Christmas.