Winning the War on Inflation
In February 2021, we wrote about preparing for inflation. Inflation soon became a big problem, and the Federal Reserve responded by approving its first rate hike of this cycle in March 2022. Inflation peaked at 9.1% in June 2022 (as measured by CPI), but the rate hikes eventually had the desired impact. Rates across the board rose, including mortgage rates (from 3.2% to 6.8% on a 30-year mortgage) and credit cards (APR has hit record highs and now exceed 20%). On the positive side, CPI has now fallen for eleven consecutive months to 4.0% in May, a level that is much closer to the Federal Reserve’s 2% inflation target.
Recently, the Federal Reserve paused on raising rates, marking the first break after 15 months of increases. This is not a complete declaration of victory, as the Fed announced it will continue to monitor the economy to see if additional hikes will be needed in the second half of the year. But it does feel like the worst of the inflation battle is over.
Now what?
For some investors, going from a period of hyper-inflation to a more normal level of inflation might require a complete revamping of their investment portfolio. Replacing inflation hedges like gold and silver with income-producing assets is a typical portfolio move when inflation eases. In our view, the problem with this strategy is that it’s difficult, if not impossible, to know if inflation is no longer an issue. At First Fiduciary, we believe a more durable approach is warranted. Rather than speculating on next month’s or next year’s inflation levels, we focus on owning the shares of high-quality, industry leaders that have the pricing power to stay ahead of inflation and the balance sheet strength to ride out periods of economic weakness. Staying disciplined with our time-tested strategy has helped our clients grow wealth over generations.
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Talk to the Hand
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Notable Reads:
Built to Move
by Kelly Starrett and Juliet Starrett
Written by two revered fitness practitioners, Built To Move provides a simple and effective framework for improving the way your body feels and boosting overall quality of life. The book focuses on 10 “Vital Signs,” their phrase for the fundamental training we all need to be our healthiest self. The authors offer ways to test (and improve) many aspects of life from nutrition to sleep to, of course, physical fitness. This is an excellent reference manual for any person hoping to live a long and active life (hopefully that’s all of us!). – AG
Till We Have Faces
by C.S. Lewis
Lewis’s last published novel was a retelling of the Cupid and Psyche myth. He brings a fresh perspective to a timeless tale. The richly developed characters, a Lewis trademark, explore the complexities of love, faith, and the human condition. The story was enjoyable but the heavy emphasis on philosophical themes was overwhelming at times. – AG
Restaurant Review:
Momotaro
Chicago, IL
Momotaro in Chicago's West Loop is an exceptional dining experience that combines modern elegance with traditional Japanese flavors. The restaurant's sleek and stylish ambiance sets the stage for an enjoyable meal. The menu showcases a wide range of impeccably crafted sushi and sashimi, as well as inventive small plates and delicious robata grilled dishes. Our group particularly enjoyed the Negima and Chahan. The attentive and knowledgeable staff provide impeccable service, ensuring a memorable and satisfying dining experience. – AG
More Than A Trusted Investment Advisor
Recently, a client consulted with us to help her plan for the purchase of a new home. The client wanted to make sure that she had sufficient funds available in cash when it was time to fund the purchase and was initially considering keeping money in her bank checking account. We discussed the account balance exceeding insurance limits on her checking account (prior to this spring’s wave of bank failures) and the low rate of interest being paid by her bank. Instead, we recommended the purchase of several US Treasury obligations to provide her with significantly higher earnings and greater safety compared to her checking account. The client completed her home purchase as planned. Let us know if you face any changing situations. We would be happy to help you strategize the best way to handle them!
The data contained within this newsletter is for informational purposes only. The information contained herein should not be considered investment, tax or legal advice.
This newsletter contains links to external third party websites that are not affiliated with First Fiduciary Investment Counsel. FFIC does not control or direct the content of the information contained on these websites. Information contained on the third-party website is relevant on the date the newsletter was published but may be changed or revised by the third parties without the knowledge of and/or notice to FFIC.
Statistics and other information have been compiled from various sources. First Fiduciary Investment Counsel believes the facts and information to be accurate and credible but makes no guarantee to the complete accuracy of this information.
Past performance does not guarantee future results. The mention of securities or types of securities in this newsletter should not be considered as an offer to sell or a solicitation to purchase or sell any securities mentioned. Neither First Fiduciary nor the authors hold positions in any of the stocks mentioned unless otherwise stated.
First Fiduciary Investment Counsel, Inc. is a registered investment adviser with the Securities and Exchange Commission. A more detailed description of the company, its management and practices is contained in its firm brochure document, Form ADV, Part 2. A copy of this form may be received by contacting the company at: 6100 Oak Tree Blvd., Suite 185, Cleveland, OH 44131; Phone: 216.643.9100; Email: ffic@firstfiduciary.com.