Three Minute Digest for September 8, 2022 | Affinity Capital

September 8, 2022

“The best way to teach your children about taxes is by eating 30% of their ice cream.” - Bill Murray

Inflation, like taxes, eats away at our spending ability, another bite out of the ice cream cone. Unfortunately, inflation continues to eat away at our hard-earned income at rates unseen since the seventies. In an effort to combat inflation the Federal Reserve is expected to raise rates yet again at their upcoming meeting this September 20th and 21st. They have raised rates four times since March, by 0.75% increments at each of its last two meetings.

In its simplest definition, inflation is when the economy is growing too fast and raising rates is one tool to slow economic growth. The concern is an overcorrection and instead of slowing growth – growth stalls or even retreats, and we experience recession. Currently, there are economic indicators that say we are experiencing both problems which is referred to as stagflation.

So how does this affect the markets and our portfolios? Bonds are typically viewed as safe havens when compared to stocks but when interest rates rise, the value of bonds go down, so we exited most traditional bonds early in the rate hike cycle. The good news is that the yield, or income, on bonds rise as a percentage basis during these periods. We plan on re-investing in bonds, but the market is not quite there yet in our opinion.

With regard to stocks, the one-two punch of recessionary forces and inflation which equals stagflation makes for a difficult environment. The Dow has dropped almost 3000 points in the last two weeks. While the stock market had a good day today, our view is that further downside is ahead.

Jack Benny said, "A rich man is one who isn't afraid to ask the salesperson to show him something cheaper."

Who doesn’t like to buy something on sale? Well, the markets are on sale, and we feel the possibility of deeper discounts are ahead. With that said, we may still make some purchases at opportune times with a focus on income producing securities.  It is a good time to have a cash reserve built up and the more cash the better. Now is the time to add funds to accounts in preparation.

As always, please feel free to reach out to us with your thoughts and questions. We appreciate the opportunity to serve you.

Signals from the Fed: Inflation, Growth, and What Comes Next

August 22, 2025
It was a Fed-heavy week, with three major developments that matter for markets and the economy. FOMC minutes (July 29–30) — released Wednesday (Aug. 20). The minutes reinforced a data-dependent stance : participants saw continued progress on inflation but noted that risks aren’t one-way, citing pockets of labor-market cooling and the growth impact of tighter financial conditions. Policymakers emphasized flexibility and the need to see inflation moving durably toward 2% before declaring victory. For investors, the takeaway is that the bar for rapid policy shifts remains high, but the Committee is clearly keeping both sides of the mandate in view. Weekly balance sheet (H.4.1) — released Thursday (Aug. 21). The Fed’s weekly statement showed the usual moving pieces: securities holdings, reserve balances, and program usage. While week-to-week changes can be noisy, the release remains a useful pulse on system liquidity and the runoff of the Fed’s portfolio under quantitative tightening . Markets watch aggregate reserves and Treasury General Account flows because they can nudge front-end rates and funding conditions at the margin. Jackson Hole — Chair Powell’s Friday address. At the Kansas City Fed’s annual symposium, Chair Powell underscored that policy decisions will continue to be guided by incoming data . He highlighted the balance between sustaining expansion and finishing the job on inflation , noting tariff-related price pressures and supply-chain considerations among factors being monitored. The message: no preset path, but openness to adjust as evidence accumulates. Historically, Jackson Hole is more about long-term framework and risk management than near-term moves, and that tone held this year. What it means for the days ahead Near-term market drivers will be how inflation and labor data align with the Fed’s “proceed carefully” posture. • If inflation continues to edge lower while growth holds steady, the door stays open to gradual policy easing later this year. • If price pressures re-accelerate—or if hiring slows more sharply than expected—the Fed may extend its wait-and-see approach. Liquidity dynamics from the Fed’s balance sheet runoff will remain a background factor , but the central story is still inflation’s glide path and the durability of demand . Investors should expect choppy trading around key data releases , with markets pricing probabilities rather than certainties. As always, we welcome your questions and are here to support you . At the heart of everything we do is our commitment to “ Wealth Management for Life ”—providing enduring guidance for you and your family’s financial success.

Fed Moves and Market Trends | Affinity Capital

August 6, 2025
Markets entered the week with a boost of optimism, fueled by softer labor data and growing chatter that the Federal Reserve might be leaning toward a rate cut this fall. But that optimism didn’t last long . As the week unfolded, economic uncertainty returned to center stage: fresh concerns about tariffs, underwhelming corporate earnings in some sectors, and signs of consumer fatigue in key parts of the economy tempered the early enthusiasm.

Weekly Market Update: Stability Amid Data and Tariff Jitters | Affinity Capital

July 17, 2025
This week’s stock markets were marked by tight trading ranges, record-setting highs in tech, and a backdrop of macro uncertainty. The S&P 500 (through SPY), Nasdaq (QQQ), and Dow (DIA) eked out modest gains, shrugging off headline volatility tied to Fed independence concerns and escalating tariff threats.