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The markets were off a little over 2% in spite of some good news. The Fed stated they wanted to stay accommodating, consumer confidence was up, jobless claims were down, and there was a gain in producer price indices. We are beginning to see deflation in other parts of the world which we are monitoring closely.
Most of what happened last week was from momentum stocks. These are stocks that tend to go up quickly. While emerging markets are staying positive, this has not always been the case in the past when they decreased with the momentum stocks. This is something we are watching closely but we believe our portfolios are adequately allocated to accommodate for this.
Issues that are important for investors
We are still in the middle of earnings seasons and the week is a moderate week for economic data. There are however, certain issues that we are watching because they are important for investors. The consumer price index was up last week so we are watching to see if those costs are being pushed on to the consumer. Housing starts are also on our radar as well as industrial production.
Franklin Bradford, CMT – Senior Vice President, Wealth Consultant
Concern over deflation
We have been talking about deflation since the beginning of the year. Now there is a lot of information from the IMF and the Fed coming out that concern over this is growing. This is something that is very important for investors. Low inflation can be just as problematic as high inflation if not more so. Low inflation almost invariably accompanies low growth. Because we are seeing this in Japan, Europe and China, we view this as a world wide problem. This could impact short term interest rates and the tapering of Quantitative Easing. Low inflation can really stunt growth in the economy and subsequently your investments.
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Ashley Page, JD, MBA – Senior Vice President, Wealth Consultant
fi-Plan Partners is an independent investment firm in Birmingham, AL, serving clients across the nation through financial planning, wealth management and business consulting. fi-Plan Partners creates strategies in the best interest of their clients using both fee based investing and transactional investing.