#312 Goodbye Deflation, Hello Inflation

Where to Go From Here

Last week the market traded back, that’s no secret. The yield of the 10-year treasury hit a 7-year high. Vice President Pence recently gave a speech saying US and China relations are not getting any better. Allegations were that China was putting spy chips in our technology making tech stocks really sell off. That’s what got us on Wednesday. Also, the International Monetary Fund lowered their global growth. It’s not a surprise that we’ve had a volatile market all year. Five out of ten of the biggest one-day drops have been this year which was in February. We are looking for strong corporate earnings to come out in the next few weeks to stop the bleeding, so to speak and corporate earnings will be the key until the midterm elections. We are keeping an eye on all our portfolios and models based on age, income needs, and other factors and if we need to take a more conservative approach, we will be looking at that.

Shift in the Market

Part of what we saw last week is that we are having a fundamental shift, we think, from the market being in a deflation mindset to an inflation mindset. Inflation as a model is easier to deal with. We have a strong rising economy and with that typically comes inflation. Historically over the past 65 years, when you’re having rate increases and inflation, most of the time you get an openly mobile market that isn’t on the downside. History proves that just because interest rates are rising doesn’t mean it’s a bad thing.

Moments and Trends

We have the midterm elections coming up in November. According to Strategas, the average midterm election year decline is 18% for the S&P 500. The S&P has been up 12 months following every midterm election since 1946, says Strategas. There’s no guarantee we will see the market go up this time but that’s what we have seen historically. It was reported this morning that the retail giant, Sears, has filed bankruptcy. In February 2018 Sears reported having 90,000 workers. Those workers plan to make it through the holidays but if that is not the case you might see those 90,000 people coming back into the workforce which will cause a big impact on the job market.


Greg Powell, CIMA®
President and CEO
Wealth Consultant
Email Greg Powell here

Bobby Norman, CFP®, AIF®
Senior Vice President
Wealth Consultant
Email Bobby Norman here

Ashley Page, JD, MBA
Senior Vice President
Wealth Consultant
Email Ashley Page here

Adam Vansant
Associate Vice President
Wealth Consultant
Email Adam Vansant here


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.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

Economic forecasts set forth in this presentation may not develop as predicted.

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