Dear valued client,
The strong possibility of another interest rate hike pulled markets down this week. Canadian inflation came in at 3.3% for the month of July (compared to 2.8% in June). This, the hawkish tone from Federal Reserve monetary policymakers, as well as gas prices rising to their highest level since Oct. 2022, indicates the fight against inflation is not quite over yet.
Retail sales (Walmart, in particular) for the past month exceeded expectations, demonstrating strong consumer spending. In our strange economic environment, this is both good and bad news. It is positive because retail consumer spending drives roughly 2/3 of the U.S. economy, while on the other hand, a heated economy in the grips of inflation coupled with concerns about ballooning credit card debt could drive interest rates higher – further increasing mortgage payments and shrinking family budgets. Investors are expecting the Fed to start cutting rates by mid-2024; economic data over the next couple of months will impact whether or not those expectations change.
The death toll continues to rise as a result of the deadliest wildfire in a century ravaged the city of Lahaina in Hawaii. The latest count sits at 111 bodies, though many more are likely to be found as only about one-third of the rubble has been searched. It appears the fire started after strong winds knocked down a number of power lines, sending sparks into underbrush that had been dried out over the last month. Many residents are blaming the authorities’ lack of preparedness and warning as the fire approached. On top of the human toll, the fire caused about $6 billion in property damage, destroying over 2,000 buildings – most of which were private homes. The state’s governor, Josh Green, said, “It will certainly be the worst natural disaster that Hawaii ever faced.”
“There’s no harm in hoping for the best as long as you’re prepared for the worst.” – Stephen King
Have a terrific weekend,
PW
