The Fed: An Economic Counterweight
Market Commentary

The Markets

If you’ve ever waited in traffic while the center section of a bridge lifts to allow ships and sailboats to pass underneath, you may have noticed the enormous counterweight that lowers as the bridge moves higher. When the boats have passed, the counterweight rises, and the bridge lowers back into place.  

The Federal Reserve (Fed) often acts as a counterweight to the economy; raising and lowering interest rates to achieve its goals. Recently, the Fed has been raising rates to bring inflation down. Higher rates make borrowing more expensive, slowing economic growth and reducing demand for goods.  

Over the past 18 months, the Fed has raised the effective rate from near zero to 5.33 percent. Last week, data suggested its efforts were working. The Personal Consumption Expenditures Price Index showed that headline inflation has dropped from a peak of 6.8 percent in June of 2022 to 3.3 percent in July 2023.

Don’t Trust Your Ears

There are pros and cons to artificial intelligence (AI). On the pro side, many people have found AI-powered digital assistants helpful. The assistants schedule events and offer reminders. They relay timely information about weather and traffic, help manage lights, thermostats, ovens, and other smart devices in homes.  

On the con side, they’ve become a valuable tool for scammers. Recently, criminals have been using AI-generated voices to scam family members, friends and financial institutions.  

The potential for vocal deception was demonstrated at a recent Senate hearing, which featured “a faked voice recording that was written by ChatGPT and vocalized by an audio application trained on [a U.S. Senator’s] Senate floor speeches,” reported Matt Berg of Politico. “If you closed your eyes at the beginning of the hearing, you couldn’t have told that we were playing a voice clone of myself,”  commented the Senator.  

Deepfake audio also has been used to mimic the voices of friends and family members. In another hearing, a mother who was targeted shared the story of receiving a phone call from her terrified teenage daughter and her kidnapper, who demanded a ransom. Only, it wasn’t the daughter – it was an AI-generated voice that sounded just like her, “reported Carter Evans and Analisa Novak of CBS News.  

There are ways for families and friends to protect against voice scams. These include:        

     – Choose a code word. Then, if a suspicious call is received, they can ask the caller for the code word         – Call or text the person who is making the emergency call (or someone with them)

In the example above, the mother called her husband who confirmed their daughter was safe.   Since voice cloning often relies on publicly available audio, it can be a wise choice to make social media accounts private, and only accept followers whom you know.

Focus – Think About It

“I’m growing older but not up.”    
- Jimmy Buffet

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Sources

https://en.wikipedia.org/wiki/Vertical-lift_bridge

https://www.investopedia.com/articles/stocks/09/how-interest-rates-affect-markets.asp

https://www.newyorkfed.org/markets/reference-rates/effr

https://www.bea.gov/news/2022/personal-income-and-outlays-june-2022

https://www.bea.gov/news/2023/personal-income-and-outlays-july-2023

https://www.bloomberg.com/opinion/articles/2023-09-01/jobs-report-we-may-finally-be-witnessing-a-normal-labor-market?in_source=embedded-checkout-banner (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2023/09-05-23_Bloomberg_We%20May%20Finally%20Be%20Witnessing%20a%20Normal%20Labor%20Market_6.pdf)

https://www.bloomberg.com/news/live-blog/2023-09-01/us-employment-report-for-august (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2023/09-05-23_Bloomberg_Fed%20Friendly%20Jobs%20Scenario%20Boosts%20Odds_7.pdf)

https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html

https://www.barrons.com/market-data?mod=BOL_TOPNAV (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2023/09-05-23_Barrons_Data_9.pdf)

https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value_month=202309

https://www.politico.com/news/2023/05/17/blumenthal-ai-deepfake-recording-senate-hearing-00097349#:~:text=Richard%20Blumenthal%20(D%2DConn.,on%20his%20Senate%20floor%20speeches

https://www.cbsnews.com/news/scammers-ai-mimic-voices-loved-ones-in-distress/#

https://www.brainyquote.com/quotes/lisa_joy_1078490?src=t_ai

Disclaimers

 

* These financial views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.

* The Market Commentary is based on one prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or broker/dealer.

* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.  However, the value of fund shares is not guaranteed and will fluctuate.

* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.

* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.

* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.

* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.

* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.

* Gold represents the 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.

* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.

* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.

* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.

* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.

* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.

* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.

* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.

* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

* Past performance does not guarantee future results. Investing involves risk, including loss of principal.

* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.

* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

* Asset allocation does not ensure a profit or protect against a loss.

* Consult your financial professional before making any investment decision.