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11.3.2023 by David M. Smith

The Fed Holds Rates Steady and May Be Done This Cycle

Market watchers anticipated the Federal Reserve to hold rates steady when they met this week, and that is exactly what happened. The Fed’s short-term rate stays in a targeted range of 5.25% - 5.50%. This is the second consecutive meeting that the rate-setting committee held rates steady which is the first time that happened since aggressively raising rates starting in March of 2021. In the meeting notes released after the meeting, they acknowledged strong growth in the previous quarter but also that employment gains have moderated but are still strong. They also alluded to credit and financial conditions tightening with higher yields. CNBC

Fed Chair, Jerome Powell stated it cannot yet be determined that financial conditions are sufficiently restrictive at this point. Though the Fed left the possibility of additional rate hikes going forward, many economists and market experts believe they will be data-dependent and are split on if we should expect another rate hike in December. Bloomberg WSJ

4.9% Growth for Q3 GDP: The GDP growth number for last quarter came in at a sizzling 4.9%, much higher than anticipated. 1.3% of the growth was attributed to restocking of business inventories, which tends to wax and wane each quarter. Growth outside of the inventories was still strong and fueled by consumer spending. Will the strong growth continue? Most experts believe a lower but still positive growth trend is in store. New job growth has slowed, consumers are spending down pandemic-driven savings, and higher interest rates are curtailing business spending. The Atlanta Fed GDP Now measurement which predicted the hot Q3 number is currently reading Q4 growth coming in at 1.2%, a steep drop from last quarter. Axios GDPNow

Best of 207 Voting Begins! Last year, RSWA was awarded by the Best of 207 as one of the best financial planning firms in Maine. We were very honored for those of you who had the confidence and took the time to vote for us. We weren’t even aware we were up for the vote last year! This year we were notified that RSWA was nominated in two categories for both best financial planning and wealth management firm. Voting ends November 17th and I believe anyone can vote for a firm and vote once a day. We would be very honored by anyone willing to vote for us again this year. Thank you! Best of 207 – RSWA

Treasury I Bonds Reset Rate: Many investors have gravitated towards buying Treasury I Bonds from the U.S. Treasury due to the high-interest rate backed by the U.S. government. The rate is reset every 6 months on November 1st and May 1st. The inflation rate is adjusted based on changes in the Consumer Price Index for all Urban Consumers and it was just reset for the next six months at 5.27%. That is still a pretty good return that competes well with money markets and CDs. Each person is allowed to purchase up to $10,000 annually and there are other rules and limitations so if you are interested in purchasing them, read the details first. Treasury Direct   Money

Financial Planning/Investment Strategy Corner:              

Open Enrollment Employee Benefit Season is Here: November is prime time for many employees to choose their benefits package from their employer. If you plan to keep the same benefits, it still is worth it to look through any changes to your plan, especially health care. What is covered or not covered changes on an annual basis, such as mental health benefits, particular doctor networks, or specific medications. Also, make sure you are taking advantage of every benefit you can, such as maxing out the match on retirement plans, utilizing health savings accounts, increasing supplemental insurance, or participating in wellness programs. Doing some homework can help you next year and beyond as well as avoiding some pitfalls. The Employee Benefits You Should Use—but Probably Don’t - WSJ The Three Things That Can Save You Money—and Misery—on Your Benefits - WSJ RSWA Blog – Health Savings Accounts

Quick Hits:

  • The upper middle class, or mini-millionaires, is where the wealth is growing fastest: WSJ
  • What’s the best exercise for cardio fitness at home, the treadmill, stationary bike, or rowing machine? The Conversation
  • Less snacking, more satisfaction: Some foods boost levels of an Ozempic-like hormone: NPR
  • How to adjust to daylight savings time, according to sleep doctors: Forbes
  • This Quick Hit is long overdue – how to get started in pickleball: Pickleball Hunt

The Psychology of Compliments: Who doesn’t like to hear a good word about themselves now and then? Turns out, giving a heartfelt compliment is both good for the receiver and the giver. Research shows that compliments often make the receivers feel better than most people anticipate, and they also improve the mood of the giver. Also, compliment givers greatly overestimate how bothered, uncomfortable, or annoyed a receiver of a compliment would feel, which prevents people from giving them. Don’t hold back those compliments folks – it’s for your good too! Psychology Today  Harvard Business Review  

The Health Benefits of Short Distance (and Slow) Running: Research has shown that running is great for cardio fitness, mental well-being, reduction of many diseases, plus numerous other benefits. Studies are also showing that most of the benefits occur on the front end of running, meaning you don’t have to go far or even fast, to receive the bulk of the benefits. Running at a slow pace for a couple of miles three times a week may get you the full benefits of running. Even jogging just five or ten minutes a day at a slow pace a few times a week was associated with markedly reduced risks for all causes of death and extended a person’s life by several years. So put on some comfy shoes and go for a short, slow run for a few minutes – it can help! Short Distance Runs Have Major Health Benefits – NYT

Quote: “Give recognition where it is due. Compliments stimulate more effort and desire to improve. Be generous with honest praising.” Bruce Lee

Bonus Quote I Found Funny: “Give me compliments. I love compliments. I was born modest, but it wore off.” Val Kilmer

Thank you for reading RSWA Financial Advisor Insights! We welcome feedback, and please forward this to a friend! Be well, take care, and stay safe!


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