For Your Money is brought to you by Nelson Corp Wealth Management.
It’s now time for, For Your Money. We’re joined by John Nelson, financial advisor at Nelson Corp Wealth Management. Welcome back, John.
Thanks for having me, Brandy.
So the Fed remains the main focus this year. What are you watching to gauge the impact of their policies?
Yes, they definitely are. They’ve been on one of the most aggressive rate height cycles in a long time, and that’s definitely been the sentiment for a lot of people. The recession discussion has been loud and clear for well over a year, yet investors just haven’t seen that at this point.
And what I have with me today is a graphic that illustrates kind of where things are at. So this comes from the Chicago Fed, and what we’re looking at here is how restrictive conditions are. Like rising interest rates, rising inflation, falling asset crisis. Those are all things that create more restrictive environments.
And the yellow line is just illustrating that when we see the blue line break above the yellow line, that is periods of time where money is more restrictive. Followed by the red shading on each side, which indicates a recessionary period of time.
So we’re close to that, as we can see off to the right-hand side. But thankfully we’re below that yellow line, and haven’t broken through at this point.
Yeah. So what does this mean for viewers’ investments?
Yeah, we’re just indicating to a lot of people not to panic at this point, there’s still quite a bit of room there between going through this one indicator. But also being well aware of the conditions we’re facing.
This isn’t to say that there couldn’t be a recession later this year or early in the next year, but that you should review your investments, maybe the equities or stock holdings that you have. Maybe some changes are needed there for different stocks, or lowering the stocks overall. But just looking at portfolios and preparing for times to come.