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Weekly Wealth of Knowledge - Week of 7/18/22

July 19, 2022

Click to Read Full Article!The Weekly Wealth of Knowledge is your download of this week's most important topics related to financial planning, the markets, and our community. As we usher in July, we kick off the theme of "independence". Our content all month long will be highlighting all of the benefits of working with an independent financial services firm like MONECO and being independent in general.

In this issue:

       •  Good Inflation? (3 min read)
       •  Mid Year Outlook - Navigating Turbulence (Full Report)
       •  The Business Cycle (3 min read)

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Good Inflation?

With all of the recent talk about the impacts of inflation on our lives and the economy, it's hard to imagine that there just might be some positives if you look around. Here are five times inflation is actually good for your finances. As always, if you have any questions, do not hesitate to reach out. 

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Mid Year Outlook - Navigating Turbulence

Markets rarely give us clear skies, and there are always threats to watch for on the horizon. But the right preparation, context, and support can help us navigate what lies ahead. So far, this year hasn’t seen a full-blown crisis like 2008-2009 or 2020, but the ride has been very bumpy. We may not be flying into a storm, but there’s been plenty of turbulence. How businesses, households, and central banks steer through the rough air will set the tone for markets over the second half of 2022.

The sources of turbulence are clear. A global economy that was already vulnerable to inflation from supply chain disruptions, tight labor markets, excess stimulus, and loose monetary policy came under more pressure when Russian aggression in Ukraine added sharply rising commodity prices and Europe on the brink of recession to the mix. The effects have included renewed pressure on interest rates, which hurt bond investors and contributed to tightening financial conditions, and a much more aggressive stance by the Federal Reserve (Fed) and other global central banks. Add in the typical market challenges of a midterm election year and the third year of a bull market, and it’s no surprise it’s been a bumpy ride.

Understandably, rising prices, slowing economic growth, and a challenging first half for both stocks and bonds have many investors on edge, and fatigue from more than two years of COVID-19 measures doesn’t make it any easier. But the markets are always forward looking, so it’s important to remain focused on what lies ahead. There will most certainly be challenges, but there are also some tailwinds from a strong job market, still resilient businesses, and the likelihood that inflation will soon start to slow. Markets historically can even get a little lift from lower uncertainty around elections as midterms approach.

Turbulence cannot be completely avoided, but it also need not deter us from making progress toward our financial goals. LPL Research’s Midyear Outlook 2022: Navigating Turbulence is designed to help you assess conditions over the second half of the year, alert you to the challenges that may still lie ahead, and help you find the smoothest path for making continued progress toward your destination. When times are turbulent, the surest path toward progress remains sound financial advice from dedicated professionals who have logged many hours in similar conditions. 

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The Business Cycle

From a definition standpoint, business cycles are a type of fluctuation found in the aggregate economic activity of a nation - a cycle that consists of expansions occurring at about the same time in many economic activities, followed by similarly general contractions (recessions). As much as we hate to admit it, business cycles are and will always be part of our economy. Considering the expansion that we have seen over the past decade, it's easy to forget that downturns do occur and it's good to put them into a historical perspective. As always, if you have any questions, do not hesitate to reach out.

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