March 2023
401(k) Allocation

There are trades.

By: Lynda Elley

“Soft landing or hard landing?” – we are not talking about flights here, but rather the Federal Reserve’s ability to engineer a measured slowing of the US economy in order to lower inflation, while still keeping employment and GDP growth strong enough to avoid a deep recession. It is not an easy task, and this “flight” already experienced a pretty strong bout of turbulence with last year’s rapid rate increases.

The hope of a cessation in the interest rate increases, fueled by slower increases, perked up both stocks and bonds, but recent signs of economic strength – well, that has actually been a negative for the stock market! Confused? It comes back to what we said in the zoominar last month – good news will be bad news and bad news will be good … sorta. Good economic news will pressure the Feds to keep raising rates and perhaps get more aggressive once again. Bad news will give them the breathing room to keep slowing the pace of the increases or even stop. But isn’t bad economic news bad for the economy and thus bad for stocks? It will be if it goes too far, and as Jake pointed out in this month’s commentary, we are seeing signals that would have us be cautious at this point.

So it is that we are rolling back some of the exposure to the stocks, as well as the bond mix we prefer for your 401K plans. Small measures for now but will accelerate if see more weakness as the Federal Reserve makes its plans known.

As always, if you have any questions about how to rebalance your 401K, we encourage you to reach out to us at the office and we’ll be happy to help!

If you have questions, please contact us.

MARKET UPDATE
FINANCIAL PLANNING
FRAUD ALERT

To download the March 2023 Newsletter: CLICK HERE

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