12/26/2023 0 Comments Abacus insightsInflation is effectively a flat tax on everyone equally, no matter how much money or income you have. However, the overall 8.5% increase, as we’ve noted previously, is a significant spike. ‘Core CPI (Consumer Price Index),’ which removes volatile food and energy prices from the equation, ticked up just 0.3% for the month versus the 0.5% expected. Over those 40 years, inflation averaged 2.81% and has been trending lower each decade, averaging 2.44% over the last 30 years, 2.37% over the last 20 years, and 2.25% over the last 10 years. Inflation accelerated to 8.5% in the twelve months ending in March, the highest rate in 40 years, with a 48% skyrocketing of gasoline prices accounting for half of the increase. In this particular case much of the uncertainty and volatility we’re seeing this year is a result of the invasion of Ukraine, sanctions on Russia, increased energy prices, inflationary pressure, and anticipation of the Fed ratcheting up interest rates. This random, roller coaster behavior of the stock market over a period of days, weeks, or months, is largely driven by uncertainty in the economic and business outlook. The higher the volatility, the more it feels like a roller coaster you’d like to exit. The lower the volatility, the smoother the ride. Volatility is the measure of the up and down movements of the market. The S&P 500 stock index started the year at 4,796.56, dropping to 4,326.51 on January 27th, bumping back up to 4,589.38 on February 2nd, and fluctuating between -2.82% to -12.5% in the two months since. It’s also natural to question what will happen to the markets, and to wonder how our own lives will be impacted. It is normal to feel anxious or nervous during a time like this. The headlines and stories are heart-wrenching, and the number of lives lost will undoubtedly climb. This time period brings with it a humbling perspective and we pause to acknowledge the true human cost of the events unfolding in Eastern Europe. The Federal Reserve approved its first interest rate hike in more than three years at 0.25 percentage points, and indicated an aggressive path ahead to try and control rising prices. The S&P 500 has fallen 7.4% since the start of 2022.inflation accelerated to 8.5% in March, marking a four-decade high and hitting levels not seen since 1981 On Thursday, February 24th, Russia invaded Ukraine, triggering Europe’s largest refugee crisis since World War II and causing more than 4.6 million Ukrainians to flee the country with an estimated 7.1 million displaced as of April.The first quarter of 2022 reminded investors that volatility, inflation, and geopolitical risk come with the territory when investing in global markets:
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