Good morning. My name is Chad Taylor, managing partner with MDT Financial Advisors here in Houston, Texas. I hope all is well in your world right now and I wanted to hop on. It seems like here the last few videos have been nothing but charts and things based on what we're seeing in the markets. But when we're in one of these challenging times, I always like people to see what we're looking at as well.

So I've got a chart here today talking about inflation again. It kind of seems like that's been the theme of a lot of our videos as of late because that's what the theme has been for the last 12 to 15 months now. It is affecting what's going on in the markets.

So we started off the year pretty good as far as the stock and bond markets. In January both were pretty good. February, they were not so good and that kind of leads to what we were saying at the beginning of the year that it's probably going to be volatile for a little while. What I'm going to kind of show today is I don't see that volatility lightening up anytime soon just because of changes in what's been going on.

It will get better again. No one knows when or what will be the catalyst, but we've been through rough times before. Sometimes they're very fast like it was in the Covid markets back three years ago. I've been in the business for over 20 years and sometimes it's like back in 2000, 2001, 2002 where it was three years in a row of really challenging times. But then you look back 20 years later and the markets are higher than they were back then. It's tough when you're right in the middle of them.

So if it's been going on now for, like I said since basically January of last year, and if you want to talk about that, please let us know because I always find that kind of looking at our plan and looking at what you're doing helps when times are like this. So don't hesitate to reach out.

So now I wanted to kind of share my chart. So if you can see from this chart, the title of it was inflation's decline may get bumpy in the next few months. So there's a lot going on here and I'm not going to go through it all. But what I would like you to kind of look at are those three lines there. The pink one, the orange one, and the purple one.

Basically the pink one there at the top, that's the trailing 12 months of inflation data and this is core CPI inflation, which is different than headline CPI inflation numbers. Both measure prices of goods and services, but this one excludes the more volatile food and energy. So as you can see, both have been coming down fairly... Or all of these have been coming down fairly steadily. What I found interesting is if you look at that three month, which is the purple one at the bottom, the trailing three month is at 4.6 versus the trailing 12 month at 5.5. So it's been coming down short term, which is what we've been saying and what we had thought because the Fed is raising rates and that will have effect. Supply chains loosening up will have effect. China coming back online will have effect. So everything kind of plays into it, but they have come down fairly steadily since the middle of last year.

What we think will happen here is it will probably get a little... We won't have quite the steady down trend. It will get a little bumpy here over the next few months as inflation continues to come down, but maybe not quite as at the pace that it has been.

What does that mean for the markets? Well probably will lead to more stock market volatility. Obviously we always like the volatility when it goes up. We don't like it when it goes down and that's normal. But unfortunately until we kind of see that inflation has come down, that the Fed can start not raising rates, you're going to see all this volatility. So when there's good news, sometimes the markets run up, when there's bad news, they run down. Right now sometimes when it's good news they go down and so it's just a weird time. It will pass, but we just don't know when.

So some of the economic numbers came in a little bit better earlier in the year. So more than likely we've been saying that we think that a recession will happen, but now it's probably going to be pushed into the second half of the year. The Federal Reserve has come out and said... Or not said. There's been talk that they're going to raise rates higher than what we had projected and maybe keep them there longer than we've projected. Which in that case, that leads to more uncertainty and until there's some clarity, that's why this volatility is probably going to be here for a little while longer.

So inflation's coming down. That's good. Volatility's probably going to stay up for a while. That's tough. That makes it tough for a while. If you have questions about this or anything else about your plan, about our strategy, anything, please don't hesitate to let me know. We'd love to talk about it and just work our way through this. I hope you have a great day. Thank you.

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