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QUOTE OF THE WEEK

“Sometimes we have to soak ourselves in the tears and fears of the past to water our future gardens.” – Suy Kassem

TECH CORNER

We just go the report that Headline Inflation came in a bit lower than expected in April. The stock markets reacted today in what I consider a way to positive manner. We are still a long way from meeting the Fed’s target of 2% so that they can declare “mission accomplished”.

Despite today’s moderately good news, it looks clear that the progress against inflation made from mid-2022 to mid-2023 has stalled. Consumer prices were up 9.1% in the year ending in June of 2022 so we have come a long way. The rapid drop down to 3.0% in the year ending in June 2023 made many believe that the end of the “transitory” pandemic inflation problems was in sight. Since then, baseline inflation has remained “sticky” above 3%. This “sticky” inflation is casting doubts on the Fed cutting rates enough, or at all, this year to make a difference. Even if we get the hoped for cut of 50 basis points this year down to 4.75% it isn’t going to help the economy avoid a recession.

The first of the two factors that signal a recession is starting to show some cracks. The unemployment numbers are starting to creep up. Long-term unemployed numbers (more than six months) are now at a level last seen during the Great Recession of 2008-2009. The employment service “Indeed.com” is reporting a stark drop in the number of new job openings. Definitely a leading indicator for a recession.

The other factor to indicate a recession is credit spreads. So far they has not increased. Just to remind you, we use both fundamental research and technical research. From a fundamental perspective, baring a drastic change in economic conditions is still pointing towards a recession. However, from a technical standpoint, the stock market may have a little more to run up so we are taking a small position in an S&P 500 exchange traded fund (ETF) The fund is structured with downside protection

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These are Larry Lof’s opinions and not necessarily those of Cambridge, are for informational purposes only and should not be construed or acted upon as individualized investment advice. Past performance is not indicative of future results. Due to our compliance review process, delayed dissemination of this commentary occurs.

The S&P 500 index of stocks compiled by Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. The Index includes a representative sample of 500 leading companies in leading industries of the U.S. economy. Indices mentioned are unmanaged and cannot be invested into directly.

Technical analysis represents an observation of past performance and trend, and past performance and trend are no guarantee of future performance, price, or trend. The price movements within capital markets cannot be guaranteed and always remain uncertain. The allocation discussed herein is not designed based on the individual needs of any one specific client or investor. In other words, it is not a customized strategy designed on the specific financial circumstances of the client. Please consult an advisor to discuss your individual situation before making any investments decision. Investing in securities involves risk of loss. Further, depending on the different types of investments, there may be varying degrees of risk including loss of original principal.

Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment advisory services offered through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Cambridge and Laurence Lof Financial Advisors, LLC are not affiliated. Laurence Lof Financial Advisors 4757 E Camp Lowell Drive Tucson AZ 85712 info@lofadvisors.com

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State Disclosure: Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SPIC. Investment advisory services offered through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Cambridge and Lof Laurence Lof Financial Advisors, LLC are not affiliated. Investment products and services available only to residents of: Arizona (AZ), California (CA), Colorado (CO), Florida (FL), Idaho (ID), Indiana (IN), Michigan (MI), Massachusetts (MA), Minnesota (MN), Montana (MT), North Carolina (NC), North Dakota (ND), New Mexico (NM), Oregon (OR), Ohio (OH), Pennsylvania (PA), Texas (TX), Virginia (VA), Wisconsin (Wl), Wyoming (WY). We are licensed to sell insurance products in the following states of: Arizona (AZ), California (CA), Colorado (CO), Florida (FL), Idaho (ID), Indiana (IN), Michigan (MI), Montana (MT), North Dakota (ND), New Mexico (NM), Oregon (OR), Pennsylvania (PA), Virginia (VA), Wisconsin (Wl).
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