October 4, 2021

Dear Clients,

“Change is the law of life. And those who look only to the past and present are certain to miss the future.”  John F. Kennedy

During the Federal Reserve’s (Fed) last meeting a few weeks ago, Chairman Jerome “Jay” Powell announced a “change” in policy is coming. But, before we dive too deep into that, let me digress for a moment and give you a quick background. You see, when the pandemic hit a year and a half ago and our economy came to a grinding halt. To avoid a financial crisis, the Fed stepped in and used two of their tools to help the economy out. First: they lowered interest rates to zero. Second: they started buying bonds with the goal of pumping cash into the system. They bought so many bonds, they are now buying $120 BILLION of bonds a month. $80 billion of US Treasuries and $40 billion of mortgage-backed securities. That is a lot of bonds and a lot of cash flowing into the system! These moves are meant to keep the economy awash in cash and keep borrowing costs low. (I hope you all took advantage of these low rates by refinancing your mortgages if you have one). Well, it’s time for the party to end and for the punch bowl to slowly be taken away. So, the Fed, in their last meeting, decided to “taper” the amount of bonds being purchased every month and in effect, lower the amount of cash being put into the system. Though the exact amounts have not been disclosed, most people think they will slow down the bond purchases by $10 billion dollars a month and be done within a year. After that is finished the Fed can, and most likely will, start raising interest rates.  Now, if you haven’t completely tuned out already, you may ask yourselves, why is this important and how does it affect me. Well, here is the answer. The price of goods and services are affected by the amount of money floating around the system. So, if the Fed is taking money out of the system, we may see higher borrowing costs, lower equity and bond returns and an overall slowdown in the economy. This is a “change” we have not seen in a long time. If you are starting to feel uncomfortable with the recent “changes” in the market, and the affects these “changes” have on your portfolio, please give the office a call.

Speaking of “change”, Rosenblatt Advisors has some exciting news to share. Effective immediately, Jessica Tufte has been promoted from executive administrative assistant to Financial Advisor. This means Jessica will now provide the same amazing financial planning advice Kerry and I provide. Please join me in congratulating Jessica on this promotion.

Craig Rosenblatt, CPA

Financial Advisor

California Insurance License #0E18620

The views stated in this newsletter are not necessarily the opinion of Cetera Advisor Networks LLC and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein.  Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed.  Past performance does not guarantee future results. All investing involves risk, including the possible loss of principal.  There is no assurance that any investment strategy will be successful. Investing in mutual funds is subject to risk and loss of principal. There is no assurance or certainty that any investment strategy will be successful in meeting its objectives.