What an “interesting” week. In a move unseen since 1994, the Federal Reserve has taken an aggressive stance toward inflation by raising the key interest rate by three-quarters of a percentage point.
With consumer prices rising, pushing short-term rates higher is an attempt to slow economic growth while attempting to avoid a recession. Fed Chair Powell said that he expects rates to go up again at the July meeting and indicated that the Fed would make future decisions as they come.
What Do Rising Rates Mean for You?
While the federal funds rate typically influences short-term borrowing rates, it can influence long terms rates such as mortgages. Mortgage rates have been climbing back to “normal” from the historic lows that were recently experienced. Since rates were at historic lows, the volume of new purchases and refinances soared to new heights. This has slowed down since most people tend to borrow and refinance less when rates rise.
This also effects the bond market since interest rates most often have a negative correlation to bond prices. In simplistic terms, as new rates continue to rise the old bonds will be less attractive since they were issued with lower yields. However, new bond issues will have higher yields than their counterparts and in turn be more favorable to investors.
Will Raising Rates Help Tame Inflation?
The short answer is nobody can predict the future, but the Fed believes their efforts will help slow down inflation. The use of monetary policy can be used to increase and decrease economic activity. Following the 2008 recession, the Fed began to quickly lower rates and keep them there for numerous years. The lowering of interest rates is supposed to spur economic growth by making capital cheaper to borrow. However, they must walk a fine line between keeping borrowing costs low and rising inflation.
Post Covid, we had a booming economy with high demand and low supply, a recipe for inflation. Since Covid slowed down the production of goods and services, the demand for them upon “release from solidarity” skyrocketed. Now, the Fed is trying to create a soft landing to help maintain inflation while limiting the effect on the economy.
Some side effects that we have seen from the recent rate increases are stock market volatility, slowing of borrowing capital, potential housing price declines, and much more. The best analogy of what the Fed is trying to do is a seesaw. One side is strong economic growth and full employment, and the other side is inflation with a potential decrease in economic output.
What Should You Do?
Stay calm! The economy is an ever-changing beast that cannot be predicted with much accuracy. Drown out the financial pornography that you see on TV or hear on the radio. Anyone claiming they can foresee the future is for sure telling a fib.
Follow your plan! The reason we create and follow a financial plan is for times like this. Inflation matters, borrowing costs matter, the overall economy matters, but as you can see from history, we have always recovered to see new heights. Don’t let the media trick you to thinking this time is any different.
Have a great weekend!
Source: Ballentine Capital Advisors
Golf Tip of the Week
How To Make Big Breaking Putts
One of the hardest things for people to understand when faced with big breaking putts is that there are and infinite number of “lines” you can take based on the speed you choose.
Sometimes certain putts require a more delicate approach while others necessitate a more direct route to the hole.
Regardless of the one you choose you must be mindful of both, and all the lines in between, in order to become a great putter under the gun.
Here at Punta Mita, you must understand this fact as our Jack Nicklaus greens here tend to have some exaggerated movement to them, especially if you hit it in the incorrect portion of the green.
I have a long putt with a ridge in the middle of the green as well as a sizable slope from left to right.
There is a range of “lines” we can take. One would be the highest line with the least amount of speed and the other would be the lowest possible line with more speed but not so much that it runs way past the hole.
First you must ask yourself what type of putter you normally are, and what type of green speeds to you tend to play on in general.
If you play fast greens with some slope, you will tend to be more of a “die” putter where you play the ball at the apex and allow the gravity to pull it down to the hole.
If you play slower and flatter greens, you will tend to be more of a firm-putter who plays less break and hits the ball harder.
The second thing you must consider is what the putt itself is asking you to do and what are the consequences of either speed. Because both can be incorrect choices.
Think of a putt you have that is super fast.
The higher and more break you try to play the faster the ball will come down the slope, leaving you with a longer comeback putt.
Now consider the short putt that has some movement to it; it might be easier to jam it into the back of the hole, taking out the break.
This this is where practice and experience comes in — helping you to make the best choice for your personality, nerves, and overall shot selection.
Sometimes it’s better to hit it harder and other times it’s better to hit it softer.
So, how do you learn how to play either putt? You must fine-tune your feel!
The best drill for fine-tuning your feel is to hit putts as I did above, finding the highest and softest line, as well as the lowest and most firm line you can take without the ball running way past the hole. Now mark these spots on the green with a tee. Your job is to practice the extremes — the high and then the low — to help you “feel” your speed control.
Now hit putts in the middle of these two spots and see if you can find that speed as well. You can spend as much time as you need finding differing lines that you can use.
From there you will have a better chance to imagine what the best line would be for the next big breaking putt you have.
From a mechanical standpoint the only thing you must remember on longer putts is to make sure that you hit the ball solidly and maintain quality impact alignments. I always want to maintain a bent rear wrist post-impact to ensure that I hit the ball with the correct amount of loft. Flip at it and you’ve turned your putter into a chipper — and you will leave the ball short of the hole every time.
If you don’t fine tune your feel or don’t understand the high and low point, you will never have the many options on the greens that the professionals on Tour have.
The key is to use your imagination, your feel, and your speed control to select the best line for the putt at hand. Take your time to fine-tune your feel and you will have no problem getting down in two regardless of where you are on the green.
Tip adapted from golftipsmag.comi
Recipe of the Week
- 2 white peaches, stoned, finely chopped
- 1/3 cup (80ml) lime juice
- 1/4 cup (55g) caster sugar
- Thinly sliced peach, extra, to serve
- Raspberries, to serve
- 1/2 cup (125ml) gin (optional)
- crushed ice, to serve
- 1.25L Chilled sparkling lemon or lime mineral water
- Mint leaves
- Combine chopped peach, lime juice and sugar in a saucepan over low heat. Cook, stirring occasionally, for 5-7 mins or until peach is very tender. Remove from heat. Transfer to a blender. Blend until smooth. Place in the fridge to chill.
- Divide extra peach and raspberries among serving glasses. Combine peach puree and gin, if using, in a jug. Pour evenly among the glasses. Top with ice, mineral water and mint. (If not using gin, add extra mineral water or soda water.)
Recipe adapted from taste.comii
Health Tip of the Week
5 Ways to Support Gut Health
Digestive system problems such as heartburn, gas, bloating and constipation reflect what’s happening throughout your body. “As we age, the natural cycles slow down and don’t work as well,” says Johns Hopkins gastroenterologist Gerard Mullin, M.D.
The main drivers of gut health change are shifts in stomach acid, gut immunity, and gastrointestinal flora—the complex ecosystem of bacteria in your digestive system.
When gut health is good, he says, you’re less likely to experience damaging inflammation and lapses in immunity.
The following ways to protect your digestive system may sound surprising because they’re not just about diet. “Everything ties together,” Mullin says.
- Eat the right foods
- Get more sleep
- Move more
- Manage Stress
- Get help for issues like anxiety and depression
Tip adapted from hopkinsmedicine.orgiii
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