At The Family Office, we weren’t surprised by the inflation data, especially on a core basis, as it recorded less than expected with an increase of only 0.1%. However, these data are in line with our vision.
It’s important to note two key points:
The margin between the current Federal Reserve (the “Fed”) interest rates and inflation levels has become very large, reaching about 3%, indicating that the Fed’s policy is very tight and is likely to ease.
Inflation is currently slowing down. Core inflation, which is the Fed’s preferred measure, recorded 2.6%, which is lower than the 2.8% expected by the Fed for the end of the year.
With the decline in inflation and the rise in the unemployment rate, which recorded 4.1%, there is a likelihood of interest rate cuts in the second half of 2024, as hinted by Jerome Powell two days ago in his testimony to Congress.
At The Family Office, we adopt the endowment model, which relies on three principles: choosing assets that preserve wealth, limiting the downside risk, and achieving returns that exceed inflation. This can be achieved in the long term through geographic diversification and, more importantly, by adding some private assets.
Watch the full interview above.