Broker Check


Previous Newsletters:

January 2022 Newsletter

April 2022 Newsletter

July 2022 Newsletter

January 2023 Newsletter

April 2023 Newsletter

Q2 2023 Newsletter

Q3 2023 Newsletter

Stocks and bonds have clearly accepted that the Fed will keep interest rates “higher for longer.” The questions now become how high and for how long?  The Federal Funds Rate has only risen by .25% over the last quarter.  Contrast that with the .75% rise in the first quarter of 2023 and the 4.0% rise in the last three quarters of 2022 and one gets the sense that the Federal Reserve is near the intended top of rate hikes.  The caveat is that if inflation re-ignites from here, rates could continue higher.  While the Consumer Price Index has dropped from 8.3% in August of 2022 to 3.7% of August of this year, there are risks to the rate climbing again.  Some of those risks may be beyond the influence of the Federal Reserve and interest rates.  For example, crude oil prices are up significantly in recent months.  While that is good for oil related stocks, it is not good for the price of everything that requires energy input (i.e. most things).  The decision of OPEC and other producers to decrease oil supply to prop up prices is the primary culprit behind the spike in oil prices.  Domestic interest rates in the US have little influence on OPEC’s oil production decisions.  If the intention of oil producing nations to keep oil prices elevated persists, then the cost to produce manufactured goods will increase.  Another example is the world’s food supply.  Supply chain disruptions for wheat and other agricultural products out of Ukraine because of their ongoing war with Russia could cause shortages worldwide.  The U.S. will not likely experience the shortages.  That suffering may be realized most harshly by European countries more dependent upon Ukraine grain imports like Turkey, Tunisia and Mongolia (Statista Research).  However, consumers in the U.S. will experience the increase in price for wheat based products.  Again, there is nothing Chairman Powell and the Fed can do about that.  So, it appears to be a wait and see game.  Interest rates are high enough if no new price shocks hit the system.  One thing the market seems to agree upon it that rates will remain higher for longer than previously anticipated.  Evidence this in the flattening of the yield curve over the last few months.  While the short term interest rates have only risen .25% over the last quarter, long-term interest rates have risen by a full 1.0%!  This may present opportunities to lock in higher yields for a longer period of time

According to MorningStar Investment analysts, stocks look undervalued as we enter the fourth quarter.  A composite of the stocks in Morningstar’s coverage indicates that the U.S. stock market is trading at an 8% discount to the firm’s fair-value estimate at the end of the third quarter. That compares with a 16% discount to fair value at the beginning of 2023.  Most of the remaining discount is found in small and mid-sized companies, not in the large headline name companies.


We have been adding to stock positions.  Fixed income holdings have been heavily short-term maturities, but longer maturities are beginning to look interesting and may be added to the portfolio mix.

We welcome your calls to discuss your portfolio, market conditions, or any personal financial decisions you face.  Thank you for your business and trust.



Joe Tomkiewicz MS, CFP®

CA Insurance License #0C61979


Sierra Financial Advisory

Michael Tomkiewicz MA, CFP®

CA Insurance License #4063677

RIA Representative

Sierra Financial Advisory