Hurricane Ian Notice

Due to the impending Hurricane Ian and its impact on the Sarasota area; Cumberland Advisors has mobilized and relocated our disaster recovery team to our Vineland, NJ office. If the storm does affect the Sarasota area, Cumberland Advisors’ staff members are on standby, and ready to provide you with any assistance you may need.  Our phone lines and emails will be monitored, and we will respond to matters on a priority basis.
 
For any urgent concerns you may also contact the following individuals by email directly:

For our clients residing in the Sarasota area, Cumberland Advisors knows nothing is more important than the safety of you and your family. We urge you to take the necessary steps to protect your loved ones. Check your supplies and make sure you have plenty of fresh water, flashlights, and a battery-operated radio. Cumberland values our customers’ security and peace of mind, and our goal is to provide outstanding service.
 
Thank you for entrusting us to continue to provide you service and may all stay safe.

 

The Fed's 2% Target

David R. Kotok
Wed Sep 14, 2022

Many readers continue to ask about the Fed’s 2% inflation target, especially after the recent CPI and the market’s reaction to it. Here’s the Fed’s own explanation, courtesy of the Federal Reserve Bank of St. Louis. We recommend it for a clear explanation of what 2% means.

https://research.stlouisfed.org/publications/economic-synopses/2022/09/02/inflation-part-3-what-is-the-feds-current-goal-has-the-fed-met-its-inflation-mandate

 

 

Cumberland Advisors Market Commentary - The Fed's 2% Target by David R. Kotok

 

Our opinion, and we repeat the word opinion, is that the Fed can achieve its target. The questions for investors are, by when and at what cost. Today, we can only guess at those answers. Our opinion is that several years and a recession are what it will take to achieve that 2% target for PCE.  We use PCE and not CPI because the Fed preference is PCE.

The reason is spillover effects from shocks beyond the Fed’s control. Those shocks include energy prices; food prices; long Covid disability in the labor force, with excess deaths and years of life lost (YLL); and a spreading regional shooting war in Europe, accompanied by a global financial sanctions and payments war, where the US is a leading antagonist on one side and Putin’s cohort is on the other side.  Putin’s losses in recent battles are serious setbacks for him but they have not ended the war.

Note that the Fed didn’t create any of these shocks through monetary policy.

At Cumberland, we are currently in a targeted cash equivalent as a reserve in our US Equity ETF Portfolios. Cash and equivalents are slightly under 50% as we remain patiently waiting for the market entry opportunities.  That can change at any time.

David R. Kotok
Chairman & Chief Investment Officer
Email | Bio


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Cumberland Advisors Market Commentaries offer insights and analysis on upcoming, important economic issues that potentially impact global financial markets. Our team shares their thinking on global economic developments, market news and other factors that often influence investment opportunities and strategies.