Skip the fiscal-cliff concern, watch for inflation, adviser says

Skip the fiscal-cliff concern, watch for inflation, adviser says
Concern that inflation will “runaway” at 4% to 5% over the next year and then Fed will have to step in to control prices
OCT 19, 2012
The pending fiscal cliff and possible tax increases are worth watching, but one financial adviser says wealthy Americans should really be focusing on the economy's improvement and possible inflation. New York-based financial adviser Bill Losey said he thinks interest rates are going to be headed up earlier than the Federal Reserve has suggested. He said he believes that Americans have returned to consuming and he doesn't see evidence of a continuing recession. He is worried that inflation will “run away” at 4% to 5% over the next year or so and then the Fed will have to step in and raise interest rates to control prices. "The economy and inflation might tick up more than people expect, and although the Federal Reserve has indicated it will keep rates low into at least early 2015, they can't do it in a vacuum," Mr. Losey said. "I think interest rates will go up much faster than what the Fed said." Mr. Losey estimated it may be as early as the end of next year when the Fed could be forced to take action. Regarding the so-called Jan. 1 fiscal cliff, when a combination of tax increases and spending cuts are set to go into effect unless Congress acts, Mr. Losey said he believes that lawmakers will “kick the can down the road” another six to 12 months. He thinks that congress will approve tax cut extensions on a temporary basis so that the officials who are elected in November will have time to “work things out in a firm and thoughtful manner.” Of course, it's not impossible that the full hit of spending cuts and tax advances will happen, he said. “We could get a real big surprise,” Mr. Losey said.

Latest News

No succession plan? No worries. Just practice in place
No succession plan? No worries. Just practice in place

While industry statistics pointing to a succession crisis can cause alarm, advisor-owners should be free to consider a middle path between staying solo and catching the surging wave of M&A.

Research highlights growing need for personalized retirement solutions as investors age
Research highlights growing need for personalized retirement solutions as investors age

New joint research by T. Rowe Price, MIT, and Stanford University finds more diverse asset allocations among older participants.

Advisor moves: RIA Farther hails Q2 recruiting record, Raymond James nabs $300M team from Edward Jones
Advisor moves: RIA Farther hails Q2 recruiting record, Raymond James nabs $300M team from Edward Jones

With its asset pipeline bursting past $13 billion, Farther is looking to build more momentum with three new managing directors.

Insured Retirement Institute urges Labor Department to retain annuity safe harbor
Insured Retirement Institute urges Labor Department to retain annuity safe harbor

A Department of Labor proposal to scrap a regulatory provision under ERISA could create uncertainty for fiduciaries, the trade association argues.

LPL Financial sticking to its guns with retaining 90% of Commonwealth's financial advisors
LPL Financial sticking to its guns with retaining 90% of Commonwealth's financial advisors

"We continue to feel confident about our ability to capture 90%," LPL CEO Rich Steinmeier told analysts during the firm's 2nd quarter earnings call.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.