Reinhart Week in Review by Madison Investments 1.13.23


INFLATION

Consumer prices (CPI) fell 0.1% in December. Year-over-year, CPI increased 6.5%, down from 7.1% in the previous month. Core prices, excluding food and energy, were up 0.3% in December and 5.7% over the last twelve months.

Our Take: Inflation continued its moderating trend, led primarily by reductions in energy costs. Prices for core goods also fell as supply chains continue to improve. This month’s report makes it more likely that the Fed will increase rates by just 25 basis points at their next meeting. While recent inflation news has been positive, there is still much work to be done. Tight labor markets have the Fed worried that service prices will continue to rise and prevent a return to their long run inflation target of 2%.

MUNICIPALS

California Governor Gavin Newsom released a general-fund budget blueprint for the next fiscal year, which starts on July 1. State officials are projecting a $22.5 billion budget deficit, six months after projecting a $100 billion surplus. Governor Newsom’s budget plan addresses the shortfall, as he proposed delaying or cutting certain spending measures.

Our Take: Officials warned of a shortfall in November after stock market weakness and lower-than-expected tax collections became apparent. Governor Newsom and lawmakers have time to evaluate and reassess over the course of the next few months as they complete the budgeting process.

“Madison” and/or “Madison Investments” is the unifying tradename of Madison Investment Holdings, Inc., Madison Asset Management, LLC (“MAM”), and Madison Investment Advisors, LLC (“MIA”). MAM and MIA are registered as investment advisers with the U.S. Securities and Exchange Commission. Madison Funds are distributed by MFD Distributor, LLC. MFD Distributor, LLC is registered with the U.S. Securities and Exchange Commission as a broker-dealer and is a member firm of the Financial Industry Regulatory Authority. The home office for each firm listed above is 550 Science Drive, Madison, WI 53711. Madison’s toll-free number is 800-767-0300.

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This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.
Although the information in this report has been obtained from sources that the firm believes to be reliable, we do not guarantee its accuracy, and any such information may be incomplete or condensed. All opinions included in this report constitute the firm’s judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.