The economy and financial markets have faced potent challenges in 2023. These include concerns of an imminent recession, a hawkish Federal Reserve, stubbornly high inflation, a sputtering banking system, etc. Unlike last year, the price of oil hasn’t been a major headwind as it’s traded between $60 and $70 per barrel for most of the year. 

The situation is now changing as the front month contract for WTI crude oil settled above $90 for the first time this year. Higher oil prices are a negative for the economy and markets as it detracts from consumer spending and contributes to inflationary pressures. Until inflationary pressures fully recede, there is unlikely to be a change in Fed policy. 

So while there has been constructive news on the finaltion front regarding real estate and the labor market, the mild tailwind from lower oil prices is now becoming a headwind. For oil, the major catalyst is on the supply front as OPEC producers have been cutting production in anticipation of an economic slowdown. 

But, demand has been less impaired than anticipated even accounting for the weakening Chinese economy. Another factor supporting demand is that the US is a buyer of crude oil given the need to restock the strategic petroleum reserve. 

Finsum: Crude oil prices moved past $90 per barrel for the first time in 2023. Here are some of the reasons behind its recent strength.

For financial advisors who are serious about growth, the most effective strategy is to simply acquire another practice. Of course, this requires significant resources in addition to a well-thought out plan to integrate the new practice into the existing one. It also means making tough decisions when it comes to headcount, organizational structure, and management. Most importantly, there can be no compromise when it comes to the client experience on both sides of the ledger. 

Advisors should consider this possibility especially as it’s going to be a buyer’s market given that so many advisors are nearing retirement age. Based on research from Cerulli Edge, nearly 40% of advisors will be retiring over the next 15 years. Additionally, advancements in technology mean that overhead costs don’t necessarily have to meaningfully rise with an acquisition. 

According to Bill Williams, the president of acquisitions at Ameriprise, the most important step is to conduct proper due diligence to ensure that no regulatory issues arise, and there is no issue with the financials of the firm being acquired. He also says that a common mistake is to use an acquisition to solve a problem. Instead, the buyer must come from a position of strength which means that you have a thriving, profitable practice with a healthy culture. 

Finsum: While there are many growth strategies for advisors, acquiring a practice can supercharge growth. Here are some important considerations. 

The Bureau of Labor Statistics released the CPI report for August which showed a 3.7% increase in inflation which was above expectations of 3.6%. Core CPI came in at 4.3% which was in line with expectations.

It marks the third straight monthly increase in inflation as July saw CPI at 3.2%. Some of the factors contributing to this were a 5.6% increase in energy prices and a 7.3% increase in owners-equivalent rent. 

Initially, Treasuries weakened on the news as it incrementally increased the odds of another hike by the Federal Reserve. However, the fixed income complex was quickly bid up on the drop as market participants seem willing to look past the hotter than expected inflation data.

Two major components of the inflation report - housing and wages - are softening which spells relief for the market. Rents are already dropping in key markets, while recent labor market data shows that unemployment is ticking higher. Much of this data will take time to be reflected in the CPI. Thus, investors are willing to use the weakness to add to fixed income. 

Finsum: Fixed income was bid up despite a hotter than expected CPI report. This seems to be because investors are increasingly confident that inflationary pressures will continue to recede.