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Market Update- February 2023

** Tax Document Update **

As a reminder, if you have an IRA or Roth IRA, your tax documents are currently available online. If you have a non-IRA account, your tax documents will be available online on March 1st. Raymond James delays these account tax documents because some of the investment companies are delayed in getting the tax information to them. If you have any questions, please give our office a call!

Debt Limit Shenanigans

On February 1st, the United States government reached its self imposed debt ceiling, which is equivalent to an average person maxing out all their credit cards, and not allowing themselves to apply for a new one. Congress has the ability to raise the debt ceiling, but in the meantime, the US Treasury is smashing dusty piggy banks in order to pay the monthly bills. The (semi-worrying) good news is that this has happened many times before, and 100% of the time, the debt ceiling has been raised and life goes on. This begs the question, how long can this last?

The US debt limit is a charade that allows the government to continue borrowing without consequence. The continued lack of discipline suggests that the mounting debt will continue until a crisis ends it. Despite warnings of a debt armageddon, many question whether high debt levels and borrowing are risky or not. After all, dozens of developed countries have a far higher debt-to-GDP ratio than the US. History has many examples of countries that borrow too much and crack under the weight, and we are a stark contrast to those examples. The US is a leader in industry, technology, higher education and military power. As long as these enduring qualities remain strong, there should be a sustained pool of individuals, organizations and countries that are willing to lend the US money. If that should change, we better figure out a budget and stick to it.

Market Update

Markets were essentially flat in February, following a very strong January. The flat performance this month was likely due to fears of a re-ignition of inflation, because of the resilience and forward momentum the economy has recently displayed. In housing news, mortgage rates came close to 7% for a 30 year mortgage, which translates into rising inventory, and downward pressure on home values (which are down 13% from their peak). The good news here is that the large, large majority of pre-2020 homeowners still have significant equity. Hotel and travel activity are at their highest levels since 2019, a sector of the economy that was smashed during the pandemic. Finally, weekly unemployment claims are at near historic lows, which signals a strong job market. General consensus is that a mild recession is still likely, but the clock is ticking for it to actually appear in the economic data.

As always if you have any questions, don't hesitate to give us a call!

Citrus Wealth Management

O: 909.312.4412 // F: 909.312.4441

1461 Ford Street, Suite 103, Redlands, CA 92373

The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of the author and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Past performance does not guarantee future results.

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