When thinking of 100, what comes to mind? Perhaps a perfect score, ripe old age, stifling summer heat, the price of crude, the NASDAQ 100, or a flawless bottle of wine?  Unfortunately, the century mark is top of mind with yesterday’s 100 degree reading here in Houston, and today’s brent crude hitting $100.  Neither are overly appealing unless being overweight oil, energy stocks, or absolutely loving heat! 

Last week, CPI dropped more than expected for the prior month – largely due to the drop in oil prices.  Ironically, the day CPI was released for the prior month, the price of a barrel of oil ran up approximately 10% that very day. Collectively, energy prices have run up over 30% since the beginning of July.  This alone suggests inflation numbers will be back higher when July’s data is released.

This is a big deal.  After all, higher energy prices are direct inputs into what amounts to higher inflation.  And, it’s more than simply paying more at the gas pump, for higher energy prices tend to work their way into higher prices across the board.  True, with the recent ceasefire, the price of energy dropped precipitously.  However, as ECB President Christine Lagarde pointed out during today’s press conference, “Remember how fast energy prices went down after the announcement of the Memorandum of Understanding.  Now, once burned twice shy, it could well be that another announcement of such Memorandum of Understanding will not have a similar impact.  Because there is rising uncertainty, and it applies across the board.” Interesting!  If Lagarde’s suspicions are correct, we might have even further higher bouts of inflation, which Central Banks around the world, including our very own Federal Reserve, profess they want to address. 

Speaking of Central Bankers, last week we had the pleasure of attending a luncheon at the Houston Branch of the Federal Reserve Bank of Dallas where Dallas Fed President Lorrie Logan shared her concerns over persistently high inflation.   She reminded the audience of the Fed’s dual mandate of maximum employment and stable prices.  Logan went on to make a convincing argument as to why inflation is too high and even if it comes down due to eventual lower energy prices, the temporary impact of tariffs, and the eventual productivity gains from AI, it is unlikely to get all the way down to the desired 2% rate.  Before reminding the audience of the FOMC makeup, she closed with “To sum up, inflation has been too high, for too long, and does not appear to be on track all the way back to 2 percent. And the inflation risks are to the upside. The labor market, meanwhile, is solid. Without any policy restraint, these conditions are likely to continue until there’s an unanticipated shock. So, I currently believe modestly higher interest rates would better balance the outlook and risks for the FOMC’s maximum employment and price stability goals. Of course, the economy is dynamic, and more data arrive nearly every day. If the outlook changes, I will update my policy views accordingly.” 

President Logan is correct on many fronts.  Inflation is too high, the job market is secure, but ongoing higher inflation has the potential impact of hurting all Americans.  It is time for the Fed to act.  Whether the Fed opts to hike next week, or at the September, October, or December meetings, barring major changes, one would assume the next move by the Fed is a hike rather than a cut.  In the interim, imagine the majority of the FOMC will vote to hold, until a greater consensus materializes.

Interest rate changes and money supply eventually impact virtually everything – from the economy, equity markets, bond portfolios, consumer demand, and corporate profits.  Like most changes, there will be winners and losers, depending on the magnitude, sector, timing, debt levels, asset class, and actions.  Yet additional reasons we remain committed to asset allocation and diversification.

Thank you for your interest, for reading to the end, and most of all for entrusting us with your lifesavings.  We are honored and humbled, and remain grateful for the opportunity!  Here, if you need anything or care to discuss further. In the meantime, reminded that 100 degrees Celsius is the boiling point for water.  Stay cool to the best of your ability…the heat is on!    

Not an offer or Advice: This commentary is provided for informational and educational purposes only and does not constitute a recommendation to buy or sell any specific security or to adopt any particular investment strategy. The views expressed represent the current opinions of Joyce Wealth Management as of 7/23/26 and are subject to change without notice.