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Insights from Don Drury


                                                                                                                                          President, Moran Wealth Management




                                                                                                                                                 lthough investors do not have a crystal ball, certain   nonetheless. Th  is inversion historically
                                                                                                                                                 economic metrics can help investors and business owners   has predicted seven out of the eight
                                                                                                                                          Amake informed decisions on the direction of the economy.   past recessions and has had one false
                                                                                                                                                                                                                   2
                                                                                                                                          For instance, leading economic indicators can signal changes in   positive in 1994.  On April 1, 2022,
                                                                                                                                          the economy before they occur. One of the most well-known   we briefl y saw the two-year
                                                                                                                                          leading economic indicators is the Yield Curve, which conveys the   Treasury note top the 10-year
                                                                                                                                          relationship between short-term and long-term interest rates on   Treasury note at 2.44%
                                                                                                                                          treasury bonds.                                            versus 2.38%, signaling to
                                                                                                                                                 Financial experts argue that the slope of the yield curve   investors another recession
                                                                                                                                          can predict future economic activity. In a normal economic   may be impending. It is
                                                                                                                                          landscape, the curve is upward sloping with the short-term rate   important to remember
                                                                                                                                          lower than the long-term. To understand why, it is useful to think   that a recession does not
                                                                                                                                          about treasury bonds as essentially investors lending money to the   follow immediately after
                                                                                                                                          U.S. government. As the maturity of a bond increases, investors   an inversion. On average, a
                                                                                                                                          expect to be compensated for the increased risk of lending their   recession comes 19 months
                                                                                                                                          money over a longer period. Th  is relationship between short-term   after the two-year and  3
                                                   ART                                                                                    by expectations of the Fed’s monetary policy, while long-term     mind, we believe that we
                                                                                                                                          and long-term rates can change, however, with the curve fl attening
                                                                                                                                                                                                     10-year yield inversion.
                                                                                                                                          and even inverting. Short-term rates are primarily infl uenced
                                                                                                                                                                                                            With all of this in
                                                                                                                                                                                                     remain at a crucial turning
                                                                                                                                          rates are set by investor’s outlook on infl ation and economic
                                                                                                                                          growth. A normal, upward sloping curve indicate investors predict
                                                                                                                                                                                                     point in the economy
                                                                                                                                          future economic health and market expansion. When investors
                                                                                                                                                                                                     as the Fed embarks on
                                                          aft er
                                                                                                                                          start to anticipate the economy slowing down in the future, this
                                                                                                                                                                                                     aggressive monetary
                                             DARK                                                                                         curve inverts with short-term bonds yielding higher than long-  policies to combat
                                                                                                                                          term bonds. Th  is yield curve inversion signals investors have a
                                                                                                                                                                                                     infl ation. Here at Moran
                                                                                                                                          pessimistic long-term economic outlook and are willing to pay a
                                                                                                                                                                                                     Wealth Management,
                                                                                                                                          premium on shorter term bonds.
                                                                                                                                                                                                     we are actively

                                                                                                                                                 Traditionally, economists look at the diff erence between
                                                                                                                                                                                                     watching for changes
                                                                                                                                          the three-month and the 10-year Treasury note to determine the
                                                                                                                                          possibility of a future recession. Economists pay attention to this
                                                                                                                                                                                                     indicators including
                                                                                                                                          metric because it has reliably predicted the last eight recessions   in leading economic
                                                                                                                                                                                                     the yield curve and
                                                                                                                                                                                       1
                                                                                                                                          consecutively, including the Great Recession of 2008.  As of June   encourage you to reach
             ummer is going by quickly with many days of afternoon rain   Th  is time of year, we have the time to enjoy them and their   23, 2022, the spread between the three-month and the 10-year   out to us regarding any
             and dramatic sunsets.  Phil Fisher likes these days of colorful   beauty and it's nice to save them in the form of a painting to   Treasury has remained positive.  Th  e spread of the two-year and   questions or concerns.
        Sclouds and skies, especially.  It gives him the opportunity to   enjoy for years to come. His works can be seen at Phil Fisher   10-year Treasury note, on the other hand, does not have a perfect   You may contact us at
        paint the exciting colors and light.  Th  e quiet of this time of year   Gallery in Crayton Cove during the months of September and   track record of predicting a recession, but is still signifi cant,   your own convenience
        is nice, too.  He works on paintings of birds you might catch a   October.  While in the area, a visit to Random Acts of Art, Paws                                                           on our mainline
        glimpse of in the shallows of a mangrove tree or the “Footprints   Pet Boutique and Shannon Green Jewelers is in order, as well.                                                             239-920-4440
        in the Sand” at the beach exciting the color that bounces off  the   Th  ere is no waiting at the fi ve restaurants within walking distance                                                  or schedule an
                                                                                                                                               Donald E. Drury President
        sand aff ected by the water.  Th  e wading birds are a favorite subject   of the shops.  Crayton Cove is a unique commercial area with a                                                     appointment at
                                                                                                                                                 P: (239) 920.4448
        as they are characters of grace and charm, standing still in a fl oral   laid-back charm, worth the visit.  Located at the intersection of                                                   moranwm.com.
                                                                                                                                                 F: (239) 431.5239
        background or in the water, fi shing for dinner.           8th St S and 12th Ave S by the Naples Bay.
                                                                                                                                                 don.drury@moranwealthmanagement.com
                                                                                                                                                                                                     1 www.barrons.com
                                                                                                                                                 www.MoranWM.com
                                                                                                                                                                                                     2 Ibid
                                                                                                                                                 5801 Pelican Bay Boulevard, Suite 110, Naples, FL 34108
                                                                                                                                                                                                     LPL Research
                                                                                                                                                                                                     3
                                                                                                                                          Th  is article contains general information that is not suitable for everyone and was prepared for informational purposes only.  Nothing
                                                                                                                                          contained herein should be construed as a solicitation to buy or sell any security or as investment advice to any reader. Th  e article
                                                                                                                                          is an advertisement for Moran Wealth Management in its capacity as a registered investment adviser. Th  e article contains certain
                                                                                                                                          forward-looking statements that indicate future possibilities. Due to known and unknown risks, other uncertainties and factors,
                             www.GalleriesOfCraytonCove.com        www.PhilFisherFineArt.com      www.Guess-FisherGallery.com             actual results may diff er materially.  As such, there is no guarantee that any views and opinions expressed herein will come to pass.
                                                                                                                                          Past performance is not a guarantee or predictor of future performance.

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