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Here’s to making it to Thursday!

If you feel sticker shock every time you step into a grocery store these days, imagine what it must feel like to shop in Argentina, where inflation surged past 70% this month. That’s right, seventy — that is not a typo — and the New York Times has experts predicting it will increase to 90%! Then consider the UK, where consumer prices were up 10.1% year-over-year in July, compared to 8.5% in the US.

Thanks to the hyper-connectedness of our global economy, rising prices in one country have ripple effects throughout the globe. High inflation, material shortages, delivery delays, and interest-rate rises all contributed to a sharp drop in US business activity in August. It’s the same story in Europe, where business activity just declined for the second month in a row thanks to rising energy prices.

So what does this mean for investors? Don’t be surprised to see the global economic slowdown impact company earnings. As you will remember from our discussion of the impact of the stronger-than-usual dollar, multinational companies and companies that rely on international goods can be impacted on multiple fronts by the costs of goods and services both in the United States and abroad. If you’re looking for a silver lining (as we often are at FWIW), consider this: downturns provide opportunity for those with capital to invest. We’ve got some thoughts on investing in a recession for those of you looking for ideas.

How all of these trends will play out over the next few months is a bit of a coin toss. Even the leaders on Wall Street can’t agree. When there is a lack of consensus on the short-term direction in the financial markets, we — again — take solace in our commitment to focus on the long-term and to look for the companies and funds that are both in line with our values and positioned to succeed over a 5-10 year period.

News you can use

• More changes in the workplace are expected with high inflation and economic uncertainty rising. Half of the 722 execs surveyed this month predict job cuts in the next 6-12 months, with 52% also expecting to institute a hiring freeze. When coupled with recent announcements from companies like Lyft, Yelp and Salesforce that they are selling or leasing out part of their office spaces, you can see multiple shifts in the US workplace taking hold. Something for all of us to keep an eye on.
  
• Many were relieved to hear Wednesday’s debt relief announcement out of the White House. President Biden announced a plan to cut $10,000 of student debt for all who had an income of less than $125,000 a year and $20,000 for those who were Pell Grant recipients. Overall, the White House estimates that this action will clear 20 million people of all their student debt in the next year. This hotly debated topic… will likely continue to be debated.
  
• California is gearing up to challenge the internal combustion engine! State regulators will be voting today on a historic rule that would ban the sale of new gasoline cars starting in 2035. If passed, 35% of each automaker’s sales will need to be zero-emissions by 2026. A growing list of car makers, including GM, Ford, Toyota, and Honda, have backed the state’s authority to do this in order to be eligible for government fleet purchases. Proponents are saying this is the push the auto industry needed to speed up introduction and production of more zero-emission vehicles. Critics… well, there are a lot of them and they have a number of issues with the timeline.