“It is the time you have wasted for your rose that makes your rose so important.” Antoine de Saint-Exupéry, The Little Prince

Good morning,

As most of you know, I typically like to get these morning musings out early Monday morning…. Yesterday, however, I spent the morning with my son Bowie as the rest of my crew (Jenn, PresleyMae & Dilynn) stayed up at the beach for the week. With the little guy up at 5am yesterday, I decided to protect & prioritize my limited resources……

Finite Resources

The current average human lifespan we get 4,000 of each day of the week: 4,000 Saturday nights, 4,000 lazy Sundays, and 4,000 Monday mornings. When we are young, that might feel like a dizzying number of tomorrows. As the years go by, not so much…..

“How did it get so late so soon?” Dr. Seuss

Our focus here at Henderson Wealth, in our work with clients is centered around three central personal resources:

• Wealth
• Time
• Energy

Wealth

“Show me where you spend your time, money and energy and I’ll tell you what you worship” John Wimber

It’s important to consider wealth more than money, in our view wealth is comprised of four distinct elements of capital; Financial, Intellectual, Social and Human capital, elements that require us to prioritize our time and our energy to ensure we are expelling our resources in a way that is in line with our values and our vision for ourselves, our family and the imprint that we desire to leave on this world.

Time

“Some people live more in 20 years than others do in 80. It is not the time that matters, it’s the person.” Doctor Who

Time is finite, we understand this, but it’s not often enough that we think about how we are spending our time. We have the moment we’re in….right now….and we are always about to lose this moment it to the next one. What does this mean? We must be more deliberate, diligent and purposeful with our time and our moments.

Energy

“It's being here now that's important. Time is a very misleading thing. All there is ever, is the now. We can gain experience from the past, but we can't relive it; and we can hope for the future, but we don't know if there is one.” George Harrison

All the time in the world is meaningless if we cannot spend energy to enjoy it. Energy is the ability to engage in mapping out our goals and all the effort it takes to achieve them.

No one, even the titans of industry, have unlimited energy to do the work that they do. That might seem unlikely, after all, we can think of extremely successful people around us that achieve incredible things, move institutions and money at levels that few can hardly fathom…..but to them, like you, energy is a limited resource.

Energy, even more so than time and money, needs careful management if we are to be productive and live a life in line with our goals. Despite its importance, most of us don’t spend a single moment considering how our energy is spent, we just spend. If we are striving to control our resources, it’s imperative to become exceptionally good at managing your energy and be ferocious about protecting it.

“It is the time you have wasted for your rose that makes your rose so important.” Antoine de Saint-Exupéry, The Little Prince

I could write at length on these topics, they are themes we cover in our wealth journey meetings. If we can all prioritize and create intentional direction for our time, energy and wealth….we can ensure that our time is not wasted and will help us avoid attributing importance to efforts that are not in line with our ultimate vision for life. Stepping back and reflecting where we are spending our time, energy and wealth will ensure that we are living in accordance to a measured and deliberate vision.

And now, to the Markets

After reporting a rock solid quarter yesterday, Goldman Sachs CEO David Solomon made reference that inflation is deeply embedded in the economy and it’s unclear whether the situation will improve later this year. “I expect there’s going to be more volatility and there’s going to be more uncertainty and in light of the current environment we will manage all our resources cautiously,” Solomon said

Investors who had been hoping for a quiet start to the summer may be disappointed. The past week alone was rather busy, with a number of developments ranging from a large rate hike from the Bank of Canada to closely scrutinized inflation data in the U.S. Concerns are also rising with respect to Russia and the potential for it to cut off its supply of natural gas to Europe. Meanwhile, the second quarter earnings season has kicked off with investors both eager and anxious to learn about the resiliency or difficulties companies are experiencing in the current environment. We’ll touch on the latter two issues over the weeks to come. Below, we share some thoughts on the two former issues.

The Bank of Canada surprised investors by raising its policy rate by a full percentage point, versus the 0.75% that was expected. It was an understandable decision given the persistence of inflationary pressures. The Bank now expects inflation to end the year at an annual rate of 7.5%, compared to its prior forecast of 4.5%. Officials mentioned they would rather “front load” the interest rate hikes. More specifically, the Bank is hoping that by raising rates forcefully this early in its tightening cycle, it will reduce the odds of having to raise rates by an even larger amount in the future. Our firm’s economists expect another 1.0% in rate increases by the end of the year. In the U.S., the consumer price index (CPI) for the month of June was released. It rose past 9% year over year, representing the highest level in more than 40 years. More importantly, it revealed that pressures are relatively broad and continue to rise in areas such as rent, where inflation has historically been more persistent and taken time to unwind. Not surprisingly, this report paves the way for the U.S. Federal Reserve to take action. The Fed is expected to raise rates by either 0.75% or 1% when it makes its decision in a few weeks.

Markets have been surprisingly resilient in the wake of these developments. This is in contrast to the behavior earlier in the year when there appeared to be a greater degree of trepidation. We attribute this to a few things. First, central banks are already aggressively tackling inflation, with a series of forceful rate hikes in recent months. Second, there are signs that suggest future inflation may be poised to decline. For example, commodity prices have fallen substantially, which will eventually make its way into future inflation readings. And, some leading economic indicators, such as the yield curve, are pointing to activity that is likely to slow further in the months to come, with growing risks of a potential recession. This shouldn’t be surprising. Financial conditions have tightened meaningfully in a short period of time and are starting to deliver some of the intended impact, namely a deceleration in demand. Lastly, and perhaps most importantly, measures of longer-term future inflation expectations have come down, and in some cases meaningfully. All this suggests that while inflation remains a serious issue at the present time, it may pose less of a challenge in the future.

To be clear, the risks facing the market still remain elevated. But, they may be transitioning from strictly inflation oriented, towards risks that are more closely tied to other fundamental issues such as economic and earnings growth which bodes well for us as we find opportunities amid the volatility and uncertainty.

“The goal of life is not to have our lives mean something to ourselves. The goal of life is to have our lives mean something to others.” Simon Sinek

As we head into the week and continue to enjoy summer, it’s a perfect time to really reflect on where your see yourself spending your time, your energy and your wealth moving forward.

Once you have a framework around these precious resources, do welcome discipline and routine into your life. The more decisions you can make automatic, the better your performance around these treasurable resources will be, and you can ensure you are spending your one true life wisely, with impact and intention.

Be well & enjoy the moments

Derek