• Blog

StonebridgeFOCUS | Cancer in the Markets

One of my closest friends is an oncologist for one of the largest pharmaceutical companies on the planet. We often go cycling in the evenings to get some exercise, fresh air, and a break from our demanding lives. Last week he was sharing some of the intricacies of different types of cancer treatments. Surely, we all know someone who has been impacted by cancer, but how many of us have considered the importance of the right treatment? Interestingly, the way cancer is treated in the U.S. isn’t all that dissimilar to how inflation gets treated in the economy. I’ll withhold from calling myself a medical expert, even though the quality of my handwriting (which is abysmal) should give some measure of credibility. I do think that the comparisons between inflation and cancer treatment are worth discussing.

One thing that stuck out to me was the difference between treating localized cancers versus systemic cancers. Systemic cancers affect the whole body (i.e. leukemia) and chemotherapy is the most common treatment method. Localized refers to cancers that target specific parts of the body (i.e. lung, liver, etc.) and typically utilize radiation therapy and surgery as primary treatments. The choice of treatment is critical since using radiation therapy for cancer spread throughout the body wouldn’t be very effective. Similarly, chemotherapy may not be the most effective tool for treating localized tumors.

The tools the Federal Reserve uses to treat systemic inflation is raising interest rates, which is akin to chemotherapy. It is a blunt tool and the side effects can be economically devastating. While the Fed does have other tools at their disposal, setting short term interest rates (also called monetary policy) is their primary tool.

Raising interest rates is an indirect treatment designed to reduce demand (using the Fed’s euphemism) and bring down prices. It is a treatment program that attacks the economic body. What this practically means is more people out of work, which means less money spent, which leads to lower prices. Doesn’t sound as upbeat as “reduce demand.”

When it comes to localized treatment of the economy, this is a job best suited for Congress. The Inflation Reduction Act was signed into law on August 16, 2022. Candidly, the name of the bill hardly has anything to do with inflation. It is still early, but according to the Penn Wharton Budget Model (a nonpartisan, research-based organization at the University of Pennsylvania) there is low confidence that this law will have any impact on inflation. Even the Congressional Budget Office (CBO) estimates the law will have a “negligible effect on inflation” this year and next. If this bill addresses inflation, then I’m Lebron James.

Given the political climate, it is increasingly difficult to get meaningful legislation passed. Inflation is an economic cancer that needs appropriate treatment. We’ve seen some action coming out of Washington regarding oil and gas prices; however, more should be done to attack the localized components of inflation. It’s clear where inflation is running hot (housing, food, oil and gas). Unfortunately, there doesn’t appear to be a cohesive treatment plan that leverages all the tools available.

Until all the tools are coordinated, it’s best to focus on identifying asset classes and investment solutions that mitigate inflation risks. Managing these risks can be challenging, particularly because investment performance varies based on the inflationary environment (systemic or localized). The data provided by the National Bureau of Economic Research (or NBER) reflects a wide range of outcomes depending on the type of inflation we are experiencing. Reflecting on the last 12 to 18 months, it certainly feels like there are some localized inflation pressures that metastasized into more systemic inflation.

At Stonebridge, we focus on building client portfolios that manage risks, capture future opportunities, and most importantly, align with your career, life, and wealth goals. We are grateful for you and your continued trust and confidence.

Tyler Martin, CFP®, CPWA®


Important Information

StonebridgeFOCUS and StonebridgeMARKETS are publications of Stonebridge. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author as of the date of publication and are subject to change.

Information contained herein does not involve the rendering of personalized investment advice, but is limited to the dissemination of general information. A professional adviser should be consulted before implementing any of the strategies or options presented.

Information is not an offer to buy or , or a solicitation of any offer to buy or sell the securities mentioned herein.

Past performance may not be indicative of future results. Therefore, no current or prospective client should assume that the future performance of any specific investment, investment strategy (including the investments and/or investment strategies recommended by the adviser), or product made reference to directly or indirectly, will be profitable or equal to past performance levels.

All investment strategies have the potential for profit or loss. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will either be suitable or profitable for a client's investment portfolio.

Historical performance results for investment indexes and/or categories, generally do not reflect the deduction of transaction and/or custodial charges or the deduction of an investment-management fee, the incurrence of which would have the effect of decreasing historical performance results.

Economic factors, market conditions, and investment strategies will affect the performance of any portfolio and there are no assurances that it will match or outperform any particular benchmark.

Stonebridge Wealth Management is an umbrella name to describe the investment advisory services offered by Stonebridge Investment Counsel, LLC and OneAscent Financial Services, LLC, registered investment advisors with the United States Securities and Exchange Commission.

Stonebridge only transacts business in states where it is properly notice filed, or excluded or exempted from such filing requirements. Registration with the SEC does not constitute an endorsement of the firm nor does it indicate that the adviser has attained a particular level of skill or ability. Follow-up and individualized responses that involve either the effecting or attempting to effect transactions in securities, or the rendering of personalized investment advice for compensation, as the case may be, will not be made absent compliance with state investment adviser and investment adviser representative registration requirements, or an applicable exemption or exclusion.

  • The Loews Vanderbilt Tower
  • 2100 West End Avenue, Suite 660, Nashville, TN 37203
  • (615) 309-0832 | (800) 847-1030

Investment advisory services are offered through Stonebridge Investment Counsel, LLC (“Stonebridge”) and/or OneAscent Financial Services, LLC (“OAFS”), registered investment advisers with the United States Securities and Exchange Commission.

© Stonebridge Wealth Management. Press | Terms of Use | Privacy Policy | Legal Disclosure | OneAscent Financial Services Form CRS | Stonebridge Investment Counsel Form CRS | OneAscent Financial Services Form ADV 2A | Stonebridge Investment Counsel Form ADV 2A