A war rages on, a literal one in Iran and another one with inflation. Everyone is wondering how the markets can continue to be so resilient.
We get a lot of inflation data this week.
Last week markets pushed to new highs, inflation fears eased slightly, and concerns about an immediate economic slowdown took a step back.
Stocks climbed across the globe, bond yields declined, and optimism surrounding artificial intelligence continued to spread beyond a handful of technology companies.
Let’s be clear, escaping an immediate threat is not the same thing as securing a smooth journey ahead.
Because while Wall Street is cheering, Main Street is still paying attention to something much more personal:
The price of groceries.
Beef, for example
2024 about 4-5% inflation
2025 about 10-14% inflation
2026 around 12-15% through spring data
And surprisingly, one of the newest risks to your food budget has a name that sounds like it came from a horror movie: screw worms.
What in the World Is a Screw Worm?
The New World screwworm is a parasite that attacks livestock, particularly cattle.
Disruptions to livestock production have a direct impact on beef prices, dairy production, and ultimately the cost of food at your local grocery store.
This happened before in the 1950’s, and it cost more than $100 million annually roughly $1.1 to $1.3 Billion per year in today’s dollars.
It impacted Texas, Florida, New Mexico, Arizona, Louisiana and other Gulf cost states.
We have had our second confirmed case in Texas along the border. Hopefully since we beat this before we can do it again. It seems the administration is working to have the appropriate flies (Yes, sometimes flies are a solution) in place to combat this possible outbreak.
Sterile flies are needed to combat the screw worm fly that causes all this trouble.
When outbreaks occur, ranchers face increased costs for treatment, containment, and transportation restrictions. Those costs eventually work their way through the supply chain and show up on your receipt.
It's another reminder that inflation doesn't always come from the places we expect.
Sometimes it’s a more annoying summer fly.
Sometimes it's Federal Reserve policy.
Sometimes it's energy prices.
And sometimes it's literally a worm, that exists courtesy of said fly.
Why Food Prices May Stay Stubbornly High
Food prices don't exist in isolation.
They are heavily influenced by transportation costs, fertilizer costs, labor costs, and energy costs.
That's where the current geopolitical landscape becomes important.
The ongoing uncertainty in the Middle East and concerns surrounding energy supplies continue to create volatility in oil markets. While prices have come off their highs, oil remains elevated compared to pre-conflict levels.
Energy acts like a tax on almost every part of the economy. Higher fuel costs affect:
- Farming equipment
- Fertilizer production
- Transportation and shipping
- Food processing
- Retail distribution
In other words, when energy costs rise, your grocery bill often follows.
Investment managers are increasingly warning that disruptions to global energy flows could take months—not weeks—to fully resolve. Even if geopolitical tensions ease, rebuilding supply chains and restoring normal trade routes takes time.
The Federal Reserve's New Problem
Just a few months ago, markets expected multiple interest rate cuts in 2026.
Today, those expectations have shifted dramatically, you can’t make money cheap when too many people are circulating it, making it expensive.
For consumers, that means:
- Credit card rates may remain elevated
- Auto loans may stay expensive
- Mortgage rates could remain higher than many hoped
- Savings accounts may continue offering attractive yields
The era of "cheap money" may not be returning anytime soon.
Meanwhile, AI Keeps Changing Everything
At the same time we're discussing inflation, energy shortages, and food costs, another powerful force is reshaping the economy.
Artificial intelligence.
Business investment fueled by AI continues to be one of the strongest drivers of economic growth. Companies are spending heavily on infrastructure, software, and productivity improvements.
The challenge is that AI creates both opportunities and disruptions.
Recent labor reports even cited AI as a contributor to certain layoffs, while other industries are experiencing productivity gains and stronger earnings.
This is why today's economy feels so confusing.
We can have:
- Strong stock markets
- Solid corporate earnings
- High food prices
- Elevated interest rates
- Technological breakthroughs
All at the same time.
Why Diversification Matters More Than Ever
After more than a decade of U.S. market dominance, international markets are beginning to make a stronger case for inclusion in portfolios, supported by improving earnings growth and more attractive valuations.
The range of possible outcomes has widened significantly with that, we prepare with broad diversification across sectors, asset classes, and geographic regions.
When uncertainty increases, concentration becomes riskier.
Diversification isn't exciting.
It doesn't make headlines.
But it remains one of the most effective tools investors have.
The Bottom Line
The next time you notice higher prices at the grocery store, remember that inflation isn't caused by a single event.
It's the result of countless moving parts:
- Global conflicts
- Energy markets
- Supply chains
- Labor shortages
- Interest rate policy
- Technological change
- And yes...sometimes screw worms that came about by a fly we thought we beat in the 60’s.
While markets may be celebrating a temporary reprieve from immediate economic fears, the bigger story remains unchanged: we're navigating a world where uncertainty and opportunity exist side by side.
The goal isn't to predict every headline.
The goal is to build a financial plan that can withstand them.
Because whether it's AI, inflation, oil prices, or parasites affecting livestock, your long-term success has never depended on predicting the next crisis.
It depends on staying focused on your goals while everyone else is reacting to the noise.
For you locals, I am hosting a AI and investing meeting next Tuesday at 6PM contact our office for an official invite – There is still limited availability and we’d love to have you!