Markets This week’s inflation report caused a monumental drop in stock market averages due to expectations for a decline in prices as a result of a decline in the price of gas. The results were disappointing leading to confirmation in markets that next week’s Fed meeting will result in a ¾% increase in the Fed funds rate making borrowing rates increase and decreasing the value of earnings growth in the future. Increasing interest rates cause...
Markets September is historically a tough month for the stock market. Historical patterns can be a valuable tool for certain investors who have figured out timing markets, but extensive research says execution and consistent outperformance is very, very difficult. Missing a handful of the best days in the market over long time periods can drastically reduce the average annual return an investor could gain just by holding on to their equity investments during sell-offs. Now...
Markets As August ends with a decline in the stock market and increase in interest rates, the economic uncertainty continues. The life expectancy rate has fallen again this year for Americans. We are closer to a bottom in the stock market than we were last month and negative sentiment along with headline negative sentiment is increasing. Short term interest rates are providing a safe haven for cash although inflation rates far surpass interest rates on...
Estate Plan Elements: TOD and Joint Accounts Continuing August as “National Wills Month,” TOD, or “Transfer on Death,” is another important aspect of estate planning. It involves designating an individual or entity to receive your assets after your passing, outside of probate. Probate court is the state law that determines where your assets will go if you do not have a beneficiary or TOD designated for your Investment accounts. Retirement accounts require beneficiaries. Investment or...
The “Inflation Reduction Act,” what is left of “Build Back Better,” has been signed by President Biden. This happened the same week that FBI agents implemented a document search at former President Trump's Mar-a-Lago residence. We know what item received the most attention. The IRA act is broad ranging and has already influenced market sectors, especially alternative energy companies. There are substantial benefits in areas of daily life, many of which are phased in over...
Now that the “Inflation Reduction Act” has moved out of the Senate, we should see the Consumer Price Index move towards zero! Well, it has not passed the House or been signed by President Biden. After that, the CPI will move to zero. Not really of course. Although importantly, in the latest Fed Survey, consumers' expectations of inflation in 2022 is 6.5%, but in 2023 and the next 3 years inflation expectations are 3.2%, a...
Important Client Action Item (Blog Post Begins Below): The San Francisco Governor of the Federal Reserve Bank indicated today that the Fed is far from over-attacking inflation, meaning short-term interest rates will continue to increase and stay higher for longer. The July stock market rally was presumed on fewer interest rate raises and the possibility of lowering rates going forward based on two-quarters of negative GDP growth. The two-quarters of negative GDP growth is a...
Insight into possible Wall Street/investor thinking. After the market closed on Monday, Walmart announced a significant decline in sales because inflation in food items is leading to lower discretionary spending, resulting in too much inventory and a subsequent lowering of prices to clear it out and a reduction in quarterly and 2022 profits. The immediate result is a futures sell off in the S&P 500, Dow, and Nasdaq and a steep after hours decline in...
The Euro and the US dollar are no longer exactly at parity, however, if you have contemplated buying property in the European Union, now is the time to consider it. The heat wave and fires could be a problem though, kind of like California. So far, in SF, we have been lucky with clean air this year, however, that can change anytime. The Market In July, for the first time this year, markets have gains...
The Market Markets focus on trends in preference to absolute numbers. Inflation numbers came out this week and they might be higher than last month’s, but markets look for trends. And the bad news is good is often at work. If inflation numbers are higher this month, it may be interpreted that this is the high and the trend will be down going forward. One indicator that I have mentioned repeatedly in our newsletter is...
First Half Decline The first half of the year is done with stock market averages experiencing the largest ½ year decline since 1970. These declines include the fixed income market (bonds) as well, although the declines are less in that asset class and recently we have seen declines in interest rates as well. Headlines do not include the fact that in the 2nd half of 1970, market averages increased by 26%. Will history repeat itself...
Markets Week Ending 7/1/2022 From the depths of correction territory and a 20% decline, markets rallied across the board last week. Interest rates stabilized with the yield curve remaining pretty flat between 2 year and 30 year maturity. The bond market remains skeptical of economic growth past 2 years time from today. Earnings season for the 2nd quarter begins in July with not a great deal of visibility and analysts still expecting growth of 4.8%...
