The first half of the year was difficult for investors as the Federal Reserve (the “Fed”) began an aggressive tightening cycle to fight inflation sitting at 40-year highs and risk-off sentiment pervaded. Here are 3 things you need to know: The S&P 500 index dropped 20.6%, marking its worst first half of a year since 1970.Bonds, as measured by the U.S. Aggregate Index, had their worst first...
Stocks rebounded in March even as the Russia/Ukraine conflict continued to escalate. The key message from the Federal Reserve is that it is focused on fighting inflation and is prepared to hike short-term interest rates steadily and reduce its balance sheet until it reaches its goals. Q1 earnings season will kick off the week of April 11th and although Wall Street analysts have recently...
By: Thomas Steffanci, PhD, Senior Portfolio Manager The first link in the supply chain, the number of ships backed up in Los Angeles and Long Beach harbors, is in sharp decline as the accompanying chart from BCA shows. Source: BCA Research The harder part is relieving the structural scarcity of trucks, drivers, and logistics (i.e., port workers, warehouse capacity) to decompress...
February was a month of two halves. Hawkish central banks, high inflation and a strong U.S. jobs report dominated the first half of the month. However, the Russia/Ukraine situation has taken over the narrative for the second half of the month and has carried over into March. Our hearts and prayers go out to the people of Ukraine. Here are 3 things you need to know: Real gross domestic product...
By: Michael Allbee, CFP®, Senior Portfolio Manager Late last year we gave you some tips on how to profit from inflation by investing in Series I savings bonds (I-Bonds). You can buy up to $10,000 per person per year directly from Treasury Direct. But you can also fight inflation by buying an additional $5,000 in paper I-Bonds with your income-tax refund. You can ask to receive all or part of...
By: Thomas Steffanci, PhD, Senior Portfolio Manager The markets are all aflutter as the Federal Reserve (the “Fed”) plans to reduce and then eliminate their purchases of government securities which are supposed to follow their first increase in the Fed Funds rate in March. That is estimated to be a 25-basis point (maybe 50-basis point) rise. If you believe the latest estimates of the members of...
By: Thomas Steffanci, PhD, Senior Portfolio Manager Source: Realinvestmentadvice.com Has the Federal Reserve (the “Fed”) caused the burst in inflation over the past year? Not Likely. While the Fed can influence money supply (M1) growth, they can’t control how fast it is spent. Money velocity measures how many times a dollar of money supply circulates. If M1 growth rises but it is saved (a...
Do you have excess cash reserves that you won’t need for 12-months? If yes, then consider Series I savings bonds. These bonds pay a fixed rate for the life of the bond (today it is 0%), plus the annualized Consumer Price Index (CPI) inflation rate. With the interest compounded semiannually, these I Bonds will pay a total annualized interest rate of 7.12% through April 2022, well in excess of any...
You have done a great job preparing for retirement, but do you understand the risks? Timing is everything, and early market declines at retirement, particularly if they are paired with rising inflation, can significantly reduce the longevity of your retirement nest egg. Learn from Paul Horn, CFP® in this 2-minute BFSG short as he discusses the least understood risk to retirement – sequence risk...
November returns would have looked very different had the month ended at Thanksgiving, but the last three days turned global markets on a head. Here are 3 things you need to know: The gradual removal of pandemic-era monetary policy accommodation in the United States has begun with the Federal Reserve’s announcement on November 3 that it would start to scale back its bond-buying program.President...
Many equity markets saw their best month of the year (including the S&P 500), whilst commodities led the way. Here are 3 things you need to know: Real GDP growth slowed substantially in the 3rd quarter to a 2.0% annual rate, after 6.5% growth in the first half of the year. Recent data points to a pick-up of economic momentum for the 4th quarter.Core CPI inflation for September rose to 4.04%....
September marked a much weaker month for financial markets. Here are 3 things you need to know: Inflation moderated across a few major categories that have been the most impacted by supply chain shortages and pent-up consumer demand, such as used cars, airlines and hotels. However, energy prices surged during the month with WTI oil increasing +9.5% for the month.Expiring extended federal...
By: Steven L. Yamshon, Ph.D., Managing Principal James Carville, President Clinton’s political consultant said at the time when Clinton was President, "I used to think that if there was reincarnation, I wanted to come back as the president or the pope or as a .400 baseball hitter. But now I would like to come back as the bond market. You can intimidate everybody." Back in the early...
By: Michael Allbee, CFP® Principal| Senior Portfolio Manager The past few months saw some eye-popping inflation readings after subdued inflation prints last year due to COVID. The Core Consumer Price Index (“CPI”), which excludes the volatile energy and food categories, rose 0.9% in June after increasing 0.7% in May and 0.9% in April, bringing the year-over-year reading to 4.5%. Headline...
By: Thomas Steffanci, PhD, Senior Portfolio Manager On Wednesday, June 23, 2021, the minutes of the Federal Reserve’s (the Fed) latest policy meeting held a week earlier were released along with individual members’ (anonymous) estimates of where the Federal funds rate will be through 2024. The policy setting group (the Federal Open Market Committee) is comprised of 18 members including Chairman...
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