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Delta Variant Ignites Volatility

jim Financial advisor, Investing, Market Brief, Market Commentary, Market Outlook, Market Review, Retirement Planning, Stock Market, wealth management July 19, 2021July 19, 2021financial advisor, investment planning, market brief, Market Commentary, Market Outlook, Market Review, retirement planning, Stock Market, wealth management

Fears of the spreading delta variant ignited a selloff today. Last week’s weakening under the hood as some areas experience significant drawdowns relative to the broad indexes. Concerns about deteriorating market breadth pushed equity indexes lower. With a light calendar of economic news to start the week, the focus will shift to Q2 earnings announcements.

Last Week

Concerns about deteriorating market breadth pushed equity indexes lower. The S&P 500 and Dow Jones Industrial Average fell 0.5-1.0%, while the Nasdaq slipped 2%. Energy stocks plunged 8%, with the materials, industrials and discretionary sectors also suffering losses. Consumer prices jumped 5.4% from a year ago. The largest increase since August 2008, and rose 0.9% on a monthly basis. Producer prices increased 1% from May and jumped 7.3% Year-over-Year. Most of the increases continued to come from sectors influenced by the shutdown, which Fed Chair Powell reiterated in his Congressional testimony. Powell also noted that the Fed’s benchmarks for tightening monetary policy remain “a ways off”. Crude oil fell 4.5% after Saudi Arabia and the UAE reached a compromise on increasing output, offsetting declining U.S. stockpiles.

Jobless claims reached a new pandemic-era low of 360,000, with continuing claims falling sharply to 3.24 million. U.S. manufacturing reports came in mixed, the New York region rose to a record 43 reading for July. While the Philly Fed said progress was slowing with a decline from 30.7 to 21.9. U.S. industrial production missed estimates in June, posted a 0.4% increase as supply shortages still plagued output. Prospects for Q2 U.S. economic growth were bolstered by a surprising jump in retail sales. Transactions climbed 0.6% Month-over-Month and 18% Year-over-Year, well above pre-pandemic levels. China, the world’s second largest economy expanded 7.9% in the first three months of the year, still strong but down from 18.3% the previous quarter. In Europe Germany’s CPI was in-line at 2.3% Year-over-Year while the UK’s 2.5% outpaced estimates.

Delta Variant and the Week Ahead

With a light calendar of economic news to start the week, the focus will shift to Q2 earnings announcements. Large cap mainstays IBM, Travelers, Netflix, Johnson & Johnson, Verizon, AT&T, Intel and American Express will all provide updates. On Wednesday, the ECB will deliver its monetary policy statement with an eye towards recent inflation dynamics and the difficult-to-assess risk of the coronavirus delta variant. U.S. unemployment claims are expected to fall to another pandemic-era low. Housing starts will highlight the state of the complicated homebuilder market.

Year-to-date index performance; Dow up 13.3%, S&P up 15.2%, and Nasdaq up 11.9% through the close on Friday.

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This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

Strong Jobs Report Push Recovery

jim Uncategorized July 6, 2021July 6, 2021

U.S. jobs report data propelled equities to finish the first half of 2021 on a high note and continued the upward momentum into the holiday weekend. The Dow, Nasdaq, and S&P500 all closed at record highs as interest rates remain a non-factor. A holiday-shortened week still offers a busy economic calendar. Constant and immediate information leads many to haste and anxiety. At the end of the day, keep it simple.

Don’t Overthink It

So much information is at our fingertips today. Have a question about a health issue? I’m sure Google has a quick answer and Amazon has a perfectly matched product for you, or there are probably 50 blogs on the topic detailing every answer under the sun. But how do you know if you can trust those results?

Copious amounts of data and conflicting opinions can be very confusing when you have an important decision to make – especially one concerning your future or finances. It’s those panic moments of information overload when analysis paralysis can set in. The fear of making the wrong choice often results in endless wrangling over the upsides and downsides of each option, and an inability to pick one.

Analysis paralysis can cost you time and money. When it comes to your finances, don’t put extra pressure on yourself. I can keep your worries in check by staying laser-focused on the long-term goals you’re striving for. Working together, I’ll help you replace paralysis with problem-solving. In doing so, you will reclaim your time, energy, and brainpower.

Last Week: All About Jobs Report

Equities finished the first half of 2021 on a high note and continued the upward momentum into the holiday weekend on the back of strong U.S. jobs report data. The ADP report showed private payrolls grow by 692,000 in June versus the estimate of 550,000. Non-farm payrolls also grew by 850,000, despite the unemployment rate rising to 5.9%. However, the under-unemployment rate (U-6), which accounts for discouraged and part-time workers, fell below 10%. This was the first time since March 2020 the report came in under 10%. Jobless claims reached a fresh pandemic low of 364,000.

U.S. consumer confidence hit a fresh pandemic high of 127.3 in June. Manufacturing continued to expand at a strong pace. The U.S. ISM Manufacturing Index eased to 60.6 from 61.2, but prices paid for raw materials soared to 92.1, highest since 1979. U.S. home prices saw an annual gain of 14.6% in April, and pending home sales unexpectedly jumped 8% in May as demand continues.

Week Ahead

A holiday-shortened week still offers a busy economic calendar. Tuesday kicks off with the U.S. ISM Services PMI, on the heels of last week’s NFP jobs report that showed sizable job gains in leisure and hospitality. Wednesday presents a look at minutes from the June Fed meeting. Year-to-date index performance; S&P 500 is up nearly 16% YTD, while the Dow and Nasdaq have each added about 13.5%.

You’d be surprised how much I can assist you with. Follow the link below to get the conversation started.

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Exit stage right – What to think about when you’re ready to leave your business

jim business owner, Business Planning, business succession planning, Financial advisor, small business owner July 1, 2021July 1, 2021business owner, business planning, business succession planning, financial advisor, small business owner

A succession plan will help assure business continuity. If you’ve built a successful business, you know that having a plan is critical to making it work. By the same token, readying your business for your retirement is an important piece of the puzzle.

While there are no set rules in a succession plan, you may want to include such details as:

The successor: family member, business partner or someone new who will buy out your share
Timeframe/transition period
Key personnel changes and skill retention
Training and development of new leadership
Legal considerations: buy-sell agreement, estate plan/will
Risk management
Communication strategy
Financial considerations: retirement income, insurance, sale price, tax implications

Protecting your most valuable asset: You

Your exit strategy recognizes when you are planning to retire from the business. It can also address any potential surprises that may impact your ability to remain in charge.

You may develop a major illness or injury that takes you away from day-to-day operations. Having insurance in place can ensure your company will continue to function in your absence. While also protecting your own earnings and family, particularly if you’re not able to return:

Disability Insurance: All owners should have their own insurance that covers their monthly earnings in the case of an illness or injury that requires long-term healing. It may include a buy-out clause.
Business Overhead Expense Insurance: Provides funding to the business of any overhead expenses (such as payroll or rent) if these costs are jeopardized by being away for an extended period.
Critical Illness Insurance: This is generally a lump sum payment that helps you cover your bills if you have a serious illness.
Key Person Life Insurance: A life insurance strategy may include a payout to the business for continuity, or to your estate to minimize any tax implications. Life insurance proceeds equalize payments to heirs.

If you plan to retire, you need a plan

If it’s time for you to hand over the reins, your succession plan should address the time horizon for transition. You may want to execute a buy-sell agreement with partners or co-owners. The agreement outlines the circumstances of the exit and the price for your share of the business. Insurance can be used to help minimize the tax impact of a small business sale and to finance retirement income.

There are many tax-efficient ways to protect your business and help you transition to your retirement.

Contact me if you’d like to learn more about these business-owner strategies.

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Preparing for retirement emotionally

jim family wealth management, Financial advisor, Investing, retirement, Retirement Planning, wealth management June 15, 2021June 15, 2021financial advisor, investment management, retirement, retirement planning, wealth management

Retirement paves the way to a new and exciting chapter of our lives, emotionally too. This is the moment of relief when, for the first time ever, we now have ample time to travel the world, take up new hobbies, and scratch whatever itch we’ve been ignoring.

Yes, retirement should be exciting. But for many of us, the thought of leaving our jobs forever can be daunting. After all, our careers play an important role in shaping our identity. And to suddenly cut the cord means we have to find something else to fill the void.

This isn’t helped by the fact that the word ‘retirement’ can be quite limiting – when it’s anything but. All too often, people associate it with old age and the ‘pipe and slippers’ part of life. This is why the financial conversation is often limited to how much you might have to retire on. And that’s that.

But it’s not as simple as that anymore. Today’s typical 60 somethings are nothing like those of a generation ago.

A lot of this comes down to the fact that life expectancy in North America has been on the rise for some time now. A generation ago, men could expect to live up to their late sixties, and for women their mid-seventies. Since then, life expectancy has improved incrementally. The current life expectancy for North American men is 76 and women 85.

This means that for many retirees these days, retirement isn’t a wind-down phase, but a whole new beginning. This means that financially speaking, you might need to consider how to manage your retirement fund more strategically.

But how do you prepare for such a massive transition emotionally?

According to gerontologist Ken Dychtwald, it’s all about mindset. He advises people approaching retirement to do so as they would a career: His advice is to set goals, to visualize a ladder to climb, and to use these targets as motivation to move closer towards your next destination.

Unfortunately, the statistics show how detrimental it can be to find yourself without purpose and meaning at retirement: depression is prevalent in 22% of men and 28% of women at the age of 65 and over.

If you’re unsure of how to even begin to plan for retirement, then following some of the principles from Professor Dychtwald’s five phases of retirement could help you map out your journey.

Imagination (15 before retirement)

Being at least fifteen years away from finishing work for good, retirement might not seem like a priority. At this point, you’re more likely to be making sure that career aspirations are met, bills are paid, and your children are able to get through university.

But it’s important to think about your pension at this stage as it can help to ensure you have the financial stability to live life on our terms, post-retirement. This is where you can start to dream big and imagine the retirement you really want to have.

Anticipation (3 years from retirement)

Now you’re planning to turn retirement it into reality… this is where preparing emotionally is just as vital as preparing financially.

A great way to do this is by trying to develop a network of retirees whom you can trust for advice so they can share their experience of how they coped with the process.

Make a note of the goals you want to accomplish and what measures need to be put in place in order to achieve them.

Preparing (1 year before retirement)

The new beginning is near! Now’s the time to start developing concrete steps. Ask yourself what you’re going to do during the first week of retirement and what you plan on doing on a day-to-day basis.

Make a plan of what you want to achieve in the first six months and talk it through with your partner or loved ones. Visualizing the practicalities of this new phase will make it seem less daunting when it eventually arrives.

The liberation phase (first year of retirement)

Your working life is finally over! This is the stage when you’re likely to feel the most excited, relieved, and liberated. You can finally begin to explore new opportunities, travels, and hobbies.

Unfortunately, this honeymoon period will eventually fade, but remember, this is natural.

Dychtwald states the importance of staying physically active and maintaining strong social ties with people at this stage.

Reorientation (3 years into retirement)

This is the part where creating a legacy for the next generation can be top of mind. Whether that’s by sharing your knowledge and wisdom with others, or by thinking more carefully about the financial gifts you’re leaving children and grandchildren, this is an opportunity for you to decide what impact you want to leave on the world.

Hopefully, this is helpful in terms of thinking about retirement and a brand new beginning. Retirement isn’t the end of the road; dream big and don’t be afraid to chase after your deepest desires.

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Summer is here – will stocks melt up or cool off?

jim Financial advisor, Market Brief, Market Commentary, Market Outlook, Market Review, Stock Market June 8, 2021June 8, 2021financial advisor, market brief, Market Commentary, Market Outlook, Market Review, Stock Market

Last week, stocks finished higher after mostly solid economic data, including labor numbers that showed steady progress. Since the 10-year Treasury yield rally began in August 2020, there have been two main consolidation periods. What might be the next catalyst for a move in interest rates? The S&P 500 Index closed within 3 points of its all-time closing high of 4,232.60. Last week all indexes finished up slightly; Dow up 0.69%, S&P 0.64%, and Nasdaq 0.49%.

Last Week

The S&P 500 Index gained 0.64% last week, closing within 3 points of its all-time closing high of 4,232.60. The index has steadily climbed back after hitting its mid-May lows as inflation fears weighed on the index with consumer discretionary and information technology taking the biggest hits. Investors have continued to digest inflation concerns against their expectations for the equities markets. Stocks levitated higher by less than 1% for the week after mostly solid economic data, including labor numbers that showed steady, if not overwhelming, progress. Treasury yields fell after the May non-farm payrolls report came in at a solid gain of 559,000. This was much higher than the 266K the previous month, but lower than the expected 675K.

This led to Friday’s rally with data conveying an improving employment picture in the U.S. recovery. The recovery may be slower than expected. Leading markets to assume the Federal Reserve will continue in its accommodative monetary policies. Nearly half the states have cut overly generous jobless benefits, the unemployment rate dropped to 5.8% in May versus 6.1% in April, and average hourly earnings are up 2.0% versus a year ago. Initial jobless claims fell for the 5th week in a row to 385,000.

The expectation of a quicker recovery in global demand for crude oil helped it advance 4.98% last week, closing at $69.62 per barrel on Friday. This propelled the energy sector be the top performer of the week. OPEC agreed to continue gradually easing production cuts.

The Week Ahead

Since the 10-year Treasury yield rally began in August 2020, there have been two main consolidation periods. The first came just below 1%, beginning in November 2020 to January 2021. The second began in April 2021 and continues today, with the yield currently near 1.56%. The next catalyst? Last week the Federal Reserve said that it plans to start selling its portfolio of corporate bonds and exchange-traded funds that it bought during the pandemic. This is not expected to influence the market much. Recent economic data has been encouraging. But not so strong that the Fed would consider tapering its bond buying just yet.

The next Fed meeting is scheduled for June 15-16. This week offers an update on U.S. inflation along with 10-year and 30-year bond auctions, all of which could produce interest rate volatility. The U.S. trade balance came out today, and consumer sentiment on Friday. The week closes with day 1 of the G7 meetings in London, where Treasury Secretary Yellen looks for support to rewrite international tax rules. Year-to-date index performance; Dow up 13.56%, S&P up 12.62% 6.8%, and Nasdaq up 7.19% through the close on Friday.

Click here if you would like to learn more about your options and if we can assist you with your wealth management, investment, and retirement planning.