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Nowhere To Hide Inflation and Rates – Market Brief May 2, 2022

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Nowhere to hide as U.S. equities fell in volatile trading after disappointing tech earnings and a lower GDP report. The Nasdaq Composite Index fell 4% both Tuesday and Friday alone, falling 3.9% for the week. The Nasdaq 100 Index fell 13% in April, the biggest monthly drop since October 2008. U.S. stocks are hovering at the lows of the year, and investors receive little relief this week with the Fed meeting and important economic data set be released.

Nowhere

Last Week – Nowhere to Hide

The US economy shrank at a 1.4% annual rate in the first quarter, following six consecutive quarters of growth. It was the first contraction since the second quarter of 2020. Meanwhile, the Employment Cost Index, measuring wages and benefits, increased a record 1.4% in the first quarter dating back to 2001. The sharp increase added to fears of continued high inflation and expectations that the Fed will raise rates more aggressively at their summer meetings.

The S&P 500 Index posted a -3.26% return last week, falling for four straight weeks. The S&P index had recovered strongly in March after hitting its 2022 closing low. However, April told a story of decline as each week accelerated from bad to worse. Friday’s close marked a new low for 2022. The S&P index returned -8.72% in April, marking the worst month since March 2020. Volatility was evidenced last week as the index posted its second-best day of 2022 on Thursday, rising 2.48%. Then falling to the worst day of the year on Friday, -3.62%. Inflation, Fed monetary policy, future rate hikes, and war in Ukraine are causing concern for investors. All sectors were in negative territory last week, leaving investors nowhere to hide.

Week Ahead

The Fed meets on Tuesday and Wednesday this week and is widely expected to raise interest rates by 0.50%. This would be its largest rate hike since 2000. More big earnings and economic reports are coming this week, including the jobs report for April. More than 1,600 public companies report earnings this week. The range and number of companies will give data points on how different sectors are weathering the factors out there pressuring valuations, such as – the war in Ukraine, inflation, and interest rates.

Key economic data due to be released this week include the unemployment rate, construction spending, ISM Manufacturing, and factory orders. For nonfarm payrolls, economists expect a drop to 400,000 in April versus 431,000 for March. The expected unemployment rate for April is 3.6%. If the data comes in as such, they point to continued tightness in the U.S. labor force. ISM and factory orders give us insights into two consecutive months both with an optimistic look for the manufacturing sector. Year-to-date index performance; Dow down 9.25%, S&P down 13.31%, and Nasdaq up 21.16% 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.

Erie CO Financial Advisor; investments, wealth management, retirement income planning; Boulder, Broomfield, Louisville, Niwot, Windsor, Berthoud CO

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
jobs report

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.

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.

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.

Good Debt Versus Bad Debt

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good debt

Debt is due for a rebrand, because there is such thing as good debt. So often when we hear about debt in the news, it’s within the context of “bad debt.” Households in over their heads with credit card bills and interest payments. Students working three jobs to chip away at college loans. House-poor millennials saddled with mortgage payments. All because they tried to get in on the market before it moved even further from reach.

But not all debt is bad. There are ways to leverage it in order to open up economic opportunities that will advance your financial plan. The key is to learn how to talk about it and cut through the noise.

While mortgages, student loans and investing in your business are often classified as good. Cars, credit cards, and vacations are commonly seen as bad, it’s a bit more complicated than that. For instance, what if that car helps grow your business opportunities or what if you’re living beyond your means with the mortgage?

It’s time to re-calibrate the way we look at debt and see how it can be used to your advantage.

Understanding the gray area

I often look at the dividing line between the two as if it increases your net worth or has future value, it’s good debt. And if it drains your wealth and decreases your value, it’s bad debt. But this also negates the point that all debt comes at a cost and that cost of borrowing needs to be considered. Further to that, the cost of your debt should be considered in your financial plan.

Ask yourself: Are you borrowing money at the best possible rate and are you prepared if interest rates rise in the future? How will leveraging this debt improve your finances in the future? And what’s your response if things go awry?

Part of keeping debt from turning into bad debt is stress-testing the different scenarios, knowing your comfort level, and developing a plan.

Using good debt to your advantage

My role as your financial advisor is to set you up for the future. Part of that is managing both the good and bad. Together we can identify strategies that help you to your advantage. From mapping out your cash flow and identify the problem areas to prioritizing expensive delinquent accounts over lower interest and less pertinent debts. Debt can be restructured into more beneficial vessels that allow you to draw equity or consolidate the amounts you owe.

So don’t let debt’s bad rep get in the way of a good strategy. Talk to me about how it can fit into your plan.

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.

Financial Advisor Erie CO focus on investments, wealth management, retirement in Boulder, Louisville, Niwot, Lafayette, Windsor, Berthoud, CO

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.