Strong Jobs Report Push Recovery

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

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.

What does the market outlook look like in 2021

market outlook

We thought there was no environment that could be worse than 2008-9. 2020 made the Great Financial Crisis look like an appetizer, so the market outlook is positive from here. And yet the market did so well. So where do we go from here? What are the market strategist predicting will have in store for 2021?

Market Outlook

The stock market seems to be in good shape. Stocks follow profits, and if profits are going higher, stocks eventually will. Earnings are recovering nicely, which tells us that fiscal and monetary stimulus is doing its job. Next year we could see earnings growth of 30%- plus. Goldman Sachs has predicted the S&P 500 reaching 4050 by the end of 2021. That is a 7.8% increase from today’s year-end close.

Some market strategists see the S&P 500 index rising further in 2021, propelled by a stronger economy, robust profit growth, and still-massive stimulus from governments and central banks, which paved the way for this year’s advance by keeping interest rates near zero. Even better, the market’s leadership could broaden well beyond big tech stocks to encompass financials, industrials, and other economically sensitive shares left behind by 2020’s rally. Much like the real estate market, the low interest rate environment is good news for stocks. The Federal Reserve’s actions to push down interest rates and bond yields encouraged those savings into risky assets to find a return.

The market likes a Biden win with a split Congress because it’s gridlock — you don’t get many surprises. Research from Capital Group shows that over the past eight decades, in 18 of 19 presidential elections, no matter which party won, a hypothetical $10,000 investment made at the beginning of each election year would have gained in value over the next 10 years, and in 15 of those 10-year periods, it would have more than doubled.

Barron’s interviewed 10 market strategists and chief investment officers on the outlook for 2021, below is the consensus: 

4,040 = The group’s average 2021 S&P 500 price target (today’s close is 3,726.86)

5% = Expected U.S. GDP growth in 2021 

$168 = Wall Street’s consensus earnings estimate for the S&P 500 in 2021. Compared with 2019 earnings of $161, and 2020’s forecast of $138

Caution Ahead

The outlook is not all roses… Areas of caution do linger, notably, huge hangover of debt, deep uncertainty about how consumer and office-worker behavior might have changed, inflation, and many small businesses clinging on by their fingernails. Inflation can be cause speed bumps. Resurgent inflation and an eventual rise in rates, which could put a lid on the market’s ebullience in 2022. “If inflation makes a significant and sustained comeback, the Fed is going to have to let interest rates go up. The impact on stock valuations, on compounding debt, on these zombie companies that have been able to stay in business only because of record-low interest rates—they’re toast,” Ed Yardeni of Yardeni Research.

There could again be a disconnect in how the markets and the economy do in 2021. The economy sees an aggressive recovery and that corporate earnings see an aggressive recovery. But the market returns are less robust, given that a lot of gains from next year have been pulled into this year. Much success will also depend on a smooth rollout of vaccines to protect against Covid-19. Any mutations in the virus that could extend the pandemic would cause Wall Street to rethink its bullish stance. Stay tuned…

Let me know if you would like to talk more about investment management and retirement planning options. Happy New Year to you and you family!

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.

Market Brief August 5 2019

Market Brief August 5 2019

Indexes across the board fell last week following the Fed’s decision to cut rates and an unexpected tariff announcement from the President. The Dow was down 2.6%, S&P 500 down 3.1%, and the Nasdaq down 3.9%. Stock markets typically rejoice at a Fed rate cut, however, this rate cut was made with the understanding it was a “mid-cycle policy adjustment” and is not necessarily the first of multiple rate cuts. This coupled with President Trump’s 10% tariff announcement on an additional $300 billion of Chinese imports, led to a selloff across many individual positions. From a global perspective, manufacturing continues to slide, over 60% of countries PMI readings are now in contraction.

On the bright side of economic news, consumer confidence rose to the highest levels in 2019, and Friday’s job report confirmed the U.S. employment remains strong. Employment wages rose 3.2% year-over-year.

This week needs a breather after last weeks volatility. Driving the markets will be further news on trade talks as the economic data slate is light. As of Monday morning, the stock markets are down off of China’s retaliation of the latest U.S. tariffs. Year-to-date performance for the indexes; Dow up 13.5%, S&P 500 up 17%, and the Nasdaq is up 20.6% as of Friday’s close.

Click here if you would like to learn more about your options and if we can assist you with your 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.

Market Drivers in 2019

2019 Financial Planning
What will next year hold?  The stock market has been on a great run recovering from 2009 recession lows.  How will the economic landscape move going forward?  We do not know exactly, but there are 3 contributors we are keeping an eye on:
1) Interest Rates – the expectation is that rates will rise in 2019, Fed funds rates are currently pegged to increase by end of 2019.  This impacts the consumer and business borrowing costs, but also raises the interest rate of savings accounts.  For example, savings at 0.2% pay $100/year on a $50,000 account.  Some banks are currently paying 2.35%, which is a $1,175/year payout.
2) Tax Events – more tax cuts seem unlikely with Democrats controlling the house.  However, the President can find other ways to lower costs, and that is by reducing tariffs, essentially lowering trade costs for companies, therefore, not passing on the higher costs to consumers.
3)  Wage Increases – higher wages can result in inflation concern, which can be offset by more production.  Hand-in-hand is business investment in equipment, improving productivity, and allowing for potential wage hikes.  If businesses have confidence in the economy they will make the investment.  Higher wages have a strong correlation with consumer spending, and more consumer spending encourages businesses to invest.

Are you planning your personal finances for 2019?  Get a jump on it today!  Budget planning, investment review, insurance coverage review, we can help you.  Click here if you are not sure how to begin your plan for the upcoming year or if you would like a second opinion of your current plan.

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.

Market Brief November 10 2018

Market Brief November 10 2018

Happy November!  Fall is full effect, out with the ghosts ‘n goblins and in with the turkeys and pumpkin pie, well almost time for pie…

The Markets continued back-and-forth action this past week, ending with a new uptrend, but proceed with caution.  This week saw good gains, as Wall Street responded favorably to election results, then closed with two days trading lower.  This type of distribution after a good recovery signals we are not yet on solid ground.  These uptrends can quickly rollover.  Large companies are currently in favor due to small cap companies and the Nasdaq falling off highs much harder than the Dow Jones composite.  Smaller companies tend to show more sensitivity to the changing economic cycles than large companies.  International growth saw a slowdown in China, which reported the weakest growth in six years in Q3 of just 6.5% compared to the previous year.  China also saw auto sales fall 11.7% in October.

How are you dealing with the recent market volatility?  For the long-term investors, market corrections are healthy and normal aspects of the business cycle.  And, for the investor, offer a chance to buy-in at a discount.  Furthermore, during periods of stock market volatility, the importance of asset diversification within portfolio’s remains an integral part of planning.  Click here if you are not sure how to begin your own investment program or would like a second opinion of your current plan.

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.