Weekly Market Insights: 1-19-22 Fed: Rate Hikes Near
Finance has a language all its own. I find that when you have never been taught how to speak it or if you have no interest in learning how to speak finance, then adopting, preparing for, and planning out your retirement becomes a task that just gets benignly neglected.
The famous, “Honey will you take care of the yard or dishes” is what it sounds like each time you hear your spouse ask you “Are we doing okay?” or when you hear of a newsworthy event and wonder, “How does that affect me?” How about when you hear the stock market had a bad day and are compelled to log in and check even when you don’t think what you will see is going to be good!?
I was in the garage yesterday watching Maggie “my puppy” run around barking at the wind and chasing the occasional blowing leaf and a thought came to mind. I wonder what client’s think it is that we do for them? Is it…
Manage my investments?
Manage my 401K?
Help us to get out of debt?
Help us to pay for college?
They are my broker….yea, that’s it!
Yes and no to all the above except the last one…I haven’t been a broker since 2001, by the way!
Simple answer to a complex question and that is, we are the guide in our hero’s story! Your story of how you started to prepare for retirement and didn’t know how to do it except to put more money in retirement and hope for the best. We are your guide to help you understand and prepare for what is critical in your quest for the journey to your financial peak.
We help you answer the question of “How much do I have to save in my 401K and more importantly, how do I do that when that is a lot of money?”
We help you determine how much risk you need to take and exactly what investment combination to choose to match that risk level. When to step on the gas and when to step on the brake as it were.
We help you to understand which debt reduction techniques to apply to your situation specifically to get you out of debt in the most efficient way for you.
We are the guide in the hero’s story… YOUR story of how you beat the odds of thinking you are not able to retire, to retiring on time and maybe even earlier than you thought possible.
Client Couple A:
$1,198,963 in February of 2017. In June of 2021, $2,091,206 with a goal of retiring with or more than $2M in their investments. A goal achieved more than 12 months early.
Client Couple B:
$464,072 in April of 2015. In July of 2021, $1,468,305 with a significant job loss, college tuition and no change to lifestyle along the way.
Client Couple C:
$106,388 in March of 2015. In January of 2022, $914,435 that included 2 significant job changes requiring a relocation, one new baby, major home renovations along the way and a significant health issue.
I can go on and on, but all these couples had a common denominator. A guide that helped them to see what their choices where in real time and weigh the pros and cons, allowing them to make the choice that most benefited them. The key is “in real time.” These aren’t case studies. Life isn’t a case study, it’s a puzzle with every choice having consequences that are immediate or delayed. Sometimes, your choices will cost you more than you planned or could see from your vantage point.
“I never want to spend time checking the internet of things about how to do this.”
“I do not want to spend time thinking about what I have to do for retirement.”
“I have no idea what I’m doing so I just put more money in my 401K and hope it’s right”
“I am not sure if it’s best to pay off my mortgage or save that money in my 403B?”
“You’re speaking to me with this report right now! I can plainly see how much I need to save to get where I have to go.”
“I have more important and satisfying things I want to do than to worry about finances.”
All those are comments we have heard, and there’s more, a lot more! Suffice it to say, there are two types of financial approaches one can take these days.
Option A: DIY.
You can plan your trip on your own. Supplies, mileage, weather, gas, food, time management, etc. You then must adjust your plans based on accidents, delays, weather, and unforeseen situations due to lack of experience & planning. BTW, the more trips you take, the better you are at making alterations.
Option B: Guided Assistance.
You can hire a guide who is experienced. You collaborate with that guide to get where you want to go on time or early without the stress and hassle of what to do next when life throws your plans into disarray.
Either way is fine and okay. Some just simply will always be the DIY kind of personality, and that is okay. Some are DIY because they do not think there is any other way. For those people, congratulations…you are incorrect in your thinking.
Till we speak again, enjoy the week and stay warm (except for readers in the Southern US, we don’t want to hear your “it’s 70 and sunny” forecast here right now….jk)
General Market Commentary
Deteriorating investor enthusiasm for high-valuation growth companies and a mixed start to the fourth-quarter earnings season made for a volatile week.
The Dow Jones Industrial Average lost 0.88%, while the Standard & Poor’s 500 slipped 0.30%. The Nasdaq Composite index fell 0.28% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, gained 1.31%.1,2,3
Stocks were under pressure all week as investors grappled with higher bond yields and talk of possibly four rate hikes this year. Initially, intraday declines would bring out buyers and pare the losses. Investors were particularly heartened by Fed Chair Powell’s congressional testimony on Tuesday that softened the hawkish tone found in the minutes of the Federal Open Market Committee’s December meeting.
After digesting the hot inflation reports released mid-week, stocks were unable to resist the selling pressures on Thursday. A weak retail sales number, a resumption in the rise in yields, and mixed earnings from some of the big money center banks weighed on the market during Friday’s trading.
Inflation and the Fed
Inflation reports last week continued to reflect upward momentum in consumer prices. The Consumer Price Index posted a 7.0% year-over-year jump–the biggest increase since 1982, while the Producer Price Index rose 9.7% from a year earlier–the fastest pace since 2010 when the index was reconstituted.4,5
Markets responded calmly as both numbers were in the neighborhood of expectations and the monthly increase for each moderated from previous single-month increases. The price pressures are expected to remain in the face of continuing supply chain constraints and wage growth. The pace and persistence of price increases may influence the speed at which the Fed may tighten in the year ahead.
This Week: Key Economic Data
Wednesday: Housing Starts.
Thursday: Jobless Claims. Existing Home Sales.
Friday: Index of Economic Indicators.
Source: Econoday, January 14, 2022The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.
This Week: Companies Reporting Earnings
Tuesday: The Goldman Sachs Group, Inc. (GS), The Charles Schwab Corporation (SCHW), J.B. Hunt Transport Services, Inc. (JBHT)
Wednesday: Bank of America (BAC), UnitedHealth Group, Inc. (UNH), The Procter & Gamble Company (PG), Morgan Stanley (MS)
Thursday: Netflix, Inc. (NFLX), CSX Corporation (CSX), Union Pacific Corporation (UNP), United Airlines Holdings, Inc. (UAL)
Friday: Schlumberger Limited (SLB).
Source: Zacks, January 14, 2022Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.
“If we all worked on the assumption that what is accepted as true were really true, there would be little hope of advance.”
– Orville Wright
What to do if You Get Mail From the IRS
The IRS sends letters and notices for many different reasons. Some letters need a response or action item, while some are just notices to keep you informed.
Here’s what to do if you receive mail from the IRS:
Don’t throw it away.
Don’t reply unless directed to do so.
If a response is needed, respond in a timely manner.
Review the information to make sure it’s correct.
Respond to a disputed noticeIf you need to call the IRS, use the phone number printed in the upper right-hand corner of the notice.
Avoid scams through email, social media, or text messages.
* This information is not intended to be a substitute for specific, individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.
Tip adapted from IRS.gov6
A Stretch to Combat “Tech Neck”
We spend so much time staring at our phones and computers, it’s no wonder that so many of us are suffering from “tech neck,” or a muscle tightness at the back of the neck from looking down for multiple hours of the day.
Luckily, there are quite a few stretches you can do to combat tech neck. Here is one of our favorites:
This stretch is called the exaggerated nod. While sitting at your desk or standing comfortably, slowly look up to the ceiling with your mouth closed. Then, open and close your jaw to feel a stretch in the front of your neck. Repeat this for a few seconds.
After you look up, exaggerate your nod down by staring at your chest. This will help stretch out the back of your neck. Repeat these two stretches a few times to loosen up your tech neck.
Tip adapted from Healthline7
How many times can you subtract the number 4 from 40?
Last week’s riddle: I’m soft enough to soothe the skin, as well as make rocks crumble. I’m often slippery and on the move. What am I? Answer: Water.
Spirit Island, Jasper Alberta, Canada
Footnotes and Sources
1. The Wall Street Journal, January 14, 2022
2. The Wall Street Journal, January 14, 2022
3. The Wall Street Journal, January 14, 2022
4. The Wall Street Journal, January 12, 2022
5. CNBC, January 13, 2022
6. IRS, August 16, 2021
7. Healthline.com, September 30, 2021
Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.
The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.
The market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.
The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark of the performance of major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.
U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid. Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.
International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.
Please consult your financial professional for additional information.
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