You may have heard that on April 1st of this year, the yield curve inverted, and that an inevitable recession is coming. This, however, is only one part of a much bigger financial picture. When the yield curve inverts, most often what is being referenced is the 2-year treasury yield having surpassed the 10-year treasury yield. But not all yield curves have inverted. When you look at the spread between 10-year / 2-year treasuries in orange below..
As data on U.S. economic growth for the second quarter trickles in over the next month, signs that a recession is already under way may emerge. The economy is on the cusp of a recession. The economy shrunk by -1.5% in the first quarter of 2022 and the second quarter could be negative and, thus, begin a recession officially. However, some very key fundamentals remain positive and indicate a recession could be short and shallow. States are flush wi..
There is no 'taming the bear' when it comes to contractions of the business cycle like we are currently experiencing, but there are some guiding principles one can follow to make wiser decisions during these times. This Guide to Market Fluctuations from Capital Group® American Funds® is one of the most relevant pieces for investors I have come across recently. Please give it a read and keep these strategies in mind when considering c..
Since a 1965 book by financial planner Norman Dacey popularized avoiding probate, the strategy has become ingrained in the American financial psyche, and the U.S. financial system has accommodated consumers by making it easy to set up IRAs and other brokerage accounts to avoid probate. Now, with the first generation of Americans who set themselves up to avoid probate starting to die, the quiet evolution toward avoiding probate has suddenly create..
Earlier this month Forbes reported that Tesla (TSLA) was removed from the S&P ESG Index, citing "flaws in its business conduct and, ironically, aspects of the company’s low-carbon strategy". Yet companies like Amazon, United Health, and even Exxon Mobil make the cut. This inflamed Elon Musk who proclaimed, "ESG is a scam", but the truth may lie somewhere between two extremes. Read the Forbes article..
In an ominous sign a recession is on the way, the U.S. Index of Leading Economic Indicators ticked down four-tenths of 1% in May, following a decline of four-tenths of 1% in April. The LEI has a history of rolling over definitively before every recession since 1950, except for the Covid-19 recession. Comprised of 10 indexes, the LEI is a reliable forward-looking indicator of the foreseeable future. The LEI was doing just fine until Ap..
Nearly half of professionals say the bear market would bottom after sustaining a loss of -25% -- a mere three percentage point loss from yesterday’s closing price. Another 34% of practitioners say the S&P 500 loss would bottom at a loss of 30% before a new bull market begins. The poll was conducted Tuesday, June 14 at 5 p.m. EDT, at a financial economics class attended by more than 200 professionals. More than half of the advisors att..
The inflation crisis of 2022 grew more fearsome with Friday’s release by the U.S. Bureau of Labor Statistics of a worse-than-expected consumer price index (CPI) report. For the 12 months through May 2022, CPI shot +8.6% higher, the highest rate since the inflation crisis of the late 1970s and early 1980s. Higher gas prices are the main factor. Meanwhile, other threats to U.S. economic growth linger, including the war in Ukraine, supply ch..
If you’re feeling stressed about inflation, the War in Ukraine, Covid-19 subvariants, you’re not alone. “Amid historic inflation spike and geopolitical strife, money and economic stress is mounting,” according to the latest results of a poll by the American Psychological Association (APA) and The Harris Poll. “These more recent findings were alarming,” according to APA. “Stress about money is the highest recorded since 2015.” &nbs..
The Federal Reserve hiked rates on May 4 by a half-point. It was the first half-point hike since May 2000. This summer, the Fed plans two more half-point rate hikes, on June 15 and July 27. So this could be a long, hot summer for investors. Reminiscent of the 1958 movie, “The Long, Hot Summer,” starring “newcomer” Paul Newman and Joanne Woodward, who were married for 50 years after making the movie, this summer of financial and economic n..
The list of risks threatening investors seems longer than usual and perhaps more frightening than ever. Stock prices on May 20 were 19% lower than the all-time high on January 3rd, edging precariously close to bear market territory. And inflation is out of control; the last time the inflation was this high was 1981!..
At age 65, only about 20% of American retirees have family and financial resources to cover high-intensity care for at least three years. About 30% cannot afford any help at all. The remaining half of older adults lie somewhere in between, depending on their marital status, education, and race. These are the grim conclusions of The Center for Retirement Research (CRR) at Boston College. CRR is part of a consortium of research groups funded by the..
Back from the brink of a bear market, the stock market snapped its seven-week losing streak. The Standard & Poor’s 500 index of blue-chip publicly-held U.S. companies gained +6.37% this past week. Just a week ago, the S&P 500 was down -19% and in the throes of the worst losing streak since 2001. However, according to consensus forecasts of economists, the U.S. is expected to grow by more than +2% in 2022. Newly released data on the Fede..
The list of risks threatening investors is unusually long. Stocks are at the edge of a bear market. Inflation last raged so high in 1981. The pandemic lingers as does the risk of bad subvariants. Supply chain problems remain a drag on consumer spending. Oil prices could spike higher still, as Russia’s pariah status compels Germany to impose a ban on imports of Russian oil and gas. This is a great moment to ask yourself: “What’s my pla..
The headlines are ugly. “Late Rally Lifts Stocks After S&P 500 Skims Bear Market,” according to WSJ.com’s top story after Wall Street closed today. “Markets End Down for 7th Straight Week, Despite Late Rally,” according to NYT.com. Stocks are at the edge of a bear market – defined as a loss of -20% from the last record-high closing price of the Standard & Poor’s 500 index (on Jan. 3). Not since 2001, The Wall Str..