Tag Archive for: secondquarter

Comments and Opinions

Simply put, the Second Quarter of 2022 was painful. Painful for stock markets, investors, consumers, and the US economy in general.  The Federal Reserve continued to raise interest rates in an effort to tame inflation, supply chain issues lingered, and stocks entered bear market territory.  The question of whether the US is in recession after experiencing two consecutive quarters of declining Gross Domestic Product was debated by politicians, economists, and the public in general. 

Stock market performance came close to historical lows. The Dow Jones Industrials were down -10.8% in the second quarter, -14.4% year to date.  The S&P was down -16.1% in quarter two, -20.0% ytd, and the Nasdaq Composite finished the quarter down -22.3%, -29.2% ytd.  Source:  NASDAQ Inc. 2022

Inflation continues to be a major problem throughout the US and the world as we experience the highest inflation rates in over 40 years. During the Covid recession in 2020, inflation affected targeted products, such as cars, due to demand vs. inventory.  However, as consumer demand returns to previously normal levels inflation has increased and persisted for basic goods such as energy, gasoline, food, rental housing, and mortgage rates. 

A slowdown in growth is expected due to tightening monetary policy. The Federal Reserve recently raised interest rates by 75 basis points, (.75%), the biggest single increase since 1994—and signaled more big hikes to come—in its continued effort to tame the highest inflation the U.S. has seen in 42 years. Source:  Morgan Stanley

With uncertainty in the foreseeable future, we recommend a review of your investment portfolio to determine if the asset allocation, diversification, and risk category meet your current financial goals.

Women and Investing

The US Census Bureau’s report dated March 2, 2022 reports women outnumber men 51% to 49%.  Approximately $30 trillion in wealth is set to change hands in the next decade and women will inherit a sizable share, according to research by McKinsey & Company published in 2020.  However, unique issues face women relating to money and investing. The possibility of leaving the workforce for extended periods to care for family members, the ever-increasing expense of childcare, the reality of the gender pay gap, underrepresentation in executive positions, and a lack of any significant financial education in public schools are just some of these issues.   

However, according to Fidelity’s Women & Investing Study, 2021: 

67% of women are now investing in addition to their retirement accounts compared to 44% in 2018. Millennial women lead the way with 71% investing outside of their retirement accounts. Although these are positive trends, women are significantly behind men in actual dollars invested. This is concerning because women tend to live longer than men and therefore their savings will need to last longer. Obtaining investment knowledge will increase confidence and help women become more successful in reaching their financial goals.

Steps to take may include:

1. Put your finances in order by developing a budget, take steps to pay off debt, and establish an emergency account.
2. Set your financial goals for short-term and long-term horizons.
3. Determine your risk suitability and risk tolerance.
4. Take full advantage of your employer’s retirement plan if offered.

5. Keep emotions out of investment decisions and behavior.
6. Consult a qualified financial advisor.

The information and opinions expressed herein have been obtained from sources believed to be reliable but are not guaranteed for accuracy or completeness; are for information/educational purposes only; do not constitute a solicitation or recommendation for the purchase or sale of any security; are not unbiased/impartial; subject to change; may be from third parties. Opinions expressed are those of the Author and do not necessarily reflect those of B. Riley Wealth Management or its affiliates. Investment factors are not fully addressed herein.

Securities and variable insurance products offered through B. Riley Wealth Management, Inc., member FINRA/SIPC.  Fee-based advisory services offered through B. Riley Wealth Advisors, Inc., a SEC-registered investment adviser.  Fixed insurance products offered through 

B. Riley Wealth Insurance.

Comments and Opinions

The First Quarter, 2022 brought major pressures on both the US and Global stages. Although we began to move forward in the recovery from the last two years of the pandemic, rising inflation, rising interest rates, and supply chain issues impacted consumers and the stock markets. In March, Russia’s invasion of Ukraine brought humanitarian crises, global economic and political upheaval, and stock market uncertainty.

According to the US Bureau of Labor Statistics, as of March, 2022, inflation rose 8.5% over the last 12 months – a 40 year high. Gas, food, and housing were the biggest inflationary drivers putting pressure on consumers. The root causes of this inflation stem from historic government spending, continuing supply chain disruptions, and strong consumer demand.

The uncertainty of the above situations impacts our economy and the stock markets. Markets do not like uncertainty and volatility is the result. U.S. stocks recorded the first quarterly decline since the onset of the Covid pandemic in the first quarter of 2022. Source: NASDAQ. The US Gross Domestic Product was down 1.4% a reversal from an annual 6.9% growth rate in the fourth quarter of 2021. Source: Wall Street Journal

Although the US faces challenges and there is talk of recession, some believe the economy remains strong and can return to modest growth going forward. Consumer spending is strong as Covid-19 restrictions are being lifted. According to Morningstar, the Federal Reserve’s shift to tighter monetary policy increases confidence that high inflation will be tamed. Markets are now pricing in an increase in the federal-funds rate to 2.5% by the end of 2022, a much more aggressive pace of tightening than previously expected. This will come at the cost of slightly slower near-term GDP growth, but they don’t believe a recession is on the horizon.

Source: Morningstar, Quarter End Insights, April 1, 2022

As we watch and wait in a volatile market environment investors should review their portfolio’s asset allocation, risk suitability and risk tolerance to make sure their plan is on track to meet their financial goals.

“Market Volatility: Check Your Emotions at the Door.”

The following article is taken from the Investor Insights page on the Financial Industry Regulatory Authority’s website:

https://www.finra.org/investors/insights/market-volatiliy-check-emotions-door

Volatile markets can inspire feelings of fear and anxiety among investors. The market surges and sags that we experience can be for any number of reasons—trade policy concerns, tax breaks, inflation fears, economic optimism, concern of a global pandemic or a recession watch. The stock market reacts, and sometimes so do we. It raises the question: what should you do in times of volatile markets? In many situations, the answer is sit tight, and take the long view.

“One enduring truth about stock markets is that they go up, and they go down—and the steeper the rise or the fall, the more tempting it can be to derail a long-term strategy with a snap decision,” said Gerri Walsh, FINRA’s Senior Vice President of Investor Education. “Especially when markets fall sharply, we tend to react on impulse. Before that becomes your reaction to market volatility, focus first on your goals and your investment timeframe.”

Investors who need short-term liquidity—for example, if you plan to make a large purchase such as a house or a car, or you know a tuition bill is about to come due—will likely want to pursue a different path than investors who do not need cash right away. All else being equal, the latter group might be better able to stomach volatility in the short term. But any investor who cannot bear the thought of—or cannot afford—locking in losses in times of volatility may want to explore less volatile alternatives to help secure their portfolio’s value.

“Talk to your investment professional,” said Walsh. “And consider the broader consequences. How does any action you choose to take in the moment impact your portfolio in the future? What are the tax consequences? Before you make any decisions regarding your investments, it’s important that you keep your emotions in check and understand what is going on.” Whether any given day’s drop reflects a market correction, an anomaly or the beginning of a bear market can take time to figure out – and is outside the control of any one investor. So control what you can – and focus on key investing concepts such as staying diversified and rebalancing to stay aligned with your goals.

The performance quoted herein represents past performance. Past performance does not guarantee future results. Investors cannot invest directly in an Index and performance represents gross returns without net fees if any.

A BRANCH OF NATIONAL SECURITIES CORPORATION · 59 FINLAY ROAD, PO BOX 2806, ORLEANS, MA  02653

Tel:  (508) 240-0320      FAX:  (508) 240-2309    www.brimmerfinancial.com

Securities offered through National Securities Corporation, member FINRA/SIPC.  Advisory services offered through National Asset Management, an SEC registered investment advisor.  Fixed Insurance Products offered through National Insurance Corporation.  Investing involves risk including loss of principal. The information provided is not directed at any investor or category of investors and is provided solely as general information about products and services or to otherwise provide general investment education. None of the information provided should be regarded as a suggestion to engage in or refrain from any investment-related course of action as neither National Securities nor its affiliates are undertaking to provide you with investment advice or recommendations of any kind.

Comments & Opinions

A year ago at the end of the Second Quarter of 2020, we were in an economic and social lockdown brought on by the Covid-19 pandemic.  The US and most of the world were under severe restrictions.  It’s been a long year.  Now, due to the availability of Covid-19 vaccines and behavioral changes in society, we have witnessed strong rebounds in the US and global economies along with lessening of social restrictions. 

US equity benchmarks closed the first half of 2021 at or near record highs as the economy reopened and more people returned to work.  The S&P 500 ended the first half of the year up 15.2%, the DJIA was up 13.8%, and the NASDAQ Composite finished the first half of the year up 12.9%.  Historic fiscal and monetary stimulus has provided a consistent tailwind since the Spring of 2020, and there is little evidence those efforts will be removed anytime soon. Source:  NASDAQ.com July 1, 2021

Going forward, we believe the main challenges for the economic recovery may be the spike in the highly contagious Covid-19 Delta variant and the possibility of new restrictions, continuing inflation for products and services across the board, and the Federal Reserve’s response to these inflationary pressures.  The question of whether price increases are “transitory” or long-term is yet to be seen. 

Fed Chairman Powell stated on July 27^th, that inflation will likely remain elevated in the coming months before moderating.  He also said the Fed will not raise rates or begin tapering the purchase of Treasury and mortgage bonds that provide stimulus to the economy until they see “substantial further progress” toward their goal of low unemployment and stable inflation. Source:  Wall Street Journal, 07/28/2021

We recommend a review of your investment portfolio and financial plan to determine if any adjustments are needed for your short-term and long-term goals.  Please call our office to schedule a meeting at 508-240-0320.

INFLATION

What, Why, When?

Inflation can be defined as the rise in prices for goods and services and the decline in the purchasing power of money.  Three of the main reasons that contribute to inflation are an increase in the money supply, the resulting decline in the value of the Dollar, and a disruption in the supply chain for goods and services.  All three of these have occurred since the beginning stages of the pandemic.

The Federal government and the Federal Reserve rapidly infused the economy with stimulus money.  Trillions of dollars were printed to provide individuals and businesses with money to keep the economy functioning and the Federal Reserve began purchasing assets in order to inject liquidity into the economy.

A large, rapid increase in the money supply reduces the value of each dollar and therefore, the cost of goods goes up. Companies pay more for their supplies and they pass the cost on to the consumer.

Production of goods slowed during the pandemic due to employees becoming ill and wide-reaching economic shutdowns.   Supply chains for imports, especially from China, were disrupted and this significantly impacted the price and availability of goods.  

Too much money chasing too few goods = Inflation

A BRANCH OF NATIONAL SECURITIES CORPORATION · 59 FINLAY ROAD, PO BOX 2806, ORLEANS, MA  02653

Tel:  (508) 240-0320      FAX:  (508) 240-2309    www.brimmerfinancial.com

Securities offered through National Securities Corporation, member FINRA/SIPC.  Advisory services offered through National Asset Management, an SEC registered investment advisor.  Fixed Insurance Products offered through National Insurance Corporation.  Investing involves risk including loss of principal. The information provided is not directed at any investor or category of investors and is provided solely as general information about products and services or to otherwise provide general investment education. None of the information provided should be regarded as a suggestion to engage in or refrain from any investment-related course of action as neither National Securities nor its affiliates are undertaking to provide you with investment advice or recommendations of any kind.