Robare and Jones Wealth Management on the Markets - September 21, 2020
ROBARE AND JONES ON THE MARKETS
We've seen that investors weren’t happy with central banks last week.
After the Federal Open Market Committee (FOMC) meeting, Federal Reserve Chair Jerome Powell confirmed the economy along with job reports, are recovering more quickly than anticipated:
“With the reopening of many businesses and factories and fewer people withdrawing from social interactions, household spending looks to have recovered about three-quarters of its earlier decline…The recovery has progressed more quickly than generally expected, but overall activity remains well below its level before the pandemic and the path ahead remains highly uncertain”
Investors weren’t satisfied. Colby Smith of Financial Times reported stocks, “sold off sharply during Mr. Powell’s press conference on Wednesday, and again on Thursday,” because the FOMC did not provide information about “how it might adapt its balance sheet policy to generate…inflation and aid the U.S. economic recovery.” The Houston economy has been hurt probably more so with Houston and Texas' economy having a heavy weight in the oil and energy field.
The Bank of England (BOE) also delivered news that unsettled markets last week. Minutes from the BOE’s latest meeting noted it was studying negative interest rates. Some banks and analysts interpreted this to mean the bank intends to implement negative rates. Eva Szalay and Chris Giles of Financial Times reported, “People familiar with the matter said the preparations now under way were aimed more at fully understanding the effects of negative rates, rather than at seeking to implement them.”
It’s possible the BOE wants to better understand negative rates so it’s prepared for a worst-case scenario. The EU trade deadline is fast approaching and, currently, no deal seems likely.
In the face of uncertainty, markets are likely to remain volatile, but not as volatile as this past March.
What will Social Security look like when you retire? Many Americans have lost hope that there will be anything to see. According to a 2019 Gallup poll, 41% of individuals surveyed said they worry a great deal about the Social Security Administration. The same survey also revealed that 33% of individuals said they believe Social Security is going to be a major source of their income in retirement.1
So what will Social Security realistically look like in the future? Should workers be concerned?
Key Takeaways
- >Social Security does not now, and unlikely won't in the future provide enough income for a comfortable retirement alone.
- >If the program is reworked by Congress to extend its life, younger workers and high-earning people are likely to be the ones who will pay it forward.
- >You should start saving for your retirement as early as possible by contributing to your pre-tax retirement accounts such as an IRA or 401(k).
So all in all, there’s really no need to worry about a difference in your social security if you’re into your 50’s, but it’s always a good idea to diversify your income streams during retirement, and not heavily weighted into one source like social security.
It's important to work with fee-only investment advisor that are not only concerned about your account performance, but always striving for the best customer service possible and covering all topics of financial planning
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Sources:
https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20200916.pdf
https://www.ft.com/content/91bd3435-2439-4787-a013-26eade1067bf (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/09-21-20_FinancialTimes-Investors_Vent_Frustration_Over_Feds_Balance_Sheet_Inertia-Footnote_2.pdf)
https://www.ft.com/content/5a6ecbce-f88a-4de7-89ae-59f49bf8f831 (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/09-21-20_FinancialTimes-Bank_of_Englad_Upends_Market_Expectations_with_Comments_on_Negative_Rates_Footnote_3.pdf)
https://www.bloomberg.com/news/articles/2020-09-18/no-deal-brexit-may-be-the-trigger-for-boe-s-journey-below-zero (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/09-21-20_Bloomberg-No-Deal_Brexit_May_Be_the_Trigger_for_BOE_to_Use_Negative_Rates-Footnote_4.pdf)
https://www.improbable.com/ig-about/the-30th-first-annual-ig-nobel-prize-ceremony/
https://www.improbable.com/ig-about/winners/
https://www.improbable.com/ig-about/24-7/
https://www2.nycbar.org/Publications/record/winter01.1.pdf
