2019

Policy Normalization on Target: In spite of one member voting for a 50 bps reduction and two members voting for no change, the FOMC voted to reduce the Fed Funds rate by 25 bps to a targeted range of 1.75% to 2.00%. As has been the case for recent meetings, this decision was generally “as expected” by the market, with a near ~100% implied probability of at least a 25 bps reduction reflected in the futures market since early August. Amid notable pre-meeting volatility in the overnight repo lending market, the Committee unanimously voted to cut the interest it pays…

Please find the next blog in our monthly series that provides a review of the prior month’s market data, the state of the economy, and the global financial markets. Global Economy: Uncertainty and volatility ruled the month of August, with globally depressed interest rates, US/China trade issues and the increased likelihood of a no-deal hard Brexit at the forefront. While economic data indicates “consumers are consuming,” manufacturing data were not as strong, causing some dashboards to flash rising recession probabilities. Interest rates moved sharply lower, resulting in an inverted US yield curve and increasing amounts of negatively yielding debt abroad….

Navigating independence for the first time as a young 20-something can be overwhelming. What career is right for me? When is the right time to buy my first house? Am I saving enough? Decisions made at this stage of life can now have significant consequences. Formal goal setting can help young adults set themselves up for success by visualizing and accomplishing what they want in life. It provides an actual process for thinking about what you want your future to look like and motivating yourself to turn that vision into reality. Without goals and a plan, your decision making is…

One of the best things about being a young adult is that you are starting fresh with countless opportunities and choices ahead of you. The downside can be that mistakes made early in life can have long lasting and sometimes expensive repercussions in terms of debt and credit. Establishing a budget is a great way to help ensure a good beginning to your financial lives. A budget is an itemized summary of expected income and expenses for typically a month’s time. It will show you how much money you expect to bring in against all your expenditures. The first step…

Please find the next blog in our monthly series that provides a review of the prior month’s market data, the state of the economy, and the global financial markets. Global Economy: Markets maintained risk-on momentum in July, even as the Federal Reserve’s rate cut left investors questioning the degree of certainty around future policy easing. Economic data releases, consumer confidence, and better-than-feared quarterly earnings reports portrayed a relatively stable environment in the US. Manufacturing data in the Eurozone warranted attention, even as the European Central Bank indicated intent to employ monetary policy tools in September to address the economic slowdown….

Background When Congress passed Section 401(k) of the Revenue Act of 1978 they began a revolutionary risk-transfer as it relates to retirement savings. With employers increasingly embracing the cash flow predictability of defined contribution plans, the percentage of private-sector employees covered by a defined benefit plan has declined from nearly 40% in the late 1970’s to less than 15% today. Being only one generation into the evolved reality of “saving for yourself,” the consumer-driven nature of the US economy could be increasingly challenged as longevity collides with an under-saved population. Working to improve financial literacy may spur better financial well-being,…

Policy Pivot Underway: Heralded as the most important meeting of the year, the FOMC was fully expected to cut the Fed Funds rate for the first time since October 2008. In direct opposition to the negative outcomes triggered by hawkish concern this past December, the ~10% rally we’ve seen in the S&P 500 since the early-June lows has been driven almost entirely by a dovish shift in global monetary policy messaging. Although the futures market had signaled a ~20% chance of rates being reduced by 50 bps, the more tempered 25 bps “insurance cut” that was delivered was clearly the…

As of June 30, 2019, the official U.S. unemployment rate resides at 3.7% which is very near the lowest in 50 years, as 21.5 million new jobs have been added in the last decade. This rate is well below the Federal Reserve’s longer run projected rate of 4.2% which has been repeatedly revised downward over the last four years from approximately 5.2%. This longer run rate is supposed to represent “full employment” in the economy. Yet there continue to be discouraged workers and businesses struggling to fill open positions. The hallmarks of full employment are typically inflation and wage growth,…