Markets & the Economy

Is the stock market climbing a “wall of worry”?
Is the stock market thinking corporate profits are starting to bottom?
Is the stock market thinking the Federal Reserve will have to cut rates this year?

The economy repetitively moves from peak to trough, back to peak to trough, etc.

Logic would think that the stock market hits it’s high when the economy reaches a peakLikewise, logic suggests the markets should hit a low at the same time the economy bottoms out.

If that’s the case, why did stocks fall on average, approximately 20% last year, while the economy grew by 2.1%?  The answer is: the stock market is a forward-looking indicator of how investors feel about the future economy.  The market typically precedes the economy by about 6 months, when it gets it right.

I believe the market IS attempting to climb that “wall of worry,” and also attempting to anticipate when corporate profits will bottom.  I don’t believe investors should be hoping for a rate cut.  At this point, I can only see Chairman Powell cutting rates if the economy truly starts to tank. 

Let’s hope the Fed sits tight and leaves rates alone for the foreseeable future.  That may provide the economy time to adjust, thereafter perhaps the next Fed move will be obvious and not just a best guess!!

Profit Reports Start to Rev Up!

This week, 58 companies from the S&P 500 will report profits including J&J, Tesla, Taiwan Semiconductor, American Express, Alcoa, and a few large banks.

Typically, profit reports turn out better than anticipated, as many companies have already pre-announced a reduction in profits.  What’s most important this time around is forecasted earnings for the remainder of 2023.

The financial news media will have plenty to discuss as they parse the results and offer many opinions.  Keep in mind, most of the commentators have a bias to one side or the other, that can influence their opinions.

Social Security Claiming Strategy

We have several clients who will be turning 70 this year.  They have been smiling when turning on their benefit.  Not only did they receive 8% per year in delayed credits added to their benefits, but they also received significant cost of living adjustment (COLA), on top of the 8%. 

For example, for someone delaying Social Security from 2021 to 2022, their benefit increased by 8% PLUS the 5.9% cola.  From 2022 to 2023, their benefit increased by 8%, PLUS the 8.7% colaThat’s sizable!

Congratulations to all clients who have been fortunate to take advantage of either the File & Suspend, or the Restricted Application strategy. 

Much of our feedback suggests, most people are surprised how much more they’re receiving in Social Security than originally anticipated. 

The file and suspend strategy, and the restricted application strategy, are pretty much in the history books.  Without those strategies, it’s even more important for those approaching Social Security ages to thoroughly examine the various ways benefits can be coordinated and collected

The best way to examine your options is to have an analysis performed based on your earnings as they appear on your annual Social Security statement. 

We’ve been offering our complimentary Social Security analysis for many years, and will continue to do so.  If you are approaching age 62, or are older and have not yet applied, please feel free to visit our website to learn more about the analysis, view a sample analysis, and sign up for the analysis! We have assisted many individuals and couples in making the most beneficial choice for their situation.

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