What a wonderful diversion. 25-year-old Scottie Scheffler embracing his wife after winning the 2022 Masters Golf Tournament in Augusta, GA…. Refreshing to see such a youthful, cool-collected, classy man win perhaps the world’s most prestigious golf tournament. I must say, it gave me that deeply warm feeling inside, about all that’s right with our country. In addition, watching 46-year-old Tiger play after not knowing he’d walk again was an inspiration!
“Thank you, Scottie & Tiger!”
Fed Pushes Markets Lower
Back to reality! Last week we heard the Fed is now planning to reduce the balance sheet in May by $95 million per month. That truly is the 1-2 punch, following the higher interest rates forecasts that are being priced in. Never before has the Federal Reserve planned on reducing liquidity so quickly. One thing for sure, the Fed is determined to fight inflation!
Last week, all stock indexes retreated with the Dow down (.23%), the S&P 500 (1.24%), the Nasdaq (3.85%) and the Russell 2000 losing (4.60%).
Foreign stocks were also down, dropping (1.36%) and Emerging Market stocks off (1.52%).
The larger story is the bond market. As I’m typing, the 10-Year US Treasury is yielding 2.759%, up from 1.50% on January 1st. In my opinion, this is the main reason stocks are currently in a downward trend and not the Russia/Ukraine conflict.
Since Russia invaded Ukraine on February 24th, the market is up approximately 4%.
Consumer Price Index/Corporate Earnings
The Consumer Price Index (CPI) for March will be released this week. Expectation is for an eye-popping 8.4%, beating last months 7.9%. We mentioned a few weeks ago that as of last month, our opinion is inflation is “beginning” the peak. Hopefully the number comes in a little softer.
Also, we’ll begin to hear from Corporate America releasing 2022 Q1 earnings. Most of the companies releasing this week are in the banking industry, so what they say about how inflation is impacting their bottom lines may be impactful.
Secure Act 2.0 Passes House (RMD’s)
The House of Representative passed Secure Act 2.0, which has several provisions to assist people for retirement.
If passed by the Senate and signed into law, Required Minimum Distributions (RMD’s) will once again change.
Beginning in 2023, the age you must begin your RMD will be age 73. In 2030, the age for the required beginning date rises to 74, and then age 75 in 2033.
If you’re already subject to RMD’s, nothing will change.
Assuming this passes, the window for considering Roth IRA conversions will be expanded. Should you consider doing a Roth Conversion? Schedule a brief call to discuss your options to see if you can monetarily benefit. Nothing ventured, nothing gained!