The Markets/Fed/Economic Recovery

There’s enough going on to make your head spin!  The passing of Supreme Court Justice Ginsberg, TikTok, continuing Covid-19 issues, the economic recovery, stimulus battle, Federal Reserve alteration, the election, and of course politics!!!!  Certainly, enough to increase market volatility!

First and foremost, we should honor the life of Supreme Court Justice Ruth Bader Ginsberg.  I took a little time over the weekend to do some reading on her life.  I hope you have, or will do the same. Whether you are a Democrat or a Republican, I hope you can appreciate the dedication, contributions, and overall service to our country.

Last week resulted in a mixed stock market with the Dow down slightly (.01%), the S&P 500 down (.60%) and the Nasdaq off (.53%).   To the upside, we witnessed the Russell 2K Small Cap index rising 2.68%, foreign developed stocks and emerging markets to the plus side.

Federal Reserve Meeting

The Federal Reserve suggested rates will stay low for 3 more years, and they’ll let inflation run higher than 2% for a while (when it gets there), to smooth out the average of 2%.   I certainly believe the Fed should not be moving rates now, however I question the long-term forecast of remaining idle for 3 years.

I did enjoy seeing my high yield savings account pay 2% for a while.  It’s now down to .60%.

I wonder how long it will take to get back to 2?

Economic Recovery Scorecard

Here’s where we stand on our recovery.  This data is from the St. Louis Federal Reserve.  All data is from August 2020, except consumer spending, which is from July 2020.

We’ve come a long way back in a short period of time, however the pace of improvement in each category has slowed significantly.   Guessing the $1200 checks and the additional stimulus did help.  Will we get another round of stimulus prior to the election or after?  Is it necessary?

Any further stimulus should be more targeted to the areas that have not recovered, which will be challenging to negotiate!

United States Debt

$$$ US Public Debt as of the end of June 2020, totaled $26.5 Trillion.  So, who owns it?  The popular belief is that China owns the most!

Besides US investors, the 2 largest holders of our Public Debt are Japan, owning 5% and China which owns 4%.  The total of US Debt owned by foreign holders is about 27%, or $7 Trillion.

One thing for sure, in the short-term that debt is going higher!

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