Consumer Concerns
There are many distractions and concerns out in the world today, so we wanted to go over the main topics that we’re hearing about. First of all, people are concerned about inflation. They’re still very concerned about COVID, even though the vaccinations are available. People have voiced concerns about the volatility in the stock market. The housing market is a hot topic and people are wondering if it’s a housing boom, bust, or bubble. How long can this market continue to move up? How long can corporate earnings continue to increase? What about the supply chain? Products are getting delivered like normal and so questions are being asked about staffing at trucking companies. Could we see a trucker shortage? The point is, there are lots of distractions going on but if you take a deeper look, you will see that there are actually a lot of positive things happening. When you think of the year 2007, what do you remember? Most people say that 2007 was the beginning of the financial meltdown, which is correct. That was also the same year that the iPhone was introduced to the world. So, the question becomes, which had a bigger impact, the financial crisis of 2007-2008, or the iPhone that has now changed our lives as well as the technology that came with it? The topic that people will think about when the year 2020 is mentioned will probably always be Coronavirus and what took place in the economy. However, as we’ve talked about in our vlogs before, we’ve had mass innovation with technology and digital evolution, that typically would have taken 10 years, compressed into one year.
Technical Analysis
The S&P 500 closed Friday at a price of 4,156. That pushes the resistance level up to 4,180 and creates a support level of 4,130. Last week, we gave a year-to-date moving day average. This week, we wanted to give a short-term indicator. Our 50-day moving average is hovering around 4,090. So, last week, when we talked about the floor or ceiling being molded for the markets, this is one thing that is starting to stabilize a little bit. We are seeing more consistency, despite the volatility that we’ve seen the last couple of weeks and during the month of May. The thing about volatility is that every market has to let a little steam out at some point in time. There is a battle between the bulls and the bears going on right now as to what the future of this economy will be.
International Focus
The U.S. 10-year Treasury yield is now hovering around 1.6%. It did actually go down on Friday, but since May 7th, it’s held above that 1.6% mark. We’re starting to see credit strengthen a little bit in the U.S. as well as at an international level. The German and Swiss that we’ve been talking about for a long time, looks like it could start to rise back into positive territory. People don’t understand that in Germany and in Europe, they’ve had negative interest rates. We may very well see them start to turn positive again which is a great indicator. It also starts going back towards saving money, if rates go up. We are also seeing yields go up on the dividend side because corporations are raising their dividend yields as a result of having good earnings results. Those are just a few positives things to think about during this time period when people are starting to get anxious about the economy showing such strength. Even with inflation being a big topic right now, it’s important to know that Small Caps have outperformed inflation every decade, dating back to the 1930s. So, while inflation is a big topic right now, historically we have seen markets keep up with it.
Keeping Up with Technology
Some of the other themes that we think we’re going to see coming out of 2020 and moving forward are shown on a chart in the video for this vlog. You’ll see that there will be more conversations about the rise of electric vehicles. Another very important topic will be regarding 5G connectivity. Digital streaming of media is another category that we’re watching closely. E-commerce will continue to grow and evolve. Also, ESG is something you’re going to hear a lot about which stands for environmental, social, and governance within companies and what their strategies are for those three categories. The overall digital transformation is alive and well. We think innovation is going to continue to change things so much that there will be industries that will go through big transformations and thrive and some that will fade away. Here at Fi Plan Partners, we’ve embraced technology and the high-tech, high-touch philosophy. We believe that the companies that use technology to communicate as well as keep the human factor are the companies that will benefit. You can talk about the volatility in the market, but the truth is, there’s a lot of positive things taking place as we come out of this economy that’s been held back. People are starting to get back to normal. They are doing business as usual, enjoying their lives, and starting to travel. We hope as Memorial Day weekend approaches, that you’ve got plans to travel and enjoy yourself as well.
Greg Powell, CIMA®
President and CEO
Wealth Consultant
Email Greg Powell here
Adam Vansant, AIF®
Associate Vice President
Wealth Consultant
Email Adam Vansant here
Fi Plan Partners is an independent investment firm in Birmingham, AL, serving clients across the nation through financial planning, wealth management and business consulting. Fi Plan Partners creates strategies in the best interest of their clients using both fee based investing and transactional investing.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
Economic forecasts set forth in this presentation may not develop as predicted.
No strategy can ensure success or protect against a loss.
Stock investing involves risk including potential loss of principal.
Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a registered investment advisor.
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