Over the weekend, news came out that a lot of the waivers for the Iranian oil sanctions are going to come off. Oil prices have spiked up overnight around 2.6%. While this won’t hit the pumps right away, we like to look forward. As oil prices go up, gas prices tend to follow. The U.S. is in an interesting spot because we are a net energy exporter now. The market tends to like oil prices going up because that helps energy companies. We did an educational vlog, #356 Why Pennies Matter, in which we discussed how each penny increase in the price of gas hurts the U.S. consumer by $4 million per day. That adds up over 365 days, especially if we get a large increase. The consumer is really strong but we like to look at things that could possibly hinder that. However, from the data we are looking at seems to indicate that these rises in prices have yet to hinder the consumer and they are still out there spending money.
States & Student Debt
Over the last 4 years, 20 states have gone in and said that if there is an underserved industry they will recruit an individual for employment and forgive student debt if the person goes to work and live there for a while. Utah is a great example of this. Hypothetically, if you were a manufacturer and it is an underserved industry in that state, they will allow you to move their and forgive 25% per year they live and work there. This helps with the younger consumers and allows them to save more money and spend it in other ways. This is a new economic development move for a lot of states.
There has been a lot of speculation around the overall health of companies. This is a crucial week for earnings being reported. Over 140 S&P 500 companies will be releasing quarterly earnings which will include both industrial and tech giants. Earnings tie back directly to the consumer. If the consumer is out there spending money, then inevitability earnings will continue to rise. So, this could give us a good indication of what kind of trend is occurring.
UK Government System
The UK government is coming up with an economic early warning system. They are gathering data, leading economic indicators, and placing it in one new indicator. In the U.S. we have economic reports and indicators that come out during the month but have to wait until month’s end to get confirmation on those numbers. The UK is coming up with a system that gives a quicker signal of economic change and can essentially see the health of the economy in real time. The first economic reading came out last week and was negative. Why do we care about this? This ties directly into the global economy and it will be interesting to see if this is something the U.S. decides to use as well.
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.
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