#148 Negative Portfolio Impact Factors

There are a lot of “what-ifs” out there that have the potential to have a negative portfolio impact. We will bring you up to date on the most important ones.

Wage growth on the rise

On Friday the jobs report came out very strong with 151,000 jobs created. The participation increased as well as wages. Wage growth have been stagnant for years and this first rise shows the strengthening of our economy.

The job number caused a negative portfolio impact

The wage growth is what the Federal Reserve is watching to determine interest rate increases. This is another case where the good news became bad news as the job numbers caused a market sell off on Friday which created a negative portfolio impact. With Janet Yellen speaking this week, we could see more market action based on the perceived impact of her words. Combine that with the fundamentals and technicals of the market and that creates a big “what if’” for portfolio strategies.

The strong dollar’s negative portfolio impact

The strong dollar is causing many multi-national companies to struggle over the fact that their products are not as competitive overseas. On Wednesday and Thursday those companies may have caught a break as we saw the US dollar index fall for the first time in a seven years. This could create a strong headwind of relief for some of these companies and further strengthen the economy.

Break down of the “what-ifs”

  1. Will the Fed raise rates, hold rates, reverse their decision and bring rates back down later this year?
  2. The strength of the US dollar
  3. The price of oil which we still believe will go lower than $30

All of these “what-ifs” impact corporate America and consumers. Once the consumer gains confidence that the economy is strengthening and they are saving money at the gas pump, we could see them start spending more. But right now they are holding on to their money and paying down debt.

We are watching all these factors and we still believe we are in a bear market. We will keep you updated so keep watching.

Comment

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Greg Powell, CIMA
President/CEO
Wealth Consultant
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Ashley Page, JD, MBA
Senior Vice President
Wealth Consultant
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Bobby Norman, CFP®
Vice President
Wealth Consultant
Email Bobby Norman here

Trey Booth, CFA®
Vice President
Wealth Consultant
Email Trey Booth 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.

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