These numbers don’t always represent the full picture.

Provided by Marc Aarons

 The holiday season is often a quiet, positive time for the financial markets. The phrase “Santa Claus Rally” was coined in the early 1970s to reflect the stock market’s upward bias during the November-January stretch.¹

But this year, the markets might face some crosswinds as we travel through the holidays.

The stock market initially reacted well to news that President Biden will nominate Jerome Powell to lead the Federal Reserve for a second term. But trading became choppy as the session continued.²

Next up, the markets may react to an active December legislative calendar. Between today and New Year, Congress is preparing to work on the federal budget, the debt ceiling, and the Build Back Better plan.

Economic news also may influence trading in the weeks ahead. For example, the next reading on inflation (Consumer Price Index) releases on Friday, December 10.³

Last, COVID-19 continues to be unpredictable. Many states have seen an uptick in infections in recent weeks, and a few nations have adopted more aggressive lockdowns to help manage the most recent wave.⁴

Markets tend to be comfortable with some uncertainty, believing that time will resolve the issues. But this year, it might be best to prepare for Santa’s sleigh to hit a few speed bumps along the way.

Marc Aarons may be reached at (714) 887-8000 or marc@ocmoneymanagers.com

^{Investing involves risks, and investment decisions should be based on your own goals, time horizon, and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.}

 ^{MMI Disclosure This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment}

^{This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.} 

^Citations

1. ^{CNBC.com, November 22, 2021}
2. ^{CMEGroup.com, 2021}
3. ^{BLS.gov, November 10, 2021}
4. ^{APNews.com, November 20, 2021}

The post Powell News Kicks Off Volatile Season? appeared first on Money Managers, Inc..

In this Q3 recap: U.S. economic growth slows in the face of Delta variant headwind. Europe’s economic outlook remains positive. Stocks retreat from record highs; confront a bevy of challenges.

A review of Q3 2021, Presented by Marc Aarons

THE QUARTER IN BRIEF

Overcoming rising Delta variant infections, a slowing economic expansion, and growing inflation worries, stocks raced higher through the course of the first two months of the third quarter, propelled by strong corporate earnings, the absence of compelling investment alternatives to stocks, and a “buy on the dip” investor mentality. Investors, however, turned more cautious in September, wary of the season’s rocky reputation, persistently high levels of COVID-19 cases, the length of time that the market has gone without a meaningful retreat, and the fiscal and tax policies under discussion in Washington, D.C.

Amid this caution and absent any positive catalysts, September turned volatile, with stocks retracing their earlier gains as seasonal weakness was exacerbated by the mounting financial difficulties of a debt-laden, large property developer in China and rising bond yields.

Stocks steadied briefly following a Federal Reserve announcement that its bond buying would continue, with tapering of monthly purchases likely beginning in November and extending into mid-2022. However, a surge in bond yields in the closing week of the quarter unsettled investors and led to steep declines, especially in the technology and other high growth stocks. (Higher interest rates decrease the value of future cash flow, often resulting in lower current stock price valuations.)

In the end, September erased the gains built over the previous two months, leaving major indices largely flat for the third quarter.

Investors saw another quarter of exceptional corporate earnings growth. Second-quarter earnings exceeded Wall Street estimates for 87% of the companies comprising the S&P 500 index. Anticipating continued strength in earnings growth, market analysts have increased earnings estimates by 3.7%, expecting that the earnings growth rate will come in at 27.9% for the third quarter. If these estimates are realized, this would represent the third highest year-over-year earnings growth rate in over a decade.^1,2

THE U.S. ECONOMY

The momentum of the U.S. economic recovery slowed in the third quarter as a surge of Delta variant infections led to a deceleration in economic activity in industries such as travel, restaurants, and tourism. Economic expansion was further affected by supply bottlenecks and labor shortages. These supply bottlenecks were felt in multiple ways, from semiconductor chip shortages that limited auto production to delays of import deliveries from abroad due to factory and port closures in a number of Asian countries. Home sales were constrained by low inventory.

There were several economic sectors that continued their strong growth in the third quarter. These included manufacturing, transportation, non-financial services, and residential real estate.

Labor markets improved over the course of the last three months to the degree that employers were having difficulty finding workers. The Federal Reserve Bank ascribed a range of reasons for the worker shortage, including increased turnover, early retirements, childcare needs, challenges in negotiating job offers, and enhanced unemployment benefits.³

One consequence of this labor shortage has been an acceleration in wage gains, which may hold the potential for lower future corporate profits (if companies find that they are unable to pass on the higher cost) and higher inflation, as increased wages raise the costs of products and services.

Supply shortages, rising transportation costs, and wage increases have combined to create price pressures that have led to higher consumer costs in recent months. Reflecting these inflationary pressures were an 8.3% year-over-year jump in producer prices in August and a 5.3% 12-month increase in consumer prices.^4,5

The degree to which economic growth may have slowed in the third quarter won’t be known until October’s release of the Q3 Gross Domestic Product (GDP) report. However, according to the Federal Reserve Bank of Atlanta, which tracks economic data in real time, their model is indicating a 3.2% annualized real rate of GDP growth in the third quarter, a sharp retreat from its model’s prediction of 5.3% on September 1.⁶

The Federal Open Market Committee’s economic projections issued in September also reflect a more cautious view of the economy in the near-term. GDP growth projections for 2021 were revised lower from June estimates, from 7.0% to 5.9%, while inflation estimates jumped from 3.4% to 4.2%.⁷

After plunging in August to near all-time lows, consumer sentiment steadied in September. Nonetheless, consumers are entering the final quarter of the year with a bleaker outlook due to heightened concerns over inflation.⁸

GLOBAL ECONOMIC HEALTH

The outlook for economic growth in European Union (EU) countries grew more positive with widening vaccinations, an improving health situation, and the easing of lockdown measures. The European Commission expects that output will return to pre-crisis levels by the fourth quarter of 2021. GDP growth estimates were lifted to 4.8% for 2021, while 2022 growth is expected to be 4.5%. Inflation estimates were raised to 2.2% for 2021 and 1.6% in 2022.⁹

The economic momentum that the United Kingdom enjoyed in the second quarter appears to be abating, owing to a resurgence in COVID-19 infections, staff shortages, kinks in the global supply chain, and continuing trade tensions with the EU. Nevertheless, the U.K. economy is projected to post a 6.6% growth rate for 2021 and a 5.5% expansion in 2022.¹⁰

After recording two successive quarters of strong economic growth, China’s economy is showing signs of slowing down. Flooding, higher input prices, and a surge in COVID-19 infections have all weighed heavily. A regulatory crackdown on a number of industries did nothing to improve conditions on the ground. It’s estimated that China will end the year with GDP growth rate of 8.5%, with a drop-off in 2022 to 5.5%.¹¹

Despite a pick-up in the pace of vaccinations, the Bank of Japan pared its economic growth estimate to 3.8% from 4.0% for its fiscal year ending in March 2022, though it raised its estimate for the following year to 2.7%, from 2.4%. Encouragingly, Japan announced in late September that it would be lifting the coronavirus state of emergency that was in place since April 2021. Finally, it’s unclear what the impact may be of the decision by Prime Minister Suga not to seek reelection, but it has created an overhang of political uncertainty.¹²

The MSCI-EAFE Index, which tracks developed overseas markets, slipped 1.03% in Q3, while emerging markets, as measured by the MSCI-EM (Emerging Markets) Index, plunged 8.84%.¹³

T I P   O F   T H E   Q U A R T E R
How financially literate are your children? Encourage them to read up on investing and money matters before they turn 18.

 LOOKING BACK, LOOKING FORWARD

The third quarter was a reminder of how difficult it is to project the future amid a global pandemic. Investors entered July increasingly optimistic about an acceleration of the economic recovery, the prospect of rising vaccination rates, the reopening of schools, an easing in labor shortages, and a return to the office. By September, with the Delta variant lingering, employers delayed their plans for a return to the office, some mask mandates were reinstituted, and consumers pulled back on spending and travel.

Despite the deceleration in economic expansion, markets managed to climb to new record highs through most of the third quarter, though they stumbled in September.

If the market is to add to its year-to-date gains in the fourth quarter, it will need to climb a wall of worry. The worries include the expected start of tapering, global central bank tightening, fiscal and tax policy uncertainties, Covid infection levels, inflation, and whether corporate earnings can continue to impress in the wake of this quarter’s economic slowdown.

With the Federal Reserve’s September announcement that it may be set to begin tapering, the Fed joins a growing number of global central banks that have begun winding down the accommodative monetary policies that were put in place in response to the pandemic.

Of course, the pace of monetary tightening may be dictated, in part, by the prevalence of Delta variant infections over the course of the fourth quarter, as well as the state of labor market recovery, which continues to be prioritized over inflation by the Fed.

Inflation has touched levels not seen in over 40 years. Supply chain constraints continue to be a major factor in higher prices for businesses and, in turn, consumers. Especially troubling is that these bottlenecks may last for another year or longer. For now, the credit and equity markets seem to agree with Fed Chair Jerome Powell’s argument that inflation is transitory.

The question for investors is whether the markets will continue to accept that inflation is a transitory phenomenon should price pressures continue to rise through the fourth quarter.

While Washington may have been a tailwind for the market since hitting pandemic lows, it may turn out to be a headwind in the months ahead. Investors are wary of the impact on investments and corporate profits included in the proposed infrastructure plan and the new, higher taxes under discussion to pay for such spending.

Lastly, corporate profits and sales have exceeded market expectations in recent quarters, laying the foundation for the markets to move higher. As earnings are reported over the course of October and November, American businesses will need to once again show earnings growth that not only supports current price levels but also helps provide the rationale for higher valuations.

It’s a formidable wall to climb. Still, many of the conditions for continued stock market strength remain in place, specifically, a financially healthy consumer, an accommodative monetary policy (the Fed is not expected to hike rates until late 2022), strong corporate earnings, healthy economic expansion, and improving corporate cash balances.

The market indexes discussed are unmanaged and generally considered representative of their respective markets. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid.

Q U O T E   O F   T H E   Q U A R T E R

“I sometimes think we consider too much the good luck of the early bird and not enough the bad luck of the early worm.”

FRANKLIN DELANO ROOSEVELT

Marc Aarons may be reached at (714) 887-8000 or marc@ocmoneymanagers.com

^{Know someone who could use information like this?
Please feel free to send us their contact information via phone or email. (Don’t worry – we’ll request their permission before adding them to our mailing list.)
  MMI Disclosure This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment}

^{This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs, or expenses. Investors cannot invest directly in indices. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum} energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. The CAC-40 Index is a narrow-based, modified capitalization-weighted index of 40 companies listed on the Paris Bourse. The DAX 30 is a Blue Chip stock market index consisting of the 30 major German companies trading on the Frankfurt Stock Exchange. The FTSE 100 Index is a share index of the 100 most highly capitalized companies listed on the London Stock Exchange. BSE Sensex or Bombay Stock Exchange Sensitivity Index is a value-weighted index composed of 30 stocks that started January 1, 1986. Nikkei 225 (Ticker: ^N225) is a stock market index for the Tokyo Stock Exchange (TSE). The Nikkei average is the most watched index of Asian stocks. The Hang Seng Index is a free float-adjusted market capitalization-weighted stock market index that is the main indicator of the overall market performance in Hong Kong. The All Ordinaries (XAO) is considered a total market barometer for the Australian stock market and contains the 500 largest ASX-listed companies by way of market capitalization. The SSE Composite Index is an index of all stocks (A shares and B shares) that are traded at the Shanghai Stock Exchange. The S&P/TSX Composite Index is an index of the stock (equity) prices of the largest companies on the Toronto Stock Exchange (TSX) as measured by market capitalization. The MSCI Emerging Markets Index is a float-adjusted market capitalization index consisting of indices in more than 25 emerging economies. The MSCI World Index is a free-float weighted equity index that includes developed world markets and does not include emerging markets. The CBOE Volatility Index® is a key measure of market expectations of near-term volatility conveyed by S&P 500 stock index option prices. The S&P SmallCap 600® measures the small-cap segment of the U.S. equity market. The Russell 2000 Index is a small-cap stock market index of the bottom 2,000 stocks in the Russell 3000 Index. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. for

CITATIONS:

1. insight.factset.com, September 2, 2021
2. factset.com, September 10, 2021
3. federalreserve.gov, September 8, 2021
4. CNBC.com, September 10, 2021
5. WSJ.com, September 14, 2021
6. atlantafed.org, September 30, 2021
7. federalreserve.gov, September 22, 2021
8. sca.isr.umich.edu, September 30, 2021
9. ec.europa.eu, September 30, 2021
10. focus-economics.com, September 28, 2021
11. focus-economics.com, September 21, 2021
12. Reuters.com, July 16, 2021
13. msci.com, September 30, 2021

The post Quarterly Economic Update – October 2021 appeared first on Money Managers, Inc..

In this Q2 recap: U.S. economic growth strong as reopening widens. Europe’s recovery picks up steam; Stocks reach new record highs, face new interest rate and inflation landscape.

A review of Q2 2021, Presented by Marc Aarons

THE QUARTER IN BRIEF

The second quarter began by building on the first-quarter’s gains, with stretches of sideways trading and incremental increases that led to multiple record highs over the course of the three months. Encouraging economic data, a strong corporate earnings season, and the broadening of the nation’s economic reopening was juxtaposed by heightening inflation fears, a short-lived spike in bond yields, and a simmering anxiety over potential changes in Fed monetary policy.

With 99% of the companies in the S&P 500 index reporting, 86% reported a positive earnings surprise, with an average earnings growth rate of 61.0%, the highest since the fourth quarter of 2009.¹

Solid corporate earnings, however, did not drive the overall market materially higher, as inflation weighed on investor sentiment. Many investors were troubled for much of the second quarter by an acceleration in the rate of inflation, worried that the Federal Reserve could begin tapering some of its easy-money policies sooner than expected. Some investors were particularly anxious about the prospect of the Fed being wrong about the transitory nature of the pick-up in inflation, which could require the Fed to slam the monetary brakes harder at a future date, potentially sparking a recession and affecting stock valuations.

Stocks stumbled following a Fed announcement that interest rate hikes could begin in 2023—sooner than it had anticipated—and that it had raised its inflation expectation, though it remained steadfast in its position that above-target inflation would be transitory.

The quarter closed out on a strong note, as investors welcomed the announcement of an apparent agreement on a $1 trillion infrastructure spending bill and news that banks had passed Fed stress tests. The news was enough to send stocks to new all-time highs in the final trading days of June.

THE U.S. ECONOMY

The U.S. economy continued its remarkable recovery in the second quarter, aided by a substantial pick-up in the pace of COVID-19 vaccinations nationwide, an increase in economic reopenings at state and local levels, and by government stimulus spending.

Though second-quarter economic growth won’t be known until July’s release of the Q2 GDP (Gross Domestic Product) report, the economy looks to be building on its first-quarter gains.

According to the Federal Reserve Bank of Atlanta, which tracks economic data in real time, their model is pointing toward a 8.3% real rate of GDP growth in the second quarter.²

Economic data released during the quarter suggest that the Federal Reserve Bank of Atlanta’s estimate looks realistic. Manufacturing activity, as measured by the ISM (Institute for Supply Management) Manufacturing PMI (Purchasing Managers Index), rose in May, marking the 12th consecutive monthly increase. The central challenge for U.S. manufacturers has been meeting high-consumer demand, as the combination of increased consumer spending and supply chain bottlenecks have created temporary shortages. Meanwhile, the ISM Services PMI reached an all-time high in May, rising for the twelfth straight month, as well.^3,4

Consumer confidence is high, with June’s reading reaching its highest level since the onset of the pandemic in March 2020, according to the Conference Board’s Consumer Confidence Index.⁵

This elevated level of consumer confidence is backed by some $2 trillion in personal savings that Americans may be looking to spend as the summer unfolds and vaccination rates increase further.⁶

The labor market recovery, which has lagged other parts of the economy, such as consumer spending and manufacturing, saw meaningful improvement in the second quarter. The weekly initial jobless claims fell below 400,000 for the first time since the pandemic began, while job openings reached 9.3 million, the highest number ever recorded by the Department of Labor’s Job Openings and Labor Turnover Survey (JOLTS).^7,8

The Federal Reserve’s revised outlook on economic growth grew a bit more optimistic. In its June publication of members’ economic projections, the median view was that GDP growth would come in at 7%, a half percentage point higher than its March projection. Accompanying this higher economic growth revision was also a change in members’ inflation expectations. The median inflation expectation for 2021 jumped to 3.4%, up from its 2.4% March estimate. Its view on the unemployment rate was unchanged, projecting the unemployment rate to end the year at 4.5%.⁹

GLOBAL ECONOMIC HEALTH

After a decline in output in the first quarter, economic activity in Europe picked up in the second quarter thanks to a widening vaccination distribution and a relaxation of economic restrictions. Despite its slow start to the year, the Euro area economy is projected to grow by 4.3% in 2021, powered by consumer spending, fiscal support, and exports. Unemployment levels are expected to fall to near pre-crisis levels.¹⁰

As vaccination rates have hit 70% in the U.K., the return to economic normalcy has been quicker than on the continent. This high rate of vaccinations, along with accommodative fiscal policy, is expected to lead to a 7.2% growth in GDP this year.¹¹

China’s vaccination rollout has only recently gathered steam, with its slow start limiting full recovery from the pandemic shutdown. Nevertheless, China’s recovery has been strong, with economic growth this year projected to be 8.5%. Investment has led the recovery, with consumer consumption growth rebounding more slowly. Imports and exports have seen a solid improvement.¹²

After finding early relative success in recovering from the pandemic’s economic impact, Japan declared a state emergency in April due to rising infection rates in certain prefectures. The economic containment measures subsequently implemented were insufficient to stem the virus’s spread, resulting in muted economic growth in the second quarter. Despite this, Japan’s economy is anticipated to expand this year, albeit at a tepid 2.6% rate.¹³

The MSCI-EAFE Index, which tracks developed overseas markets, rose 4.37% in Q2, while emerging markets, as measured by the MSCI-EM (Emerging Markets) Index, gained 4.42%.¹⁴

T I P   O F   T H E   Q U A R T E R
Financial objectives usually involve a time frame. Has your time frame to realize any of your objectives changed?

 LOOKING BACK, LOOKING FORWARD

Investors have enjoyed strong gains so far this year as stocks have responded well to rising vaccination rates, economic reopening, fiscal stimulus, and an accommodative monetary policy.

If the market is to build on these gains over the next quarter and through the year-end, it may depend on how several important questions are answered over the coming months.

Second-quarter GDP growth is expected to come in very strong, perhaps the strongest in decades, leaving investors to wonder if this represents peak growth. In other words, how much will the economy continue to expand absent further fiscal stimulus and with the prospect of Fed tapering? There is a case for above-trendline economic expansion as consumers spend their accumulated savings and people begin filling open jobs once schools reopen and their comfort level with the safety of returning to work rises. Nevertheless, economic expansion appears set to slow, and that’s a potential hurdle for the market.

Then there is the matter of inflation and how “transitory” is defined. The Fed believes that the recent acceleration in inflation is transitory, but transitory is not a technical economic term. It’s a rather ambiguous term. Is “transitory” three months? Six months? Or longer? The market may have a different definition of transitory than the Fed, which could lead to future market dislocation.

For the three-month period ending May 2021, the annualized rate of inflation accelerated to 5.2%, the fastest pace since 1991. The months ahead should provide a clearer picture of whether inflation proves transitory or becomes a more sustained feature of a post-Covid economy.¹⁵

There is an additional, more overlooked, concern regarding inflation, i.e., its impact on consumer spending. While inflation may be transitory, price increases generally are sticky. Thus, it remains uncertain if increases in overall consumer prices will dampen consumer discretionary spending, which investors may be expecting to drive future economic growth.

The Fed’s easy-money policies have been a contributing factor in the market’s sharp recovery from its pandemic lows. Consequently, investors are expected to continue to focus on Fed signals about the timing and degree of its plans to taper its monthly bond purchases. (Its June meeting was silent on this issue.) Tapering is a concern, but given the excess liquidity worries of many investors, any start of Fed tapering later in the year may turn out to be a welcomed development.

Another market headwind is stretched investor sentiment. Though markets are hovering around all-time highs, market breadth has not been exceptionally strong, which suggests investor enthusiasm has moderated. A weekly survey by the American Association of Individual Investors reflected a 10% decline in bullish sentiment and a concomitant rise in bearish sentiment in the month of June. With potentially fewer positive economic surprises ahead and muted buying sentiment, the market may mark time until a new catalyst emerges.¹⁶

The economy appears in good shape, and most economists expect it to remain strong into 2022. This portends a positive second half, but investors shouldn’t lose sight that the market is currently priced above historical average.

Sources: Wall Street Journal, June 30, 2021, Treasury.gov (Bond Yield)

The market indexes discussed are unmanaged and generally considered representative of their respective markets. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid.

Q U O T E   O F   T H E   Q U A R T E R

“Education is what you get when you read the fine print; experience is what you get when you don’t.”

PETE SEEGER

 Marc Aarons may be reached at (714) 887-8000 or marc@ocmoneymanagers.com

^{MMI Disclosure This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment}

^{This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs, or expenses. Investors cannot invest directly in indices. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. The CAC-40 Index is a narrow-based, modified capitalization-weighted index of 40 companies listed on the Paris Bourse. The DAX 30 is a Blue Chip stock market index consisting of the 30 major German companies trading on the Frankfurt Stock Exchange. The FTSE 100 Index is a share index of the 100 most highly capitalized companies listed on the London Stock Exchange. BSE Sensex or Bombay Stock Exchange Sensitivity Index is a value-weighted index composed of 30 stocks that started January 1, 1986. Nikkei 225 (Ticker: ^N225) is a stock market index for the Tokyo Stock Exchange (TSE). The Nikkei average is the most watched index of Asian stocks. The Hang Seng Index is a free float-adjusted market capitalization-weighted stock market index that is the main indicator of the overall market performance in Hong Kong. The All Ordinaries (XAO) is considered a total market barometer for the Australian stock market and contains the 500 largest ASX-listed companies by way of market capitalization. The SSE Composite Index is an index of all stocks (A shares and B shares) that are traded at the Shanghai Stock Exchange. The S&P/TSX Composite Index is an index of the stock (equity) prices of the largest companies on the Toronto Stock Exchange (TSX) as measured by market capitalization. The MSCI Emerging Markets Index is a float-adjusted market capitalization index consisting of indices in more than 25 emerging economies. The MSCI World Index is a free-float weighted equity index that includes developed world markets and does not include emerging markets. The CBOE Volatility Index® is a key measure of market expectations of near-term volatility conveyed by S&P 500 stock index option prices. The S&P SmallCap 600® measures the small-cap segment of the U.S. equity market. The Russell 2000 Index is a small-cap stock market index of the bottom 2,000 stocks in the Russell 3000 Index. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.}

^CITATIONS:

1. ^{factset.com, June 4, 2021}
2. ^{atlantafed.org, July 1, 2021}
3. ^{ismworld.org, July 1, 2021}
4. ^{ismworld.org, July 1, 2021}
5. <sup>conference-board.org, June 29, 2021
   6. kansascityfed.org, April 29, 2021</sup>
6. ^{dol.gov, July 1, 2021}
7. ^{cnbc.com, June 8, 2021}
8. ^{federalreserve.gov, June 16, 2021}
9. ^{oecd-ilibrary.org, July 1, 2021}
10. ^{oecd-ilibrary.org, July 1, 2021}
11. ^{oecd-ilibrary.org, July 1, 2021}
12. ^{oecd-ilibrary.org, July 1, 2021}
13. ^{msci.com, July 1, 2021}
14. ^{bloomberg.com, June 10, 2021}
15. ^{aaii.com, July 1, 2021}

The post Quarterly Economic Update – July 2021 appeared first on Money Managers, Inc..

Several women-dominated industries were hit hardest by the pandemic.

 Provided by Marc Aarons

 Since the 1980s, unemployment rates have trended higher amongst men than women during a recession. In previous periods of economic downturn, this made sense. Male-dominated industries, like construction and finance, were typically some of the most impacted by a recession.¹

But with the onset of COVID-19, we’ve seen a shift in what workforces are the most impacted. The unemployment rate among women more than quadrupled from 4.4% in March 2020 to 16.1% in April 2020. That’s a 2.5% higher rate of unemployment in women than men.¹

There are a few reasons why this past year’s economic downturn is being called a “she-cession.”

Several women-dominated industries, including hospitality and leisure and entry-level food positions, were hit hardest by the pandemic. And when schools, nurseries, and daycares shut down, parents scrambled to cover. This increased need for full-time childcare meant many working mothers adjusted their professional roles to accommodate.

While the government offered several short-term assistance options to help those affected by the pandemic, there are long-term, compounding financial hardships that should be addressed by a professional. If you’ve experienced financial strain due to the long-lasting effects of COVID-19, do not hesitate to reach out. I’m here to help get your financial goals back on track.

Marc Aarons may be reached at (714) 887-8000 or marc@ocmoneymanagers.com

^{MMI Disclosure This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment}

^{This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.}

^Citations

1. ^{Federal Reserve Bank of St. Louis, 2020}

The post How COVID-19 Caused a “She-Cession” appeared first on Money Managers, Inc..

What the latest round of funding may mean for you.

Provided by Marc Aarons

After a bit of political posturing in December, the $900 billion Consolidated Appropriations Act of 2021 (2021 CAA) was signed into law by President Trump as the COVID-19 pandemic continues to impact employers and employees.

Here’s a quick recap of five key highlights:

Stimulus Checks: The new law authorized a second round of $600 checks for people with income that meets the criteria. The checks start to phase out for individuals who earned at least $75,000 in 2019 and $150,000 for joint filers.¹

Unemployment Benefits: The law provides up to $300 per week in enhanced benefits through March 2021. The benefits extend to self-employed individuals and gig workers.²

Student Loan Repayment: The 2021 CAA extends the provision that allows employers to repay up to $5,250 annually towards an employee’s student loan payments. The payments are tax-free to the employee.³

Small Businesses: The 50% limit on the deduction for business meals has been lifted. Business meal expenses after December 31, 2020, and before January 1, 2023, may now be fully deductible. Please consult your tax, legal, or accounting professional for more specific information regarding this provision.⁴

PPP Loans: The new law contains $284 billion in relief for a second round of Payment Protection Program loan funding. Businesses with 300 or fewer employees may be eligible for a second loan. “Second-draw” loans are available through March 31, 2021.⁵

As 2021 gets underway, expect some additional guidance from regulators on 2021 CAA. Our office will keep an eye out for updates and pass information as it becomes available.

Marc Aarons may be reached at (714) 887-8000 or marc@ocmoneymanagers.com

^{MMI Disclosure This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment}

^{Today’s summary of the Consolidated Appropriations Act of 2021 is for informational purposes only and is not a replacement for real-life advice. Make sure to consult your tax, legal, or accounting professional before modifying any part of your tax strategy based on the new stimulus package.}

^{Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.}

^{This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.}

^Citations

1. ^{USAToday.com, December 31, 2020}
2. ^{CNBC.com, December 21, 2020}
3. ^{ThinkAdvisor.com, December 30, 2020}
4. ^{ThinkAdvisor.com, December 30, 2020}
5. ^{Forbes.com, December 29, 2020}

The post 5 Highlights of the New Stimulus Package appeared first on Money Managers, Inc..

A review of Q4 2020, Presented by Marc Aarons

In this Q4 recap: the appearance of two COVID-19 vaccines gives businesses and consumers hope and lifts stocks; U.S. lawmakers approve a second financial stimulus; European negotiators sign off on a post-Brexit trade deal.

THE QUARTER IN BRIEF

On Wall Street, the fourth quarter’s biggest development had everything to do with science and medicine. In November, news that two vaccines had been highly effective against COVID-19 in clinical trials strengthened Wall Street’s fall rally. The Food and Drug Administration (FDA) authorized both vaccines for emergency use weeks later.

Two important deals were struck after much negotiation. In the nation’s capital, Congress approved a second economic stimulus in response to the pandemic. Overseas, the United Kingdom and the European Union met the deadline to forge a post-Brexit trade agreement.

All three major Wall Street indices ended 2020 with 12-month gains, with the Nasdaq Composite far outpacing the Dow Jones Industrial Average and S&P 500. As a tragic year ended, participants in financial markets here and abroad hoped that vaccine rollouts, further economic support measures, and dovish monetary policies would help stabilize the global economy in 2021.

THE U.S. ECONOMY

The federal government’s Operation Warp Speed produced results. In December, the FDA greenlighted the immediate distribution of two COVID-19 vaccines, both of which were found more than 90% effective in clinical trials. States began vaccinating health care workers and residents of long-term care facilities on December 14. On Main Street and Wall Street, there was hope that the end of the pandemic was in sight, albeit not near at hand.^1,2

In the second half of December, Capitol Hill legislators approved a new economic stimulus for American households, which President Donald Trump subsequently signed into law. The new stimulus included $600 economic relief payments for most taxpayers and at least a 10-week extension of the enhanced $300 federal jobless benefit.³

The Department of Labor statistics showed headline unemployment lessening in the quarter, dipping to 6.7% in November from 6.9% in October. The U-6 jobless rate, which counts both the unemployed and the underemployed, was 12.1% in October, 12.0% a month later. The economy added 610,000 net new jobs in the quarter’s first month, and 245,000 in its second.⁴

Understandably given fall headlines, consumer spending and consumer confidence wavered. The Bureau of Economic Analysis said personal spending contracted in both October (0.3%) and November (0.4%), along with personal incomes (down 0.6% in October, and 1.1% in November). Retail sales, ticking down only 0.1% in the tenth month of the year, slumped 1.1% during the eleventh, according to the Census Bureau. The University of Michigan’s monthly consumer sentiment gauge came in at just 76.9 in October and 80.7 in November; the Conference Board’s monthly consumer confidence index declined from 92.9 to 88.6 in the same time frame.⁴

Both the service and manufacturing sectors were growing, at least according to the monthly purchasing manager indices (PMIs) at the Institute for Supply Management. ISM states that when these indices are above 50, the sectors are expanding. Its monthly manufacturing PMI was at 59.3 in October and 57.5 in November; its services PMI came in at 56.6 in October and 55.9 the following month.⁴

In contrast to most of the above economic indicators, existing home sales rose in November and declined in October. National Association of Realtors reports showed residential resales improving 4.4% in the opening month of the quarter, followed by a 2.5% November dip. As for new homes, the Census Bureau said they plunged 11.0% in November, following a 2.1% October descent.⁴

Federal Reserve chairman Jerome Powell on December 16 said that the central bank would keep buying bonds until the economy showed “substantial” improvement. To many traders and market analysts, that commitment signaled that interest rates might stay near historic lows for years; in fact, the latest consensus opinion among Fed policymakers projects no change for the federal funds rate through 2023. Last month, the Fed forecast a 2.4% contraction for the U.S. economy in 2020, improved from a 3.7% estimate in September. For 2021, it sees economic growth of 4.2% and unemployment declining to 5.0% by year’s end.⁵

GLOBAL ECONOMIC HEALTH

The United Kingdom and European Union hammered out a post-Brexit trade agreement, beating a year-end deadline; Michel Barnier, the E.U.’s chief negotiator in the deal, called the Brexit “an act of mutual weakening.” The E.U. has lost one of its largest members, one that accounted for about a sixth of its economy. While the U.K. gains some political control, its residents can no longer live or work in much of Europe with the ease they once knew, and its economy and financial industry may face potential setbacks.⁶

China’s powerful economy was expanding again, according to China government reports. The nation’s official factory sector purchasing manager index stood at 51.9 in December, down from 52.1 in November; anything over 50 signifies sector growth. China’s services PMI has been above 50 for ten months. China’s government never announced an economic growth target last year; according to CNBC, its 2020 gross domestic product will approach 2.0%, compared to the 6.0% GDP of 2019.^7,8

The MSCI EAFE Index, tracking shares in 21 stock exchanges outside North America, rose 15.75% for Q4. The top 3-month gainer among national benchmarks was Brazil’s Bovespa, up 25.81% in Q4; that was hardly the only major climb. India’s Nifty 50 rose 24.31%, South Korea’s Kospi Composite 23.44%, and Spain’s IBEX 35 20.21%. In Japan, the Nikkei 225 added 18.37%. Hong Kong’s Hang Seng improved 16.08%, France’s CAC 40 15.57%. China’s Shanghai Composite gained 7.92%, Germany’s DAX 7.51%.^9,1

T I P   O F   T H E   Q U A R T E R
Thinking about financing a new car or truck? If so, think about gap insurance: auto insurance designed to cover the “gap” between the loan balance and the vehicle’s actual value. Should a new vehicle be stolen or damaged, the standard insurance payment may correspond to its actual value, which could be less than what you owe on it. Gap insurance addresses this difference.

LOOKING BACK, LOOKING FORWARD

Optimism grew on Wall Street as the quarter progressed. The Nasdaq Composite, S&P 500, and Dow Jones Industrial Average all saw double-digit Q4 gains, and all three benchmarks advanced for 2020.¹¹

The Nasdaq had a banner year, as traders readily bought shares of technology firms whose products helped people work at home. It wrapped up 2020 at 12,888.28. The S&P 500 settled at 3,756.07 on December 31, while the Dow ended the year at 30,606.48.¹¹

Treasury yields rose in Q4, with the 10-year note approaching 1%. Its peak yield for the quarter: 0.98%, on November 10.¹²

In this past quarter, bullish sentiment was widespread on Wall Street. In the opening quarter, investor optimism may rise as the vaccine gets more widely distributed. Frustrations in the first few weeks of Q1 may test stocks; on the other hand, measurable progress against the pandemic could renew enthusiasm.

Sources: Yahoo Finance, December 31, 2020

The market indexes discussed are unmanaged and generally considered representative of their respective markets. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid.

Many Americans believe that 2021 will be better than 2020. In the glass-half-full outlook, with most of the nation vaccinated by spring, it takes until fall in the glass-half-empty view. In either scenario, business sectors hurt stay-at-home orders could bounce back before the end of the year.¹³

Q U O T E   O F   T H E   Q U A R T E R

“Never give up trying to build the world you can see, even if others can’t see it.”

SIMON SINEK

Marc Aarons may be reached at (714) 887-8000 or marc@ocmoneymanagers.com

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^{MMI Disclosure This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment}

^{This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs, or expenses. Investors cannot invest directly in indices. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. The CAC-40 Index is a narrow-based, modified capitalization-weighted index of 40 companies listed on the Paris Bourse. The DAX 30 is a Blue Chip stock market index consisting of the 30 major German companies trading on the Frankfurt Stock Exchange. The FTSE 100 Index is a share index of the 100 most highly capitalized companies listed on the London Stock Exchange. BSE Sensex or Bombay Stock Exchange Sensitivity Index is a value-weighted index composed of 30 stocks that started January 1, 1986. Nikkei 225 (Ticker: ^N225) is a stock market index for the Tokyo Stock Exchange (TSE). The Nikkei average is the most watched index of Asian stocks. The Hang Seng Index is a free float-adjusted market capitalization-weighted stock market index that is the main indicator of the overall market performance in Hong Kong. The All Ordinaries (XAO) is considered a total market barometer for the Australian stock market and contains the 500 largest ASX-listed companies by way of market capitalization. The SSE Composite Index is an index of all stocks (A shares and B shares) that are traded at the Shanghai Stock Exchange. The S&P/TSX Composite Index is an index of the stock (equity) prices of the largest companies on the Toronto Stock Exchange (TSX) as measured by market capitalization. The MSCI Emerging Markets Index is a float-adjusted market capitalization index consisting of indices in more than 25 emerging economies. The MSCI World Index is a free-float weighted equity index that includes developed world markets and does not include emerging markets. The CBOE Volatility Index® is a key measure of market expectations of near-term volatility conveyed by S&P 500 stock index option prices. The S&P SmallCap 600® measures the small-cap segment of the U.S. equity market. The Russell 2000 Index is a small-cap stock market index of the bottom 2,000 stocks in the Russell 3000 Index. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.}

^CITATIONS:

1. ^{CNN, November 18, 2020}
2. ^{U.S. Department of Health & Human Services, December 21, 2020}
3. ^{Minneapolis Star-Tribune, December 27, 2020}
4. ^{Investing.com, December 30, 2020}
5. ^{Associated Press, December 16, 2020}
6. ^{New York Times, December 31, 2020}
7. ^{MSN, December 30, 2020}
8. ^{CNBC, December 30, 2020}
9. ^{Wall Street Journal, December 31, 2020}
10. ^{Barchart.com, December 31, 2020}
11. ^{Wall Street Journal, December 31, 2020}
12. ^{Treasury.gov, December 31, 2020}
13. ^{Wall Street Journal, December 31, 2020}

The post Quarterly Economic Update – January 2021 appeared first on Money Managers, Inc..

How will the self-employed strategize for retirement?

Provided by Marc Aarons

As Wall Street pushes higher, a pandemic-weary Main Street is relearning how to manage cash flow with the hope of keeping its retirement dreams alive.

Self-employed Americans, and the people working for them, account for roughly 30 percent of the nation’s workforce.¹

In the best of times, putting aside money for retirement was a challenge for this group. Before the pandemic, just 13 percent of people who run a single-person business set aside money in a workplace retirement plan. By comparison, 72 percent of people in large companies participate in retirement plans.²

In recent weeks, the Dow Jones Industrial Average crossed 30,000 for the first time. And this year, the Standard & Poor’s 500 index has picked up more than 10 percent through November. But some self-employed Americans are just reading about the rally, not participating.^3,4

There’s no shortage of retirement plan choices and programs. But the uncertain outlook has forced many to build larger-than-normal cash reserves to help manage through any operating restrictions or shutdowns.⁵

If you’re a self-employed business owner who’s struggling with managing cash flow while keeping an eye on your future, reach out to your trusted financial professional. They may offer some guidance on how to set priorities so both goals can be within your reach.

Marc Aarons may be reached at (714) 887-8000 or marc@ocmoneymanagers.com

  ^{MMI Disclosure This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment}

^{This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment. The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. The S&P 500 Composite Index is an unmanaged group of securities considered to be representative of the stock market in general. Index performance is not indicative of the past performance of a particular investment. Past performance does not guarantee future results. Individuals cannot invest directly in an index. Investing involves risks, and investment decisions should be based on your own goals, time horizon and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.}

^Citations

1. ^{Pew Research Center, August 29, 2019}
2. ^{CNBC.com, September 12, 2019}
3. ^{The Wall Street Journal, November 25, 2020}
4. ^{Yahoo Finance, November 30, 2020}
5. ^{CNBC.com, September 4, 2020}

The post Does Main Street Need a Wall Street Strategy? appeared first on Money Managers, Inc..

In this Q3 recap: stocks post further 2020 gains as the economy bounces back and the Federal Reserve announces a shift in its approach to inflation.

A review of Q3 2020, Presented by Marc Aarons

THE QUARTER IN BRIEF

The summer brought an economic rebound and a continuation of the stock market rally that began in spring. In late September, the Federal Reserve Bank of Atlanta’s GDPNow tracker estimated real Gross Domestic Product (GDP) growth of 32.0% for the third quarter. All three of the major Wall Street benchmarks advanced in Q3; the S&P 500 added nearly 8%, ending the quarter up about 4% for the year. Even so, U.S. equities slumped in September as traders worried that the stock market might be getting ahead of the economy.^1,2

In Washington, the Federal Reserve altered its monetary policy stance and forecast low-interest rates for the near future. Hopes for another economic stimulus dimmed in Congress. On Main Street, the coronavirus pandemic remained top of mind, but improvements in hiring, consumer confidence, and retail sales were evident.

Entering the fourth quarter, analysts wondered how adroitly the financial markets might manage some unknowns: a potential uptick in COVID-19 cases in the fall, the pace of vaccine development, the outcome of the presidential election, and undetermined prospects for additional economic support of businesses and households.

THE U.S. ECONOMY

Many positive signals appeared in the quarter. Millions of Americans went to work again; monthly net job growth topped 1.7 million in July and 1.3 million a month later. Unemployment, which had hit 14.7% in April, fell from 10.2% in July to 8.4% in August, and the U-6 rate counting both underemployed and unemployed Americans declined from 16.5% to 14.2%.^3,4

Consumer confidence, as measured by the Conference Board’s monthly index, leaped to 101.8 in August from 86.3 in July. Households kept up their buying—retail sales were up year-over-year through August even though supplemental unemployment benefits expired at the end of July.³

Industries also grew, according to research from the Institute for Supply Management. When ISM’s Monthly Purchasing Manager Index for the manufacturing and services sector surpasses 50, those sectors are judged by ISM to be expanding. ISM’s services PMI was at 58.1 in July and 56.9 in August; its manufacturing index reached 54.2 in July (a month that saw a 6.4% rise in U.S. factory orders) and 56.0 in August.³

Home sales soared as summer began, and although that momentum tailed off, sales did not retreat. Residential resales were up 24.7% in July, and another 2.4% in August. New home buying increased 4.8% for August after a 14.7% July climb. Housing starts and building permits were both up 17.9% in the first month of the quarter, but then they both declined; permits dipped 0.9% and starts 5.1% in the eighth month of the year.³

For more than a century, the Federal Reserve has had two primary monetary policy objectives: to manage inflation and to guide the economy toward a state of maximum employment. Historically, managing inflation has come first. So, it made news on August 27 when Fed Chairman Jerome Powell announced that the central bank would “seek to achieve inflation that averages 2 percent over time,” rather than proactively adjust short-term interest rates when inflation approaches that established target. In other words, it would tolerate a little more inflation than it had in the past as a trade-off for spurring the economy. The Fed kept the federal funds rate in the 0%-0.25% range in the quarter, and its September consensus interest rate forecast showed it expected no change for short-term interest rates through 2022.^4,5

 THE GLOBAL ECONOMY

As economies worldwide continued to labor under the coronavirus pandemic, the International Monetary Fund (IMF) and Organization for Economic Cooperation and Development (OECD) revised their estimates of global economic activity for 2020 and 2021. The IMF sees a 3.0% contraction for global Gross Domestic Product (GDP) this year, with the global economy growing 5.8% next year. The OECD estimates a 4.5% pullback for global GDP in 2020, and then a 5.0% rebound in 2021.⁶

The quarter ended with no agreement yet on a post-Brexit trade deal between the United Kingdom and the European Union, as the post-Brexit transition period ends December 31. Complicating matters, U.K. lawmakers introduced a bill that would disregard conditions for trade with Northern Ireland established as part of Brexit, which the E.U. has hotly protested. U.K. Prime Minister Boris Johnson wants both parties to reach a free trade agreement this month; Johnson is aiming for a pact without quotas or tariffs attached, similar to the arrangement the U.K. has with Canada.⁷

Looking at foreign stock exchanges, some significant quarterly gains stand out. South Korea’s Kospi index rose 11.2% in three months; no other consequential overseas benchmark advanced double digits in Q3l. China’s Shanghai Composite added 7.82%, Taiwan’s TWII 7.70%, Argentina’s Merval 4.69%, Japan’s Nikkei 225 4.02%, and Germany’s DAX 3.65%. On the other side of the ledger, Hong Kong’s Hang Seng retreated 3.96%, and Spain’s IBEX 35 dipped 7.12%. MSCI’s EAFE index, which tracks large companies across developed countries in Europe and Asia, rose 4.90% in Q3.^8,9

T I P   O F   T H E   Q U A R T E R
For some businesses, production and sales slow in the fourth quarter. This is a good time for business owners to allow employees to pursue education and training opportunities relevant to 2021 organizational goals.

 LOOKING BACK, LOOKING FORWARD

Stocks powered through July and August, entering historic territory in mid-summer. In particular, August saw a powerful rally. The Nasdaq Composite climbed 9.59% in August, and the Dow Jones Industrial Average gained 7.57%, finishing with its best August since 1984. Advancing 7.01% to cap a 5-month winning streak, the S&P 500 had its best August since 1986. September got off to a good start, with a new record close for the S&P: 3,580.84.^10,11

Then, reservations about the rally surfaced. Traders began to question the sustainability of the summer economic recovery, and whether a fall uptick in coronavirus infections might hurt business and consumer spending. The S&P ended September at 3,363.00, retreating 3.92% for the month. The Dow lost 2.28% in September to fall to 27,781.70, and the Nasdaq gave up 5.16%, declining to 11,167.51.^12,13

The 10-year Treasury yield spent all of Q3 between 0.52% and 0.74%, reaching the top of that range in late August.¹⁴

Wall Street enters the fourth quarter with a bit of uncertainty. The November election results may produce any number of reactions. There are only educated guesses as to when coronavirus vaccines may appear, and how effective they may be. The first reading on 3rd-quarter Gross Domestic Product growth is on October 27, roughly one week before election day.

Sources: wsj.com, cnbc.com, treasury.gov, finance.google.com – 9/30/2020

Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year Treasury yield = projected return at maturity given expected inflation expressed as a percentage.

Federal Reserve officials expect low-interest rates and very little inflation through 2022. Sustained low-interest rates could drive more borrowing and business investment, and improve the outlook for the housing market.

Q U O T E   O F   T H E   Q U A R T E R

“Adversity is always the partner of progress.”

JOHN C. MAXWELL

Marc Aarons may be reached at (714) 887-8000 or marc@ocmoneymanagers.com

  ^{MMI Disclosure This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.}

^{This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs, or expenses. Investors cannot invest directly in indices. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. The Korea Composite Stock Price Index or KOSPI is the major stock market index of South Korea, representing all common stocks traded on the Korea Exchange. The SSE Composite Index is an index of all stocks (A shares and B shares) that are traded at the Shanghai Stock Exchange. The FTSE TWSE Taiwan 50 Index is a capitalization-weighted index of stocks comprising 50 companies listed on the Taiwan Stock Exchange, developed by Taiwan Stock Exchange in collaboration with FTSE. The S&P MERVAL Index is the most important index of the Buenos Aires Stock Exchange. Nikkei 225 (Ticker: ^N225) is a stock market index for the Tokyo Stock Exchange (TSE). The Nikkei average is the most watched index of Asian stocks. The DAX 30 is a blue-chip stock market index consisting of the 30 major German companies trading on the Frankfurt Stock Exchange. The Hang Seng Index is a freefloat-adjusted market-capitalization-weighted stock-market index, and the main indicator of overall market performance in Hong Kong. The IBEX 35 is the benchmark stock market index of the Bolsa de Madrid, Spain’s principal stock exchange. The MSCI EAFE Index is an equity index which captures large and mid-cap representation across 21 developed markets countries around the world, excluding the U.S. and Canada. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.}

^CITATIONS:

1. ^{Federal Reserve Bank of Atlanta, September 25, 2020}
2. ^{CNN Business, September 30, 2020}
3. ^{Investing.com, September 30, 2020}
4. ^{Forbes, September 16, 2020}
5. ^{New York Times, August 27, 2020}
6. ^{Nasdaq.com, September 30, 2020}
7. ^{Associated Press, September 29, 2020}
8. ^{Barchart.com, September 30, 2020}
9. ^{Wall Street Journal, September 30, 2020}
10. ^{CNBC, August 31, 2020}
11. <sup>Business Insider, September 2, 2020
    12. CNBC, September 30, 2020</sup>
12. ^{Google Finance, September 30, 2020}
13. ^{Treasury.gov, September 30, 2020}

The post Quarterly Economic Update – October 2020 appeared first on Money Managers, Inc..

Here’s what you need to know.

Provided by Marc Aarons

A U.S. drug company recently said that it’s in late-stage trials for its coronavirus vaccine and reported that it could be given to Americans as early as the end of the year.¹

Great news. But it seems like every few days there’s a new update on a clinical trial for COVID-19. So we took the opportunity to check out the overall status for the development of a vaccine.

Much to our surprise, we learned that more than 150 vaccines are in development across the world. Hopes are high that at least one of these vaccines can be brought to market in record time to help manage the global crisis.²

In the past, it has taken 10 to 15 years to develop a vaccine that’s ready for the market. The vaccine for the mumps, for example, took four years in the 1960s.²

Along with the rapid development, there has been some fear that the process may be moving along too quickly without the proper checks and balances. On September 8, nine drug companies attempted to ease those concerns, releasing a letter saying they would prioritize safety and uphold “the integrity of the scientific process” in their efforts to develop coronavirus vaccines.³

We expect that news about potential vaccines may continue to influence the financial markets. Progress on vaccines also may affect the outlook for specific industries, like travel and leisure. At least one airline company believes that a vaccine may be critical to the ongoing recovery of the aviation industry.⁴

Much like you, we’re watching the developments and hoping for amazing news that may help bring an end to the coronavirus. If you are concerned about the coronavirus, we welcome the chance to speak with you.

Marc Aarons may be reached at (714) 887-8000 or marc@ocmoneymanagers.com

^{MMI Disclosure This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.}

^{This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.}

^Citations.

1. ^{FoxBusiness.com, September 13, 2020}
2. ^{NationalGreographic.com, September 9, 2020}
3. ^{USNews.com, September 8, 2020}
4. ^{CNBC.com, September 13, 2020}

The post Race for a Vaccine appeared first on Money Managers, Inc..

What you should know about the change.

Provided by Marc Aarons

The Dow Jones Industrial Average (DJIA), one of the most widely followed stock market indices, has made some key changes to its starting lineup.

Salesforce.com, Amgen Inc., and Honeywell International Inc. have replaced Exxon Mobil Corp., Pfizer Inc., and Raytheon Technologies Corp. The change went into effect before the market opened on Monday, August 31.¹

It’s important for investors to know that the changes took effect so they have a better understanding of the financial markets. But it’s also important to note that the DJIA has made several adjustments since it was first published in 1896, so a change to the Dow 30 lineup is nothing new.²

The index changes were prompted by Dow component Apple Inc’s decision to split its stock four-for-one, which also took effect on August 31.³

The DJIA is a price-weighted index, meaning the 30 companies are weighted in proportion to their price per share. By splitting its shares, Apple effectively reduced its influence—and the entire technology sector’s influence— on the Average. In fact, Apple’s move reduced the technology weighting within the Dow from nearly 28% to 20%. The addition of Salesforce is designed to help bolster the technology sector. ³

Put another way, before the split, Apple was the most influential component in the DJIA, but after the split, it drops to 17th.³

Some market analysts have said the changes make the index “more in tune with the new economy.” The DJIA changes reflect the growing influence of technology and the waning influence of the old economy. Oil and gas multinational Exxon, for example, joined the Dow more than 90 years ago in 1928.^4,5

Please remember that the companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.

Marc Aarons may be reached at (714) 887-8000 or marc@ocmoneymanagers.com

_{MMI Disclosure This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The ^{publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.}}

^{This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.}

^Citations.

1. ^{S&P Dow Jones Indices, August 24, 2020}
2. ^{Investopedia, August 2018}
3. ^{CNBC.com, August 24, 2020}
4. ^{CNBC.com, August 25, 2020}
5. ^{Reuters.com, August 24, 2020}

The post Dow 30 Changes Its Starting Lineup appeared first on Money Managers, Inc..