You Can’t Always Get What You Want (or Can You?)
As the world mourns the recent passing of Rolling Stones drummer Charlie Watts, we are
reminded of one of the band’s classic songs which has an underpinning theme about how hard
it is to find happiness; no matter what you have, you always want more. Here at Secured
Retirement we wouldn’t necessarily agree with this statement since we have the fortune of
working with many happy and satisfied clients that are able to live the retirement of their
dreams.
The stock market is currently giving investors what they want as major indices continued their
march upwards last week, again reaching new highs. The gains were attributed to more
optimistic news regarding the recent surge in Covid cases with reports new cases have possibly
peaked in some areas, providing comfort to investors worried about another round of pandemic induced restrictions. Concerning news out of Afghanistan did drive the markets lower for one
day but as that situation nears the resolution deadline of month-end, it should only have limited
impact on the markets and barring any unanticipated major event will most likely not be a large
factor to investors going forward.
Fundamentally, strong earnings reports continue to roll in as do upward revisions to future
revenue estimates. This is evidence businesses are continuing to grow in the post-pandemic
world and the economy continues to strengthen as we transition from recovery mode to
expansion mode. We are positioning portfolios to profit from this growth in a judicious manner,
being mindful of risks.
Inflation Continues
We continuously monitor economic data releases for clues about the direction of the economy.
Reports for both new and existing home sales came in stronger than expected, indicating the
housing market remains strong. Home prices continue to show solid increases as buyers still
outnumber sellers, but the price increases are at a slower pace than what was seen earlier this
year. Orders for durable goods dipped slightly which was a surprise but is not cause for
concern unless this is the beginning of a trend. Most noteworthy was the modest year-over year change in Personal Consumption Expenditures (PCE), which is the Fed’s preferred
measure of inflation. This measure remains elevated and above the Fed’s comfort zone,
leading us to believe the monthly bond buying which has been in place since the beginning of
the pandemic will be reduced prior to the end of this year and completely phased out next year.
The PCE price level is now well above pre-pandemic levels and not showing signs of slowing
down, indicating the current inflation and price increases are not just transitory from the
pandemic recovery but remain a longer-term concern.
Looking Ahead
The week before Labor Day marks the end of summer in many ways and has historically been a
quiet one in the markets with lighter than average volume. Any large news related to geopolitical
events or coronavirus has the potential to cause some short-term market volatility, but we don’t
expect that to be the case. After Labor Day, market volume and activity are expected to pick
back up with September and October historically being two of the most volatile months of the
year. Jobs and payroll data will be released on Friday and could move markets if they deviate
greatly from expectations but even then, the impact most likely will be muted given it is the day
before a holiday weekend.
We continue to work hard to ensure our clients can get what they want when it comes to a
worry-free and secure retirement. This is accomplished by diligently following the markets,
positioning portfolios accordingly and keeping our clients informed of what is happening.
Have a wonderful week!
Nathan Zeller, CFA, CFP®
Chief Investment Strategist
Secured Retirement
nzeller@securedretirements.com
Please contact us if you would like to review your individual financial plan or learn how the
TaxSmart™ Retirement Program can help you.
info@securedretirements.com
Office phone # (952) 460-3260
