We’ve Moved! 6121 Excelsior Blvd. St. Louis Park, MN 55416

Financial Planning

Weekly Insights 12/20/21 – 12/24/21

by

You’ll Shoot Your Eye Out

As you progress through life, the things you desire most will most likely change.  A child with few worries about the outside world may want nothing more than receiving a special toy as a gift.  Perhaps this toy would be a Red Ryder BB Gun, as was longed for by a young Ralphie Parker in the classic film, “A Christmas Story.”  When you get older into adulthood, you are likely to concern yourself with bigger issues and certain “toys,” which instead of BB guns might be hunting rifles, golf clubs or even a boat, may still be wanted but in the big picture they often become less important than items of greater significance in your life.  For those saving for retirement, one of their greatest wishes, if not the greatest, may be to ensure they have accumulated enough money to continue to support their income and lifestyle.  Regardless of what you might yearn for most, anyone reading this is most likely wanting a stock market to continue the upward trajectory it has generally been on over the past decade. 

Unfortunately, this was not the case last week with the stock markets moving lower, which was primarily attributed to the Federal Reserve (the Fed) meeting in the middle of the week.  Markets traded lower early in the week in anticipation of this meeting and as expected the Fed announced they were going to reduce their monthly bond buying program faster than when this taper was announced last month. It is now forecasted the program will be wrapped up in March, setting the stage for an interest rate hike in June, or possibly sooner, with projections for three total rate hikes in the year.  The stock markets reacted positively to this announcement on Wednesday, even though it was widely anticipated, because there was some concern the Fed would take more drastic measures to combat inflation such as further speeding up the taper of the bond buying program or even raising rates immediately. 

Many stocks, specifically many technology companies, were hit particularly hard later in the week due to worries over higher interest rates and slowing economic activity. This might mark the beginning of a shift from momentum stocks, which have performed very well over the past few years, and into more of the value sectors as the markets pay more attention to valuations in a rising interest rate environment.  There was relatively little change in the narrative surrounding the Omicron variant, but it does remain an overhang and therefore causes continued headwinds to the market.   

The Biden Administration’s Build Back Better spending bill had its tongue stuck to a frozen flagpole over the weekend with Sen. Joe Manchin announcing he would not be supporting the bill, effectively killing it.  If this bill would have passed it could have produced a short-term catalyst to push markets higher since it introduces a high level of government spending, but in the long-term it was likely to cause even more inflation and potentially be a drag on economic growth from higher levels of government debt.  There is always a chance the parties will continue talks and come to an agreement which would resurrect the bill, but chances are minimal and if that were to occur it would not be until sometime in 2022. 

The Soft Glow…

A soft glow is a stark contrast to burning bright with the former a reference to the “major award” (aka leg lamp) won in a contest by the Old Man (Ralphie’s father) in the aforementioned movie while the latter could be used to describe the current state of inflation.  The Producer Price Index (PPI), a measure of wholesale prices of goods before they are sold to consumers, last month rose more than analysts’ estimates at a record high pace of 9.6% compared to a year ago.  These price increases are generally passed along to consumers and with PPI increases accelerating it is very likely consumer prices will continue to move higher in coming months.  We expect inflation to remain a large threat to investors’ returns in 2022 and beyond. 

Last week retail sales for the month of November were reported and came in less than expectations, but still showed a monthly increase in spending by consumers.  Previously October retail sales were reported noticeably stronger than expectations, so the thought is the most recent numbers reflect consumers pulling forward holiday shopping because of concerns about product availability due to supply chain issues.  Indications remain that holiday spending this year will surpass previous years and be the highest on record, which can be attributed to greater personal wealth and higher household incomes thanks to a strong stock market, solid labor market and stimulus payments.  We monitor consumer spending closely since it comprises over two-thirds of GDP and we will remain especially watchful going into the new year when spending traditionally slows down and now that the stimulus payments have ended but remain optimistic for continued strength in spending from increasing wages and a robust employment situation. 

Looking Ahead

With the year winding down and major holidays approaching, we would expect the markets to get quieter.  Trading volumes are decreasing, as tends to be the case this time of year.  On the economic front, there are some key data releases coming up this week including consumer confidence, durable goods orders, and personal consumption expenditure (PCE) price index, which happens to be the Fed’s preferred measure of inflation.  Given the holiday and lower trading activity we do not expect any of these to have a major impact on the markets unless there is a major surprise, either to the downside or upside.  We follow these numbers closely since they provide signals about the health of the economy and can impact how the stock market reacts.  With recent market events, we will also be keeping a vigilant eye on how various sectors perform over the next few weeks to look for indications on which direction the market might be headed and what we think the new year will bring so we can best position our clients’ portfolios to protect against risk and capitalize on opportunities.

We remain hopeful for a year-end Santa Claus rally in the stock market, which would satisfy the author’s Christmas wish.  If this does not come to fruition, settling for a leg lamp might not be so bad since the market has already provided another great year of returns.  As always, we remain available to discuss market events and portfolio positioning.  With 2021 winding down, it is time to start looking ahead to 2022 and consider how the world might be different going forward.  But for this week, hopefully you are able to spend time with family or friends to celebrate the holiday.  If Santa does bring you a Red Ryder BB gun, don’t shoot your eye out. 

Wishing you all a very Merry Christmas!

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

Weekly Insights 12/13/21 – 12/17/21

by

Let it Snow, Let it Snow, Let it Snow

A relatively mild start to the winter season came to a rather abrupt end last week with colder temperatures and measurable snow. On its own, snow can provide pretty scenery, however for those taking part in a daily commute the snow can cause headaches. When taken individually, snow and commuting are independent events, however one can have a major bearing on the other. While it could be argued the stock market itself can impact outside events, the stock market is very susceptible to being influenced by outside events.

The stock market began last week on some very high notes, putting together the best two-day streak in over a year. The uplift in the market was attributed to the realization the Omicron variant is more mild than previous COVID variants and therefore not expected to lead to further restrictions which could dampen economic growth. The re-opening stocks, such as travel companies and restaurants, led the rally to rebound from their losses the prior week. The markets finished the week quieter on the heels of a hot inflation report and now sit at the same levels where they were trading prior to Thanksgiving and the latest COVID scare. This provides another example of the importance of maintaining a long-term view and not getting caught up in the short-term noise.

After the excitement in the markets the past couple of weeks, we are starting to experience lower trading volumes which we expect to continue to decrease through the end of the year. Much of the portfolio positioning from large institutional investors and tax harvesting from individual investors is winding down. Preliminary reports of holiday consumer spending have been positive with some reports of supply chain and inventory issues, but many retailers remain optimistic that conditions are improving and shelves are well stocked.

Rising Prices

Consumers are fully aware that prices are rising even without data releases from the government. This is especially true during the holiday season when spending for gifts and food is generally at higher levels than at other times during the year. The monthly data release on inflation, Consumer Price Index (CPI), showed that consumer prices have risen by 6.8% compared to a year ago; the highest level since 1982. This report was slightly higher than analysts’ expectations and continues to trend higher. What is alarming is that inflation seems to be gaining momentum with the amount of change from month to month growing larger. Barring an unanticipated event, the rate of increases will need to abate before inflation moderates. We anticipate elevated levels of inflation for the foreseeable future, further cutting into the buying power of consumers as well as the real rates of returns for investors. We will be watching the Producer Price Index (PPI) release this coming week since producer prices tend to be a forerunner of consumer prices.

Job openings remain at the highest levels in history, as was reported last week. The employment reports have shown that unemployment remains low and continues to improve, evidenced last week when the number of continuing unemployment claims hit its lowest level since 1969. Despite this low level of unemployment, there remains some slack in the labor market as we are not yet at what is considered full employment. Labor costs, which have been rising at a rate markedly above the long-term average since the beginning of this year and contributing to inflation, with signals this will continue and could accelerate. Having abundant jobs available, which companies need to fill, coupled with low rates of unemployment are very likely to lead to higher wage pressure.

Looking Ahead

The focus this week will be on the Federal Reserve (the “Fed”) meeting. Recent comments from Fed Chair Jerome Powell and other members of the committee indicate there will be discussion about speeding up the taper of asset purchases with the expectation being the program will wind down faster than previously anticipated. This will set the stage for multiple interest rate hikes in 2022. At the conclusion of their meeting, the Fed will also release the results of their quarterly internal survey of interest rate expectations going forward, commonly referred to as the Dot Plot. It is projected this will show two rate hikes next year with increasing odds of a third. This is a change from the previous quarter which showed only one rate hike next year. Over the past couple of decades the Fed has strived for transparency, minimizing the impact their actions have on the stock market. However, given the current inflation situation and rapidly changing dynamics in the economy they now have to act faster than in the past, allowing less time to telegraph their intentions. Market reactions, both stock and bond, are most likely to be limited since the markets responded, somewhat sharply, to Chairman Powell’s comments two weeks ago when he provided a preview of discussions at this meeting, unless there is a major deviation from prior comments which would come as a surprise.

The onset of snow does guarantee winter has arrived but unfortunately does not guarantee a year-end Santa Claus rally in the stock market, for which we remain hopeful. For the time being enjoy the scenery the snow provides as it should help get us all in the holiday spirit. We remain available to discuss market events, how they impact your portfolio and strategies to protect against downturns while taking advantage of opportunities. Do not hesitate to give us a call to discuss your individual situation and any year-end strategies.

Wishing you all a happy and joyous holiday season!

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

Weekly Insights 12/6/21 – 12/10/21

by

Switch to Decaf

Coffee has been prevalent around the globe for centuries with increased popularity over the past few decades from the surge of large coffee chains and the jolt of caffeine the beverage provides. Specialty drinks based upon coffee have come into vogue and helped propel this ascension. In the current time of year, aficionados are likely to point out that Thanksgiving marks the transition from pumpkin spice latte to peppermint mocha. If the stock market drank coffee, the volatility of the past week might have many of us wish it would switch to decaf and settle down.

Picking up from where it left off from the holiday shortened previous week, the market continued with volatility – to the upside and the downside, and in some cases both on the same day. The latest covid variant, Omicron, continued to be at the forefront but comments from Federal Reserve Chairman Jerome Powell also moved the markets, as did the monthly employment report. The equity markets ended the week lower, near levels last seen in mid-October, and bond yields retreated.

Our assessment is the market, particularly investors, are not afraid of the virus itself but rather how governments might react, with renewed fear of shutdowns or policy mistakes. Widespread restrictions have been announced in Europe but domestic governments have thus far indicated there will not be lockdowns or restrictions, with the exception of some foreign travel. The impact lockdowns could have on the global economy, especially ongoing supply chain issues, coupled with the possibility of additional stimulus would likely further fan the flames of inflation, which remains relatively high and continues to accelerate.

Fed Chairman Powell provided testimony to Congress last week in which he said it was time to retire the term “transitory” when referring to the current state of inflation; finally acknowledging that inflation truly is persistent. He also suggested the Fed would be discussing a possible acceleration to its asset-purchase taper at their upcoming meeting, which would then set the stage for interest rate hikes sooner than previously anticipated. These comments moved stock markets lower, but in our opinion this is the best course of action for the economy and needs to be done to fight inflation before it becomes out of control.

Workin’ For a Livin’

There was no shortage of economic releases last week, with the most notable being employment and payrolls which were lower than expected, leading to some downward pressure on the markets to end the week. While the report did not deliver up to expectations it was not classified as a disaster since it did reflect sustained growth in the labor market. The unemployment rate dropped to 4.2% which is the lowest since before the pandemic. With job openings remaining near historical highs, we would expect continued strength in the employment reports and the number of jobs created in the months ahead. It is worth mentioning we have seen lower than expected numbers numerous times in the past which then

are revised upwards in subsequent months, so it would not be a surprise if that occurred with this month’s numbers.

Our elected politicians in Washington continue their work on current legislative priorities, albeit with limited progress. To use a football analogy, Congress moved near the edge of a government shutdown before “punting” the issue by voting to continue funding until February. Discussions continue in the Senate around the Build Back Better bill which even if it does pass will need to be reconciled with the House version making the likelihood of it being passed by the end of the year now seemingly low. The passage, or inaction, of this bill will most likely have limited short-term impact on the stock market however some provisions, such as changes to the tax code, would impact individuals with increased government spending adding to the inflation fire.

Looking Ahead

Omicron looks to remain front and center in the coming week(s) as we find out more about the transmission of the virus, severity of its symptoms, and potential impacts on the economy. Early indications are this variant is more contagious than previous variants, however symptoms are mild. To reiterate what we mentioned last week, it appears there has been an overreaction to the news and we think the markets will eventually brush this off and get back on track.

This coming week brings reports of the Consumer Price Index (CPI) from last month, which is a measure of the change in consumer prices and the most commonly used gauge of inflation. Consensus estimates from analysts are for the year-over-year change in inflation to be higher than last month’s reading, indicating inflationary pressures continue to accelerate. Regardless of where this report comes in versus expectations, there is little doubt inflation remains elevated which is expected to continue for the immediate future.

Beyond news making headlines, the markets tend to experience added volatility this time of year from year-end portfolio positioning and tax harvesting. This year seems to be no exception and we would expect some swings in the market to continue over the next couple of weeks however it certainly would not come as a surprise if we see a “Santa Claus rally” to close out the year. For the time being, many investors would like the markets to settle down and get into the holiday spirit. We are not getting too wound up over recent events since we maintain a long-term view of the markets and underlying fundamentals remain strong. Hopefully all of you are able to enjoy your favorite holiday beverages, hot or cold, and remain healthy. As always, do not hesitate to contact us should you want to discuss your portfolio positioning or if you have last-minute tax planning you need to do prior to year-end.

Wishing you all a happy and joyous holiday season!

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

Weekly Insights 10/25/21 – 10/29/21

by

A Tale of Two Markets

A few weeks ago, investors were dealing with elevated volatility and downward pressure in the stock market. September went down as the worst month for the S&P 500 since March of last year when the pandemic descended upon the globe. Now, a few short weeks later, sentiment has turned positive and the markets have rebounded, once again trading at all-time highs. What changed during that time? Really not much…..

The market pullback a month ago was blamed on a rise in interest rates attributable to concerns about the Federal Reserve tapering their bond buying, fears of contagion from troubles in the Chinese real estate market, a growing number of coronavirus cases, political debate in Washington around the debt ceiling and spending proposals, and a rise in inflation. These issues remain, yet investors no longer seem concerned. Granted, the debt ceiling issue was temporarily resolved and there is progress around the spending proposals; however, all else remains the same. There was one trigger beginning in mid-October that helped push stock prices higher – earnings. Earnings reports began in earnest last week and in many cases exceeded expectations, reflecting continued growth in corporate profits.

We encourage investors to tune out the extraneous noise, which does not affect the stock market and instead look at what truly does matter – earnings and the overall health of the economy. In that regard, all appears to be fine and there is reason to believe the stock market is once again showing strength. Those investors who maintained a long-term view and were not caught up in short-term noise were rewarded for their patience. The stock market is up over 5.5% in the month of October.

Still Growing

Speaking of the economy, the focus remains on inflation with little doubt that inflation remains persistent and looks to continue into at least the foreseeable future. One of the worries currently garnering attention is a possible return to 1970’s style stagflation – inflation without growth. That time was also characterized by high unemployment, which is not the case today as unemployment is relatively low and continues to fall. Moderate inflation can be good for the economy if it is accompanied by growth. At this point, all indications are the economy is continuing to grow, but there are a few signs of slowing. The various measures of economic growth show very strong growth over the past several months due to the year-ago comparisons when the economy was re-opening. All indications reflect the economy remains on solid footing and if it is slowing, only from high levels.

Looking Ahead

The largest driver of the markets over the next week will likely be earnings announcements and we anticipate strong earnings to continue, which should help fuel further stock market gains. We also continue monitoring the infrastructure and spending bills in Congress, especially how the revenue will be raised to pay for each (i.e. taxes).

Many of the proposals for tax increases from Democratic Congressional leaders have been scaled downwards due to vocal opposition from within their own party. The size and scale of the original proposals reached well into the trillions of dollars to be funded by the American taxpayer. Regardless, even though the total price tags on these spending bills are decreasing they remain extraordinarily large and require funding, which could only be reasonably found in material and sweeping tax increases and/ or increasing the overall national debt.

If you are interested in discussing how taxes could impact your retirement and how we might reduce the effect Uncle Sam has on your hard-earned savings, please give us a call to schedule a planning session to review your individual situation.

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

Nathan Zeller Joins Secured Retirement

by

Secured Retirement is pleased to announce the significant expansion of the portfolio management services offered to their clients.  Chief Investment Strategist Nathan Zeller, Chartered Financial Analyst® (CFA®) and Certified Financial Planner™ (CFP®), recently joined the firm and will oversee the Registered Investment Advisor department.

“I am extremely excited to leverage my expertise and proficiency managing institutional investments exclusively to clients, as well as contribute to the continued growth of the Secured Retirement brand.    SR’s commitment to ensuring each client achieves a tailored retirement plan including personalized investment strategies motivated me to join the team,” announced Nate. 

CEO, Joe Lucey, CFP® stated, “Nate brings over two decades of investment experience including the last 12 years managing trust portfolios at both Ameriprise and US Bancorp.  By adding an internally managed option to the strong externally managed portfolios that we have previously offered we have changed what it means to deliver peace of mind and fiduciary-based planning rarely seen in a firm our size. The caliber of investment management we now offer launches our service to the next level.”

Nathan Zeller’s areas of expertise include portfolio management, asset allocation, security analysis, manager selection, and due diligence.  His investment philosophy is based upon fundamental research to identify overlooked areas of the market and find growing companies selling at a reasonable price.  He also incorporates long-term trends and themes into the investment process.

As the Chief Investment Strategist, Nate focuses his attention on providing sound fiduciary investment management. He leverages his analytical background and extensive experience to construct portfolios tailored to each client’s unique needs.  Nate dedicates himself to ensuring clients achieve their retirement goals and possess peace of mind knowing their assets are properly managed. Nate graduated from the University of Wyoming with a Bachelor’s degree in Electrical Engineering and a Master’s of Business Administration (MBA).  When not studying the markets or digging into companies’ financial statements, he enjoys spending time with his wife, two daughters, and pets.

Want a Retirement Free From Financial Stress?
Book Your Free TaxSmart™ Financial Review Today.

We’ll review your finances and tell you what you can do immediately to get on the right track for retirement.

Book now
Joe Lucey Footer Book Image

Download the Top 10 Mistakes That Increase Your Taxes

In this free report, you’ll learn…

  • Why being passive and having no plan of action for your taxes can kill your retirement.
  • The amount of money you can save with tax planning. (HINT: It’s often at least 5 figures.)
  • What the top 10 most common tax mistakes people make are and how you can avoid making them.

  • This field is for validation purposes and should be left unchanged.
Joe Lucey Footer Logo
Facebook-f Twitter Linkedin-in Youtube Instagram
Influex Logo Light

Danielle Christensen

Paraplanner

Danielle is dedicated to serving clients to achieve their retirement goals. As a Paraplanner, Danielle helps the advisors with the administrative side of preparing and documenting meetings. She is a graduate of the College of St. Benedict, with a degree in Business Administration and began working with Secured Retirement in May of 2023.

Danielle is a lifelong Minnesotan and currently resides in Farmington with her boyfriend and their senior rescue pittie/American Bulldog mix, Tukka.  In her free time, Danielle enjoys attending concerts and traveling. She is also an avid fan of the Minnesota Wild and loves to be at as many games as possible during the season!