By Edward Leone Jr. CFP RFC MBA DMD
Contact Information: 303-478-6793 edleonedds@gmail.com
We are seeing a rebound in equity markets over the last few weeks. The Federal Reserve Bank has backed off on some planned interest rate hikes. This seems to have been an element in the market up swing. Other global central banks are doing the same thing in order to stimulate borrowing and spending. Once again, the only tool being employed to stimulate the economy is monetary policy. Fiscal policy issues are not being addressed. The low-interest rates are allowing corporations to borrow at low-cost to help them pay dividends to stock holders, buy back their own stock and engage in mergers and acquisitions. These activities are accelerating stock prices. How about profit margins and capital investments? Are they going up? Labor markets are still soft and inflation factors are low. These issues are what I believe to be ingredients which are bringing central banks to the actions they are taking especially since fiscal policy changes are on the shelf. We are seeing a slight decrease in the dollar on international currency markets. This may make US export activity more vital and raises the prices of commodities globally. Is global demand and consumption increasing? As you may perceive, I have many concerns about real economic recovery in the US and globally at this time. Are we experiencing an economic recovery or not?
I commented above on labor markets. In February, the US economy added 242,000 jobs. The problem is of what quality and at what pay levels. Many job opportunities have been with reduce hours as a result of Affordable Care Act mandates. 44% of these added jobs went to the lowest-paying wage level according to Dent Digest. Are those who are employed saving adequately for retirement? We can engage in extensive discussion of this matter in future blog issues. We must recognize that Social Security benefits are not enough to fill the need. The average benefit this year is $16,092. The trust funds for retirement and disability administered by the government are on track to be exhausted by 2034. We must all plan a savings program to supplement our Social Security benefit to support life style expenses in the retirement years. It may very well be as a practical matter, that 70 will become the new 65!!
One little pearl I picked up in my reading over the last several weeks is that by this time of the year, only 8% of people are keeping up with their New Year’s resolutions. What does this say about the fiber of our behavior and the nature of our society? We are likely to do best, in my opinion, if we:
Maintain a high level of personal integrity
Treat each other with consideration and respect
Engage in productive and beneficial endeavors
Share when possible
Conduct with healthful life behaviors
Treat life as a continuous blessing and learning experience!!
For the Record:
DJIA 17,602.30
S&P 500 2,049.58
NASDAQ 4,795.65
Suggested Reading: “The New Wealth Management” by Wiley
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