Womack Investment Advisers Blog

Investors Regain Their Confidence in August

Wed, 04 Sep 2024 21:04:14 GMT

After gyrating wildly throughout the month, major U.S. stock indexes finished August higher.

Despite a lot of uncertainty and some dramatic ups and downs, the Standard & Poor’s (S&P) 500 Index rose 2.3 percent in August, while the Dow Jones Industrial Average gained 1.8 percent to close at a record high. It was the fourth consecutive month of gains for both indexes, reported Connor Smith of Barron’s.

The month’s most remarkable comeback belonged to the Nasdaq Composite Index which eked out a 0.6 percent gain for the month. “That's a shocking turnaround, given the Nasdaq entered correction territory early in the month…,” reported Smith. (A correction is a decline of at least 10 percent.)

As sentiment calmed, the CBOE Volatility Index (VIX), which gauges how volatile investors expect the market to be over the next 30 days, moved lower. “Wall Street’s ‘fear gauge’—the VIX—dropped to 15. That’s after an unprecedented spike that took the index above 65 during the Aug. 5 market selloff,” reported Rita Nazareth of Bloomberg.

Why did investors regain their confidence?

There was some good economic news last week that proved to be just what markets were hoping to see. The data were strong enough to allay fears the economy might weaken too fast, but not so strong they might cause the U.S. Federal Reserve (Fed) to change its mind about lowering the federal funds rate in September. Here’s what happened:

· The economy remains steady. Investors have been worried U.S. economic growth might be slowing more quickly than previously thought. Those concerns were soothed when the Bureau of Economic Analysis revised its estimate for gross domestic product (GDP)—which is the value of all goods and services produced in the U.S. —from April through June. “The U.S. economy grew faster than initially thought in the second quarter amid strong consumer spending, while corporate profits rebounded, which should help to sustain the expansion,” reported Lucia Mutikani of Reuters.

· Inflation continues to soften. On Friday, one of the Fed’s favored inflation gauges—the personal consumption expenditures (PCE) price index—showed headline inflation was 2.5 percent year over year. Core inflation, which excludes volatile food and energy prices, was up 2.6 percent year over year. “The soft price growth continues a recent stretch of cooler inflation readings and falls in line with what Fed officials were hoping to see before easing their restrictive monetary-policy stance,” reported Megan Leonhardt of Barron’s.

Last week, major U.S. stock indices moved higher. Yields for U.S Treasuries with shorter maturities moved lower over the week, while yields for longer maturities moved higher.

For more information on how to be financially prepared, contact our office at (405) 340-1717 or email greg@womackadvisers.com

Greg Womack

1366 E. 15 ^th Street

Edmond, OK 73013

Phone: (405) 340-1717

www.womackadvisers.com

The Near Future Is More Predictable Than the Distant Future

Mon, 26 Aug 2024 21:16:43 GMT

Last year, the St. Louis Federal Reserve explored the accuracy of recession forecasts. They found that short-term predictions about whether there would be a recession in the subsequent quarter were fairly accurate. However, projections for economic growth a year ahead were far less accurate. The researchers concluded, “Even though forecasts can help, we must live with significant uncertainty about future economic conditions.”

Investors experienced some of that uncertainty last week as economic data created confusion about the state of the economy. The Department of Labor released its preliminary revision of the employment report, which showed the number of jobs created from March 2023 to March 2024 was significantly lower than previously thought.

“The new estimates suggest monthly job growth of about 174,000, instead of the roughly 240,000 previously understood…At the end of the day, the revisions imply that the total number of jobs in the U.S. is just 0.5 [percent] smaller than previously thought,” reported Natalie Sherman of BBC News. She cautioned that the preliminary revision will be adjusted again and that, “Over the last four years, the final estimates of job growth have ended up higher than indicated in August.”

Other figures released last week weren’t particularly helpful. In August, manufacturing data was softer than expected. However, sales of existing homes rose in July as supply increased and interest rates fell, reported Seana Smith and Madison Mills of Yahoo! Finance.

The Economist also weighed in on the state of the U.S. economy last week. It asked whether America was already in a recession as some rules of thumb have suggested. It concluded:

“Recession rules are based on the premise that once news gets bad enough, it will worsen further. Historically, that has been a decent bet: unemployment shoots up quickly and then falls slowly; central banks tend to raise interest rates until something breaks. Yet today the Federal Reserve has room to ease and, given the unusual labor-market recovery, some bumpiness does not spell disaster. Although America’s gangbusters expansion is calming, a gradual slowdown is not a crash—no matter what the rules say.”

On Friday, investors were reassured by Federal Reserve Chair Jerome Powell who indicated he is confident “inflation is on a sustainable path back to 2 percent,” and “the time has come for policy to adjust.” Many market watchers interpreted that to mean a rate cut is ahead in September. Major U.S. stock indices finished the week higher, and yields on most maturities of U.S. Treasuries moved lower.

For more information on how to be financially prepared, contact our office at (405) 340-1717 or email greg@womackadvisers.com

Greg Womack

1366 E. 15 ^th Street

Edmond, OK 73013

Phone: (405) 340-1717

www.womackadvisers.com

The Best Week of the Year?

Tue, 20 Aug 2024 15:24:40 GMT

After two weeks of slow and jolting market performance, a bounty of positive news calmed investors and lifted stock markets higher last week.

“Investors seem to have come to the realization that while the economy may be in fact slowing, the Federal Reserve is going to take action to address that by cutting interest rates on Sept. 18…with a September rate cut a near certainty, the mood in the market has turned on a dime,” reported Paul R. La Monica of Barron’s.

Here’s what happened:

Inflation continued to move lower. In July, prices rose 2.9 percent year to year, according to the latest Consumer Price Index report. That was an improvement on June’s 3.0 percent increase. The price of gasoline, new and used vehicles, and medical care moved lower, while the cost of shelter, motor vehicle insurance and recreation moved higher.

“It was the first time that the annual pace of inflation was below 3 [percent] since spring of 2021. Even though June’s inflation reading was slightly better, the pricing data from last month will likely help convince Fed officials to cut interest rates by at least a quarter of a percentage point at their next policy meeting in September,” reported Megan Leonhardt of Barron’s.

Consumer spending remained strong. Consumer spending is the engine that drives the American economy. After slowing (down 0.2 percent) in June, retail sales accelerated (up 1.0 percent) in July, according to the U.S. Commerce Department’s Advance Monthly Sales for Retail and Food Services.

“The retail sales numbers were a blowout versus consensus [expectations], but more importantly it should lay to rest (at least for the moment) all of the ‘doom and gloom’ that was expressed at the beginning of this month,” said a source cited by Rita Nazareth of Bloomberg.

Consumer sentiment brightened. In August, for the first time in five months, consumer sentiment improved, according to the University of Michigan’s Consumer Sentiment Survey. Joanne Hsu, the Survey of Consumers Director, wrote:

“Overall, expectations strengthened for both personal finances and the five-year economic outlook, which reached its highest reading in four months, consistent with the fact that election developments can influence future expectations but are unlikely to alter current assessments. Survey responses generally incorporate who, at the moment, consumers expect the next president will be. Some consumers note that if their election expectations do not come to pass, their expected trajectory of the economy would be entirely different. Hence, consumer expectations are subject to change as the presidential campaign comes into greater focus, even as consumers expect that inflation—still their top concern—will continue stabilizing.”

For more information on how to be financially prepared, contact our office at (405) 340-1717 or email greg@womackadvisers.com

Greg Womack

1366 E. 15 ^th Street

Edmond, OK 73013

Phone: (405) 340-1717

www.womackadvisers.com

August Jitters

Mon, 12 Aug 2024 19:32:14 GMT

Last week, financial markets were volatile. The CBOE Volatility Index (VIX), which is known as Wall Street’s fear gauge, rose to the highest level in four years before cooling down. “While spikes in the VIX often coincide with deep market sell-offs, they can also be short-lived and precede a rebound for stocks,” reported Jesse Pound of CNBC.

Investor uncertainty contributed to market fluctuations last week. There were many reasons for the uncertainty. For example, some investors:

Were unsettled by economic data. Markets stuttered after a weaker-than-expected jobs report. Some investors panicked, believing the United States might be headed for a recession rather than a soft landing.

“A slowing economy could create challenges for equities to achieve the kind of earnings growth that analysts were penciling in for the quarters ahead,” noted a source cited by Connor Smith of Barron’s.

On Thursday, investors regained some confidence after data showed the number of people filing for unemployment claims was lower than expected. The information suggested the labor market remained solid. The subsequent rally was unexpected because jobless claims don’t normally move the market, reported Barron’s.

Concerned about geopolitical risks. Recently, the United States, the United Kingdom, Australia, France, Canada, South Korea, Saudi Arabia, Japan, Turkey and Jordan all warned their citizens to leave Lebanon as quickly as possible on fears that hostilities in the Middle East may escalate, reported Tom Bennett and Hugo Bachega of the BBC.

“Iran, Israel and Hezbollah all have the capabilities to continue to attack each other without triggering physical supply cuts in energy or blocking global shipping. Those are the kinds of effects that would trigger a major market reaction. Though a persistent danger is that, in the fog of war, one party or other goes too far or misreads its adversaries’ intent. Events can quickly spiral out of control,” reported Matt Peterson in Barron’s.

May have been less experienced. It’s summertime and people—including money managers and traders—are vacationing. The Economist explained,

“Spare a thought, then, for the 20-somethings left to run the northern hemisphere’s trading desks over the next few weeks, while their bosses doze on a beach. Possibly for this reason, markets are often more jittery than usual during the summer months. Last year, for example, it was in August that American share prices began their final protracted fall before a storming bull run that took them to new all-time highs. That may be down to liquidity, which…tends to be slightly thinner during the holiday season than in the rest of the year. It may also be that the lack of veterans on banks’ trading floors allows panic to set in more easily. Prices can swing a lot further before someone musters the courage to push back.”

For more information on how to be financially prepared, contact our office at (405) 340-1717 or email greg@womackadvisers.com

Greg Womack

1366 E. 15 ^th Street

Edmond, OK 73013

Phone: (405) 340-1717

www.womackadvisers.com

Stocks Get Dicey!

Wed, 07 Aug 2024 15:52:02 GMT

Stock markets swelled and dropped like waves at the Olympic surfing competition in Tahiti.

It is often said that markets hate uncertainty. There was a lot of uncertainty last week, and it showed. “The technology-heavy Nasdaq 100 Index soared 3 [percent] on Wednesday and then retreated almost that much on Thursday, before paring the decline at the close, for its biggest up-to-down rotation since May 2022. The S&P 500 Index sank 1.4 [percent], just one day after rallying 1.6 [percent],” reported Alexandra Semenova, Esha Dey, Carmen Reinicke, and Natalia Kniazhevich of Bloomberg.

High levels of market volatility reflect high levels of uncertainty. Here are three issues that have been top-of-mind for investors:

1. Will the United States experience a soft landing or dip into a recession?

Last week, investors became concerned that the U.S. economy may be slowing faster than anticipated. First, a key gauge showed that U.S. manufacturing activity slowed in July, reported Lucia Mutikani of Reuters. Then, on Friday, the U.S. unemployment rate rose to 4.3 percent as employers added fewer new jobs than economists had anticipated.

Investors were in a tizzy after seeing weaker-than-expected data. Expectations about the magnitude of a possible Federal Reserve rate cut in September changed—and then changed again. On Friday, the CME FedWatch Tool registered a 74 percent probability of a half-percentage-point rate cut at the Fed’s September meeting, suggesting that the market thought the Fed was likely to begin easing rates too late and would have to lower aggressively. Markets took some calming breaths and, on Saturday, expectations had reversed. There was a 22 percent probability of a half-point cut in September and a 78 percent chance of a quarter-point drop.

2. Will geopolitical issues escalate?

There is a lot happening around the world that could affect financial markets. One concern is ongoing tensions in relations between the United States and China. In addition to tariffs and trade issues, there are allegations that China is providing support for Russian war efforts in Ukraine, and concerns about a possible conflict over Taiwan. Energy security also is a risk as wars in Ukraine and the Middle East have disrupted energy supplies in some regions of the world, according to to S&P Global and David McHugh and Matthew Daly of AP News.

3. Who will win the United States election?

There has been—and will continue to be—a lot of speculation about the outcome of the U.S. election and its potential effect on the economy and markets. The emotion that accompanies elections can make it difficult to remember that financial markets are generally efficient and adjust to changing risks. While election sentiment may sway stock markets over the shorter term, other factors—valuations, earnings, and the business cycle—also are important,” reported Karishma Vanjani of Barron’s.

Last week, major U.S. stock indices moved lower with the Nasdaq Composite Index dropping into correction territory as it fell by about 10 percent. The U.S. Treasury market rallied as the yield on the benchmark 10-year Treasury fell to its lowest level since last December, reported Pia Singh and Hakyung Kim of CNBC.

For more information on how to be financially prepared, contact our office at (405) 340-1717 or email greg@womackadvisers.com

Greg Womack

1366 E. 15 ^th Street

Edmond, OK 73013

Phone: (405) 340-1717

www.womackadvisers.com

How Can Investors Fight Inflation?

email@womackadvisers.com (Greg Womack) — Tue, 30 Jul 2024 16:33:34 GMT

Americans may be witnessing something remarkable.

Earlier this year, we had the relatively rare opportunity to view a total solar eclipse – when the moon passes between the sun and the Earth, blocking the sun completely – as it crossed numerous states. Now, we may see the United States’ economy experience a soft landing – when the Federal Reserve raises rates to fight inflation and does not cause a recession.

“According to the conventional wisdom, the Federal Reserve has managed to achieve only one soft landing in the past 60 years—in 1994–1995,” wrote economist Alan Blinder in an abstract for the Journal of Economic Perspectives.

Blinder’s research suggests that soft landings are more common than conventional wisdom suggests – but not easy to achieve. From 1965 to 2022, the Federal Reserve tightened monetary policy to fight inflation eleven times. In five cases, the Fed achieved a soft or softish landing. It appears that the Fed may be about to add another soft landing to the list.

The U.S. economy grew 2.8 percent in the second quarter of 2024 (after inflation), which is faster than economists expected. The economy grew as businesses continued to invest and consumers continued to spend on goods and services, according to figures released last week by the U.S. Department of Commerce.

“A robust economy is a good sign for the average consumer, and because it came in tandem with positive data on prices, it is in line with the soft landing of a healthy economy and cooling inflation that Federal Reserve officials are looking to achieve. Economists consider real GDP growth rates of between 2% and 3% to be healthy in developed economies…The personal consumption expenditures price index increased 2.6% during the second quarter—the slowest pace since the first quarter of 2021. That is a marked slowdown from the 3.4% pace recorded in the first three months of the year,” reported Megan Leonhardt of Barron’s.

Markets moved lower early in the week and then regained some lost ground after economic growth and inflation figures were released, reported Connor Smith of Barron’s. By the end of the week, the Dow Jones Industrial Average was up, while the Standard & Poor’s 500 Index and Nasdaq Composites indexes finished the week lower. Yields on most maturities of U.S. Treasuries moved lower over the week.

For more information on how to be financially prepared, contact our office at (405) 340-1717 or email greg@womackadvisers.com

Greg Womack

1366 E. 15 ^th Street

Edmond, OK 73013

Phone: (405) 340-1717

www.womackadvisers.com

The Rate Cut Stars Are Aligning

email@womackadvisers.com (Greg Womack) — Tue, 23 Jul 2024 15:14:07 GMT

For the last year, borrowing costs in the United States have remained relatively high as the U.S. Federal Reserve (Fed) waited for economic data to show that inflation was on track to reach the Fed’s two percent target. Now, we may finally be on the cusp of lower rates.

“The Fed’s preferred inflation gauge has eased to 2.6 [percent], not far off its 2 [percent] target, and the once overheated labor market has cooled to pre-pandemic levels. The rebalancing has been accompanied by moderation in consumer spending, as high prices and borrowing costs tamp demand and thus price pressures,” reported Victoria Cavaliere of Bloomberg.

Last week, Fed Chair Jerome Powell told the Economic Club of Washington D.C., “…if you wait until inflation gets all the way down to 2 [percent], you probably waited too long…Our test has been that we wanted to have greater confidence that inflation was moving sustainably down toward our 2 percent target. What increases that confidence is more good inflation data and, lately here, we have been getting some of that.”

Few anticipate the Fed will lower the federal funds rate at its July meeting, but the outlook for September is good. The probability of a September rate cut was above 90 percent last week, according to the CME FedWatch.

Changing rate expectations disrupted stock markets, last week. Investors moved from big technology firms into smaller companies that tend to perform better when rates are lower. Rita Nazareth of Bloomberg explained that the market experienced, “a ‘rotation’ that saw investors trimming positions on this year’s winners in favor of laggards. Underpinning that trade were bets the 2024 rally would broaden out of megacaps as the Federal Reserve cuts rates.”

By the end of the week, the Standard & Poor’s 500 Index was down about 2.0 percent and the Nasdaq Composite had fallen about 3.7 percent. The Dow Jones Industrial Average fared better, finishing the week in positive territory, reported Alex Harring and Jesse Pound of CNBC. Yields on U.S. Treasuries were mixed over the week.

For more information on how to be financially prepared, contact our office at (405) 340-1717 or email greg@womackadvisers.com

Greg Womack

1366 E. 15 ^th Street

Edmond, OK 73013

Phone: (405) 340-1717

www.womackadvisers.com

Will Deflation Continue?

email@womackadvisers.com (Greg Womack) — Tue, 16 Jul 2024 15:02:01 GMT

In May, Pew Research asked Americans about the biggest problems facing our nation. The top three answers were:

1. Inflation;

2. The ability of Democrats and Republicans to work together; and

3. The affordability of health care.

Last week, there was some good news about the first issue. Inflation became deflation as the Consumer Price Index (CPI) fell in June after remaining unchanged in May. Headline inflation was ‑0.1 percent month over month.

Megan Leonhardt of Barron’s reported on the CPI’s findings: “The details under the hood, so to speak, also largely provided good news for consumers and Fed officials. Goods deflation continued — driven by falling new and used vehicle prices—while services costs also trended down. And housing costs, a persistently stubborn sector when it comes to progress in taming inflation, increased just 0.2% on the month — a slowdown from the consistent monthly readings of 0.4%.”

Cooling inflation may lead the Federal Reserve (Fed) to begin lowering the federal funds rate – and that would make borrowing less expensive. Optimism about lower rates led to a bond market rally, and a realignment in the stock market. Rita Nazareth of Bloomberg explained:

“Wall Street traders betting the Federal Reserve will be able to cut rates soon sent bond yields tumbling — while driving a big rotation out of the tech megacaps that have powered the bull market in stocks. Further signs that inflation is slowing down fueled speculation the Fed will be able to move as early as September. Optimism over lower rates sparked a shift into riskier corners of the market — as money exited the long-favored safety trade of big tech.”

Last week, major U.S. stock market indices moved higher with the Dow Jones Industrial Average hitting its first record high for 2024, reported Jacob Sonenshine. The yield on the benchmark 10-year U.S. Treasury note moved lower last week.

Over the weekend, after this commentary was written, there was an attempt to assassinate former President Donald Trump. We condemn this senseless act. We will stay alert to how this affects financial markets.

For more information on how to be financially prepared, contact our office at (405) 340-1717 or email greg@womackadvisers.com

Greg Womack

1366 E. 15 ^th Street

Edmond, OK 73013

Phone: (405) 340-1717

www.womackadvisers.com

Despite Some Volatility, Stock Markets Have Been Buoyant in 2024

email@womackadvisers.com (Greg Womack) — Tue, 09 Jul 2024 19:53:21 GMT

Enthusiasm for artificial intelligence (AI), optimism about inflation, and expectations that the United States Federal Reserve (Fed) will begin to lower rates this year have helped global and U.S. stock markets, overall, push higher in 2024. Share prices increased more slowly in the second quarter, though. Here’s what happened:

· Off to a rocky start. Overall, stocks declined in April after inflation numbers came in higher than economists had expected. That sparked concern the Fed might leave rates higher for longer than many investors hoped.

“Markets had expected the Fed to start cutting interest rates in June with three reductions in total expected this year, but that shifted dramatically following the release [of the Consumer Price Index],” reported Jeff Cox of CNBC. Markets now expect the first rate cut in September.

· Bounding ahead. U.S. stocks rallied in May and June as companies in the Standard & Poor’s (S&P) 500 Index reported strong earnings growth for the first quarter of 2024. Overall, earnings, which represent companies’ net profits, grew 6 percent, and 78 percent of S&P 500 companies were more profitable than analysts had expected, according to John Butters of FactSet.

Investor optimism also was bolstered by May inflation data that showed inflation was headed in the right direction – lower. Sarah Hansen of Morningstar reported, “Bond markets recovered in the second quarter, boosted by improving inflation and a firmer, more confident outlook for rate cuts.”

· Inspired by AI. Most of the top performing stocks in the S&P 500, to-date, have been technology companies, which are reaping the benefits of strong corporate spending on AI, reported Iuri Struta of S&P Global Market Intelligence in late June. However, technology companies may not deliver the results share price valuations suggest investors expect anytime soon. The Economist explained:

“…for AI to fulfill its potential, firms everywhere need to buy the technology, shape it to their needs and become more productive as a result. Investors have added more than $2trn to the market value of the five big tech firms in the past year—in effect projecting an extra $300bn-400bn in annual revenues according to our rough estimates…For now, though, the tech titans are miles from such results.”

· Looking for the way down. The Fed anticipates zero to two rate cuts this year. While many central banks around the world already have begun lowering rates, the Fed has yet to act. Last week’s employment report suggested the economy might be losing steam, and that could lead to the first Fed rate cut. The report indicated employers added more jobs than expected, but fewer than were added in the previous month.

“The path toward a rate cut in September is far from certain, but Friday’s data provide more evidence that the U.S. labor market is losing steam…It’s worth remembering that the other half of the Fed’s dual mandate is maximum employment, and weakening labor conditions have certainly prompted central banks to cut rates in the past,” reported Megan Leonhardt of Barron’s.

· It’s not what you think! In May, a Harris poll for The Guardian found that a lot of Americans share some incorrect beliefs about stock markets and the economy. Poll participants said: (1) the S&P 500 Index was down for the year (49 percent); (2) the United States is in a recession (55 percent); and (3) unemployment is at a 50-year high (49 percent). All of these statements are incorrect.

§ The S&P 500 is up more than 16 percent year to date and has chalked up 34 record-high closes so far this year.

§ The U.S. economy is growing. The last U.S. recession was in 2020, during the pandemic.

§ Unemployment is low – near a 50-year low for much of 2024 to date.

While inflation has fallen sharply, it affects economic well-being and opinions about the state of the economy. “[A majority of] respondents agreed ‘it’s difficult to be happy about positive economic news when I feel financially squeezed each month,’” reported Lauren Aratani of The Guardian.

For more information on how to be financially prepared, contact our office at (405) 340-1717 or email greg@womackadvisers.com

Greg Womack

1366 E. 15 ^th Street

Edmond, OK 73013

Phone: (405) 340-1717

www.womackadvisers.com

Some Good News and Some Volatility

email@womackadvisers.com (Greg Womack) — Mon, 01 Jul 2024 19:10:13 GMT

Last week was a mixed bag as investors weighed positive economic news against concerns that stock prices for some chipmakers may not be sustainable. Here are the highlights:

· Inflation slowed to zero.

On Friday, one of the Fed’s favored measures of inflation – the Personal Consumption Expenditures (PCE) Index – showed that headline inflation was flat in May. Both headline inflation and core inflation, which excludes volatile food and energy prices, were up 2.6 percent year over year. That’s a significant improvement from May 2023 when headline inflation was 3.8 percent year over year, and core inflation was 4.6 percent. The Fed’s target is 2.0 percent.

Falling inflation bolsters “the case for lower interest rates later this year. At the same time, household spending rebounded after a pullback in April, and incomes showed solid growth, offering some hope that price pressures can be tamed without lasting damage to consumers,” reported Augusta Saraiva of Bloomberg.

· The banks are alright.

Every year, the Federal Reserve (Fed) conducts a stress test to see whether “large banks* are sufficiently capitalized and able to lend to households and businesses even in a severe recession. They evaluate the financial resilience of banks by estimating losses, revenues, expenses, and resulting capital levels under hypothetical economic conditions.”

Last week, the Fed released its report, and all the banks tested – 31 of them – passed. Each bank was able to absorb losses in highly stressful hypothetical scenarios while maintaining its minimum capital requirements.

· AI stocks were up and down.

Investors have high expectations for artificial intelligence (AI) chipmakers. As a result, share prices for many chip companies have dramatically increased in value over the past year. Last week, we saw some volatility. A leader in the category experienced a correction, which is a decline of at least 10 percent, before rebounding, reported Charlotte Yang and Yoolim Lee of Bloomberg.

In addition, we saw the stock price of a company that makes computer memory chips drop after it reported earnings last week. The company’s “shares had more than doubled in the year prior to its Wednesday report, but — even with an outlook roughly in line with the average of analyst estimates — the company was punished for not outperforming elevated expectations.”

Last week, major stock market indices delivered a mixed performance. Connor Smith of Barron’s reported, “The Dow rose 3.8% in the first half of the year. The S&P 500 rose 14.5%. The Nasdaq Composite rose 18%.” Yields on longer maturities of U.S. Treasury bonds moved higher over the week.

For more information on how to be financially prepared, contact our office at (405) 340-1717 or email greg@womackadvisers.com

Greg Womack

1366 E. 15 ^th Street

Edmond, OK 73013

Phone: (405) 340-1717

www.womackadvisers.com

Are We at an Inflection Point?

email@womackadvisers.com (Greg Womack) — Tue, 25 Jun 2024 17:56:25 GMT

The transition to renewable energy has been moving forward and may be reaching an inflection point. In 2023, global renewable energy capacity increased by almost 50 percent, reported the International Energy Agency (IEA). Renewable capacity reached all-time highs in the United States, Europe and Brazil. However, the leader in new capacity is China. In 2023, the country “commissioned as much solar PV [photovoltaic] as the entire world did in 2022,” stated the IEA’s Renewables 2023 report.

In the United States, solar power is responsible for a relatively small amount (3.9 percent in 2023) of all electricity generated; however, solar is growing faster than any other source of electricity. One reason for the growth is Big Tech companies’ commitment to clean energy. Four of the “Magnificent Seven” were responsible for “40% of the demand for large, utility-scale solar projects in the U.S. over the past five years,” reported Spencer Kimball and Gabriel Cortés of CNBC.

“To call solar power’s rise exponential is not hyperbole, but a statement of fact. Installed solar capacity doubles roughly every three years, and so grows ten-fold each decade. Such sustained growth is seldom seen in anything that matters. That makes it hard for people to get their heads round what is going on. When it was a tenth of its current size ten years ago, solar power was still seen as marginal even by experts who knew how fast it had grown. The next ten-fold increase will be equivalent to multiplying the world’s entire fleet of nuclear reactors by eight in less than the time it typically takes to build just a single one of them,” reported The Economist.

The IEA forecasted that by 2028 renewable energy sources will generate more than 42 percent of the world’s electricity. Wind and solar PV energy sources are expected to deliver about 25 percent of global electricity.

There are some obstacles to renewable energy growth, though. Current constraints include siting, permitting and grids, reported BloombergNEF. From 2000 to 2018, just 20 percent of U.S. renewable energy projects that sought to be connected to the power grid were actually connected.

“Grids were not originally set up for such a fast-paced energy system; their tools and processes were developed in a slower, less volatile world…[Renewable energy source] infrastructures are already available and rapidly increasing. However, taking advantage of renewables requires a power grid that can accommodate these intermittent energy sources,” reported McKinsey & Company’s Adam Barth and colleagues.

Last week, major stock market indices finished higher with the Standard & Poor’s 500 Index chalking up its 31 ^st record high for 2024 during the week, reported Jacob Sonenshine of Barron’s. Many maturities of U.S. Treasury bonds finished this week slightly higher than they ended last week.

For more information on how to be financially prepared, contact our office at (405) 340-1717 or email greg@womackadvisers.com

Greg Womack

1366 E. 15 ^th Street

Edmond, OK 73013

Phone: (405) 340-1717

www.womackadvisers.com

Inflation Is Lower – And So Are Some Retail Prices

email@womackadvisers.com (Greg Womack) — Tue, 18 Jun 2024 15:50:59 GMT

There was a lot of good news last week about the cost of products and services in the United States.

· First, inflation is slowing down. For the second month in a row, inflation slowed. Headline inflation was 3.3 percent year over year, lower than April’s 3.4 percent.

In May, prices for gasoline and fuel oil, new cars, and clothing moved lower, while the cost of shelter, medical care, and eating out increased. Over the last 12 months, the price of used cars and trucks has dropped the most (-9.3 percent), while the cost of auto insurance has increased the most (+20.3 percent).

· Second, wholesale prices dropped in May. “U.S. producer prices unexpectedly declined in May by the most in seven months, another welcome development that will strengthen the Federal Reserve’s confidence in moderating inflation. The producer price index for final demand decreased 0.2% from a month earlier, lower than all estimates in a Bloomberg survey of economists. Compared with a year ago, the PPI rose 2.2%...,” reported Matthew Boesler of Bloomberg.

· Third, some companies are lowering prices. Over the past few years, a lot of companies boosted corporate profits by lifting prices. Now, as consumers pull back on spending, they’re reversing course. Abha Bhattarai of The Washington Post explained:

“…[company] markdowns, and the consumer spending slowdown that prompted them, mark a turning point in the post-lockdown economy, after the sharpest surge in inflation in decades.… Happy consumers mostly have themselves to thank: The price cuts are mostly due to shoppers pulling back on spending, contributing to a gradual slowdown in economic growth…That means retailers are feeling the pinch. After a period of record-high sales and profits, many are struggling to keep customers and attract new ones. Their answer: lowering prices.”

It remains to be seen how lower prices will affect companies’ performance and stock values.

Last week, the Standard & Poor’s 500 chalked up four new closing highs and finished the week higher, reported Jacob Sonenshine of Barron’s. The Nasdaq Composite also gained, while the Dow Jones Industrial Index moved lower. U.S. Treasury bonds rallied with yields on all but the shortest maturities moving lower.

For more information on how to be financially prepared, contact our office at (405) 340-1717 or email greg@womackadvisers.com

Greg Womack

1366 E. 15 ^th Street

Edmond, OK 73013

Phone: (405) 340-1717

www.womackadvisers.com

Another Record High for the Standard & Poor’s (S&P) 500 Index!

email@womackadvisers.com (Greg Womack) — Mon, 10 Jun 2024 21:40:47 GMT

Last week, the S&P 500 Index hit its 25 ^th record high for 2024. Investor enthusiasm for artificial intelligence helped drive the index to a new high. About 30 percent of the Index is information technology stocks.

The S&P 500 also benefitted from reports that forecast a slowdown in hiring for May. Economists expected the jobs report to show 190,000 new jobs were added by U.S. employers in May, and hourly earnings increased by 3.9 percent over the last 12 months, reported Jeff Cox of CNBC.

Why did investors want to see hiring slow down?

The answer is that the strength of the labor market is one factor the United States Federal Reserve (Fed) will consider when deciding whether the economy is slowing enough to lower the federal funds rate. Slower labor market growth is a sign of economic weakness, which could move the Fed toward rate cuts. Instead, U.S. labor market data suggested the economy is still strong.

“In theory, a decrease in the federal funds rate drives the stock market higher. This is because investors expect low rates to fuel spending and boost the economy, increasing the profitability of corporations,” reported Rocco Pendola, Adam McFadden and David Tony of CNN.

So, Friday’s employment report came as quite a surprise.

The economy added 272,000 new jobs in May, exceeding economists’ expectations. In addition, average hourly earnings rose faster than expected, rising 4.1 percent over the last 12 months. (Hourly earnings increased faster than inflation. The most recent Consumer Price Index showed headline inflation was 3.4 percent over the last 12 months.)

The good economic news disappointed investors, and U.S. stocks fell on Friday. Over the full week, though, major U.S. stock indices moved higher. Yields on many maturities of U.S. Treasuries moved lower for much of last week. On Friday, after the employment report was released and expectations for Fed rate cuts changed, Treasury yields generally moved higher.

For more information on how to be financially prepared, contact our office at (405) 340-1717 or email greg@womackadvisers.com

Greg Womack

1366 E. 15 ^th Street

Edmond, OK 73013

Phone: (405) 340-1717

www.womackadvisers.com

Reading the Economic Tea Leaves

email@womackadvisers.com (Greg Womack) — Mon, 20 May 2024 21:26:33 GMT

Tasseography practitioners read tea leaves to forecast the future. Some economic data serve a similar purpose. Policymakers, central bankers, economists, and investors look at leading economic indicators to forecast where the economy may be headed. Classic leading indicators include:

Consumer confidence. Consumer spending is the largest contributor to economic growth in the United States. When consumers feel confident about their finances, the economy may continue to grow, and vice versa.

The slope of the yield curve. When yields for short-term U.S. Treasuries are higher than yields for long-term U.S. Treasuries, then a recession may be ahead. “Yield curve inversions have preceded each of the last eight recessions,” reported the Federal Reserve Bank of Cleveland.

Stock market performance. Since investors make decisions based on how they believe the earnings of companies and the value of companies’ stocks will change over time, a rising or falling stock market is considered to offer insight to where the economy may be headed.

“The leading indicators for the U.S. economy fell in April for the second month in a row…The leading index declined mainly because of weaker business orders, fewer permits to build new homes and a decline in stock prices last month. Stocks have since rebounded, however, to fresh record highs,” reported Jeffry Bartash of MarketWatch. “The economy slowed in the first quarter after heady growth in the second half of 2023. It’s unlikely to speed up much until inflation tapers off and the Federal Reserve cuts interest rates.”

Some analysts believe rate cuts are still on the table for 2024, reported Sam Meredith of CNBC. Last week, the Consumer Price Index showed headline inflation (which measures price changes for a fixed basket of goods) and core inflation (which removes food and energy from the basket) both moved lower from March to April.

Investors found a lot to like in the inflation data. U.S. stocks finished the week higher with the Dow Jones Industrial Average closing above 40,000. Yields on most maturities of U.S. Treasuries moved lower over the week, lifting bond prices.

For more information on how to be financially prepared, contact our office at (405) 340-1717 or email greg@womackadvisers.com

Greg Womack

1366 E. 15 ^th Street

Edmond, OK 73013

Phone: (405) 340-1717

www.womackadvisers.com

Higher Rates Are Doing Their Job

email@womackadvisers.com (Greg Womack) — Mon, 13 May 2024 21:05:58 GMT

Higher rates are doing what they’re supposed to do.

Last week, Federal Reserve officials spoke about keeping the federal funds rate higher until it becomes clear that inflation will reach the Fed’s two percent target rate.

While people typically don’t mind earning more interest on their saving and investment accounts, higher rates are painful for consumers. That pain is why higher rates help lower inflation. They discourage borrowing and cause people to buy fewer goods. Lower demand for goods and services should lead to lower inflation, reported Trina Paul of CNBC.

So far, the biggest fly in the inflation-reduction ointment is housing. Diccon Hyatt of Investopedia explained:

“In the first two decades of the 21st century, the U.S. built 5.5 million fewer homes than were needed, the National Association of Realtors estimated in a 2021 report…The effects of that housing shortage are rippling through the economy, most obviously in the form of soaring home prices…official inflation rates, which are designed to measure the cost of living, are highly sensitive to any changes in housing costs. Housing costs make up 45% of the Consumer Price Index (CPI), the most widely watched measure of inflation.”

May data show consumers are feeling discouraged.

The University of Michigan’s Index of Consumer Sentiment dropped 13 percent from April to May. “[The] decline is statistically significant and brings sentiment to its lowest reading in about six months. This month’s trend in sentiment is characterized by a broad consensus across consumers, with decreases across age, income, and education groups…They expressed worries that inflation, unemployment, and interest rates may all be moving in an unfavorable direction in the year ahead,” stated Surveys of Consumers Director Joanne Hsu.

While consumer sentiment dragged on markets, first quarter corporate earnings reports were stronger than expected, which lifted U.S. stocks. “With well over 80% of the S&P 500 having reported results, companies are on track to have increased earnings by 7.8%, well ahead of the April expectation of 5.1% growth,” reported a source cited by Lewis Krauskopf of Reuters.

Declining sentiment caused U.S. stocks to stumble on Friday; however, major indices finished the week higher. Yields on many maturities of U.S. Treasuries moved higher over the week.

Is your portfolio positioned to take advantage of the trends? Please click here for your free risk assessment. This questionnaire will allow of us to find a way that best fits your needs! We will be in touch to review with you.

For more information on how to be financially prepared, contact our office at (405) 340-1717 or email greg@womackadvisers.com

Greg Womack

1366 E. 15 ^th Street

Edmond, OK 73013

Phone: (405) 340-1717

www.womackadvisers.com

Precious Metals Forecast & Insights by Dr. Richard Feely

email@womackadvisers.com (Greg Womack) — Tue, 07 May 2024 16:44:49 GMT

On April 30, 2024 - Gold (AU) close: $2,294.50 / Silver (AG)close: $26.32

Gold has advanced dramatically, up $373.57 or 18.7% in the last 2 months, from $1991.43 on Feb 13th, to $2365.00 on April 14th.

Silver advanced also in the same period; up $6.14 or 27.8%, $22.08 to $28.22.

Should you be invested in gold, silver, and/or miners? The stock market has normal rotations, trends, with advance, and declines. These are based upon a number of circumstances; interest rates, business economy, government spending, regulations, technical changes, as well as fear and greed. In big cycle moves/rotations, for precious metals gold has historically led the way, followed by silver and major miners then finally junior miners. We have just seen gold’s bull cycle begin.

Here are seven reasons UBS has recommended to investors why they should own mining stocks now:

Geopolitical risks have central banks led by China are massively buying gold.
Increasing US fiscal risk-excessive debt-investors moving into gold.
Concerns about cryptocurrency replacing gold are no longer valid.
Macroeconomic tailwinds for gold-TIPS yields a weakening US dollar.
Gold has not yet returned to its historical high adjusted for inflation as 40% rise is needed.
Overall investor positioning has not reflected the recent movement in gold prices.
Gold stock valuation are low P/E 40% below normal levels, look for a 45% rise.

Gold’s last major bear market low was December 2015. This is the 9 ^th year of annual momentum advance changing from daily up and down - arm wrestling. Now the gold price is moving into the acceleration phase from February to present.

What does market history tell us? During 2000-2011, precious metals bull market trend went vertically starting in 2010 (see chart below). In the 1979-1980 metals market both gold and silver went vertical with silver beating gold on a percentage basis. Below are the results of the 4 previous run-away advances in gold -

2008 : 3/mo & 00 days - 32%
2007 : 2/mo & 22 days - 32%
1979 : 3/mo & 08 days - 31%
1978 : 2/mo & 29 days - 31%

If we repeat these four previous runaways, gold will be $2618 +/- $20 during May.

Historically, silver vastly outperforms gold in the final year of the acceleration phase. Based upon historical analytical technical analysis of Elliott, Gann, and Oliver, gold and silver technical indicators point a significant advance in the next 12-18 months forming a bull run for gold, silver, and miners.

What are the market players doing? For the past four years small investors/traders have been disillusioned, selling their gold and silver metals as well as their ETFs into strength, while the Chinese and central governments of the BRICS and emerging market countries are buying gold hand over fist led by China and India. In January, the Chinese gold import from Switzerland alone was the highest ever: 120,000 kilograms (>4.2 million oz). China has added 18.5 tons since January, surpassing 2023 total purchases of 16.2 t leading to an all-time high of 822.1 t. The world’s total above ground gold ever produced is about 187,000 t. Meanwhile, the western investors/traders are chasing tech, AI or being forced to sell their precious metals to keep up with inflation. Currently, the investment in gold and silver is only 0.5% of the investment assets, which is a far cry from the 1960s when it was 2%. Markets cycles happen. The smart investor identifies them and invests in them early. The technical analysis/charts, fundamentals and geopolitical situation firmly indicates this is now the time for the gold cycle up move.

The chart below from Michael Oliver of Momentum Structural Analysis, shows the price of silver with 5 sell offs in 1 year. What we experienced on April 12, the selloff was minor just like October 15, 2010. We should expect more 1-6 day and at least one 15–28-day selloffs on the way up to $45-50/oz of silver. Historically, we saw in January 1979 thru January 1980 silver gained 646% ($6.70 to $50) while gold gained 270%.

Where do I see gold and silver going? Our current gold bull market started from December 2015 low of $1,040. Previous golden bull markets went up 6.5 - 8.0 times over several years. My long-term technical analysis based upon Elliott 5 waves up target number in gold is $7,890/oz. Silver historically is 2-2.5% of the price of gold. My long-term technical analysis Elliott 5 waves up target for silver is $167/oz.

Where will you make the most money from this golden bull rally? Here at Womack Investment Advisers, Inc (WIA), we believe that early in this rally gold, followed by silver will make the first two advances, followed by mining stocks. Based upon technical and fundamental analysis we see us just in the second inning of the game, with gold on first base, silver up to bat and miners on deck as evidenced by BHP bidding $39 Billion for the 107 y/o London based mining company; Anglo American plc, who is a diamond, nickel, copper, and also the world’s largest platinum miner this past week.

WIA provides our clients with a unique mining stock option strategy that can provide monthly income in down, flat, or up markets. We propose to maximize this golden bull market with gains not with risky leverage, but with quality gold and silver miners using our covered option strategies. We can also advise you upon buying, owning, and safely holding your physical gold, silver, platinum, and palladium.

Give us a call to see how we can help you ride this golden bull market at 405-340-1717.

The Economy Appears to Be Slowing Down

email@womackadvisers.com (Greg Womack) — Mon, 29 Apr 2024 19:03:49 GMT

Last week, many investors were focused on economic data. The Personal Consumption report offers information about Americans’ income and spending over the previous month. It includes one of the Federal Reserve’s preferred inflation gauges, the personal consumption expenditures (PCE) price index. The March report showed:

Disposable income, which is the amount of money available for Americans to spend and save (after taxes), rose by 1.4 percent, year-over-year.

The U.S. personal saving rate moved lower, falling to 3.2 percent, year-over-year.

Consumer spending was higher than expected, up 0.8 percent from February to March, as Americans spent more on both goods and services.

Headline inflation increased from 2.5 percent year-over-year in February to 2.7 percent year-over-year in March.

Core inflation, which excludes volatile food and energy prices, did not change from month to month and remained at 2.8 percent.

What does it all mean?

“More spending is good for the U.S. economy, with consumption accounting for more than two-thirds of the country’s economic activity. But falling savings rates suggest consumers might need to extend themselves financially to keep the shopping going. Friday’s data add to other evidence—such as rising credit card balances and falling excess savings—that suggests, while still strong, the consumer-spending binge won’t continue forever,” explained Nicholas Jasinski of Barron’s.

Investors also had an eye on economic growth. The Fed has been raising rates to slow economic growth which, in turn, should help bring inflation lower.

One way to measure economic growth is through gross domestic product (GDP), which is the value of all goods and services produced over a specific period. Last week, data showed that U.S. GDP growth slowed in 2024. After inflation, the U.S. economy grew by 1.6 percent in the first quarter. That’s down from 3.4 percent growth in the fourth quarter of 2023.

Major U.S. stock indices moved higher last week, according to Barron’s. Yields on most maturities of U.S. Treasuries finished the week higher. However, yields moved lower on Friday after investors decided the Fed is likely to lower the federal funds rate at least once in 2024, reported Ye Xie of Bloomberg.

For more information on how to be financially prepared, contact our office at (405) 340-1717 or email greg@womackadvisers.com

Greg Womack

1366 E. 15 ^th Street

Edmond, OK 73013

Phone: (405) 340-1717

www.womackadvisers.com

Strongest State Economies in 2023

email@womackadvisers.com (Greg Womack) — Wed, 24 Apr 2024 17:12:32 GMT

As the world’s largest oil producer, the U.S. hit a historic 12.9 million barrels per day in crude oil production in 2023—more than any other country ever. Given these tailwinds, the top five fastest-growing states by real GDP in 2023 were all powered by the mining, quarrying, and oil and gas extraction sector.

Below, we show the strongest state economies by real GDP growth last year:

North Dakota witnessed the highest growth, with real GDP rising by 5.9%. As the third largest oil-producing state, it also has one of the strongest job markets in the country. In February 2024, the state’s unemployment rate was 2.0%, significantly lower than the national average of 3.9%.
Falling in second is Texas, whose economy surged to $2 trillion in inflation-adjusted terms. In 2023, the oil and gas industry generated about $72 million per day in local and state taxes in addition to state royalties. Roughly half of U.S. crude oil exports are shipped from Corpus Christi Bay, a port along the Texas coastline. As the seventh-fastest growing state, Florida’s economy was largely supported by retail trade, its biggest driver. Moreover, Florida boasted the highest growth rates nationwide in both personal and property income, rising at 7.0% and 8.8%, respectively, over the year.
By contrast, some of the slowest-growing states were Delaware, Mississippi, and New York, each with a real GDP growth rate falling below 1%.

For more information on how to be financially prepared, contact our office at (405) 340-1717 or email greg@womackadvisers.com

Greg Womack

1366 E. 15 ^th Street

Edmond, OK 73013

Phone: (405) 340-1717

www.womackadvisers.com

Investors Have Been Recalibrating Their Expectations

email@womackadvisers.com (Greg Womack) — Wed, 24 Apr 2024 15:37:45 GMT

There is a lot going on in the world that could affect the value of financial markets – wars, tensions between major powers, a strong dollar, and rising oil prices – just to name a few. Last week, it was Federal Reserve policy. The possibility that the Fed might keep rates higher for longer shook investors, reported Naomi Rovnick of Reuters.

At a policy forum early in the week, Fed Chair Jerome Powell told the audience:

“The performance of the U.S. economy over the past year has really been quite strong. We had growth of more than three percent last year as rebounding supply supported both robust growth and spending, and also employment alongside a considerable decline in inflation. More recent data show solid growth and continued strength in the labor market but also a lack of further progress so far this year on returning to our two percent inflation goal…we’ll need greater confidence that inflation is moving sustainably toward two percent before it would be appropriate to ease policy.”

With the federal funds rate likely to remain at its current level for longer than expected, markets reconsidered how that might affect economic growth and corporate earnings, reported Jacob Sonenshine of Barron’s.

“Big investors are not rushing to change long-term holdings, but in a sign of things to come, stock market volatility is around a six-month peak as traders debate how high the U.S. rate…against which financial assets are valued will stay,” reported Rovnick.

The Standard & Poor’s 500 Index moved lower over the week as investors sold technology stocks on fears that first-quarter earnings reports might disappoint, reported Rita Nazareth of Bloomberg. The Nasdaq Composite and Dow Jones Industrial Average moved lower, too, while yields on many maturities of U.S. Treasuries moved higher.

For more information on how to be financially prepared, contact our office at (405) 340-1717 or email greg@womackadvisers.com

Greg Womack

1366 E. 15 ^th Street

Edmond, OK 73013

Phone: (405) 340-1717

www.womackadvisers.com

Inflation and Geopolitics and Earnings. Oh, My!

email@womackadvisers.com (Greg Womack) — Fri, 19 Apr 2024 19:59:42 GMT

Inflation and geopolitics and earnings. Oh, my!

It was a rough week for stock markets. “The S&P 500 closed 1.5% lower on Friday, while the Nasdaq Composite dipped 1.6%. Every S&P 500 sector closed lower—and just about 40 stocks in the index finished the day with gains,” reported Connor Smith of Barron’s.

A trio of issues caused investors to reassess their expectations for the year. Here’s what many were thinking about:

Prices rising at home. Early last week, the Consumer Price Index showed prices had moved higher in March. Headline inflation was 3.5 percent year-over-year, up from 3.2 percent in February. Higher prices for gasoline and shelter were the primary drivers of the increase. Inflation, in tandem with strong economic data, dashed investors’ hopes that the Federal Reserve will lower rates soon, reported Augusta Saraiva and Matthew Boesler of Bloomberg.

Tensions rising overseas. One of the drivers behind rising prices is geopolitics, reported Rita Nazareth of Bloomberg. Oil markets have been responding to the possibility of escalating tensions in the Middle East, as well as the damage done by drone strikes on Russian oil infrastructure. Equities moved lower and gold moved higher as investors sought so-called safe-haven investments, last week.

Corporate earnings growth. Last week, banks began reporting on their performance during the first quarter of 2024. Some banks reported net interest income (the profit earned from lending money) that was lower than analysts anticipated. The gap in expectations was due, in part, to the fact that bank accountholders were seeking higher returns on their savings, reported Sridhar Natarajan of Bloomberg. Despite disappointment over bank’s interest income, earnings grew by 3.2% for the handful of S&P 500 companies that have already reported, according to John Butters at FactSet.

By the end of the week, major U.S. stock indices were lower. U.S. Treasury yields moved higher over the week.

Financial markets are likely to be volatile as investors adjust to U.S. economic strength and changing expectations for Fed rate cuts and geopolitical events. While market turbulence can be unsettling, price swings can create opportunities to invest in quality assets at attractive levels.

For more information on how to be financially prepared, contact our office at (405) 340-1717 or email greg@womackadvisers.com

Greg Womack

1366 E. 15 ^th Street

Edmond, OK 73013

Phone: (405) 340-1717

www.womackadvisers.com

The Bull Charged From October 2023 Through March 2024

email@womackadvisers.com (Greg Womack) — Thu, 11 Apr 2024 20:04:37 GMT

The bull charged from October 2023 through March 2024. Last week, it took a breather.

Optimistic may be the best word to describe the first quarter of 2024. From the start of the year, investors were confident that an economic soft landing in the United States was possible. The U.S. stock market reflected investors’ conviction that:

· The U.S. economy would continue to demonstrate resilience;

· Inflation would continue toward the Federal Reserve (Fed)’s target; and

· The Fed would eventually lower the federal funds rate, pushing borrowing costs down and boosting economic growth.

Over the first quarter, the Standard & Poor’s 500 Index moved 10.2 percent higher.

“That’s only the fourth time since the start of the millennium [the S&P 500] has gained 8% or more in the first three months of the year…,” reported Teresa Rivas of Barron’s. “Of the 16 times the S&P 500 has managed to rise 8% or more in the first quarter from 1950 through 2023, only once—in 1987, the year of the Black Monday crash—did the index lose ground in the rest of the year.” (While the historic data are interesting, past performance is no guarantee of future results.)

The U.S. stock rally “showed yet again that under the right conditions equities can thrive amid considerable uncertainty,” wrote Economist Mohamed El-Erian. In a Bloomberg opinion piece, he explained that U.S. stocks have moved higher despite:

· Changing interest rate expectations,

· Rising oil prices,

· Wars in Gaza and Ukraine,

· Escalating tensions among major powers, and

· Recessions in Germany, Japan, and the United Kingdom.

These issues carried less weight than other factors, El-Erian explained. “…the first quarter saw much broader investor adoption of the promise of generative artificial intelligence…This was supported by growing recognition of the innovative technology's potential to enhance productivity across many sectors and in a durable manner…From a top-down perspective, the rally's expansion…was fueled by a combination of US economic exceptionalism and the Federal Reserve's relatively dovish stance on monetary policy.”

Early last week, the rally paused. The S&P 500 fell by more than two percent through Thursday. Some attributed the shift to hawkish comments from the President of Federal Reserve Bank of Minneapolis Neel Kashkari. In an interview with Pensions & Investments, Kashkari commented, “If we continue to see inflation moving sideways, then that would make me question whether we need to do those rate cuts at all," reported Reuters.

Other factors were at play, too. John Authers of Bloomberg pointed out that the market backpedaled after a jump in oil prices (which have the potential to push inflation higher), as well as rising tensions between the U.S. and Israel.

On Friday, the market rebounded after a blowout employment report. Bloomberg Economics forecast a downshift in hiring that would result in fewer than 200,000 new jobs for March, reported Matthew Boesler. That forecast was off the mark. Employers added more than 300,000 new jobs during the month. Strong hiring pushed the unemployment rate lower even though more people were actively looking for work during the month.

For more information on how to be financially prepared, contact our office at (405) 340-1717 or email greg@womackadvisers.com

Greg Womack

1366 E. 15 ^th Street

Edmond, OK 73013

Phone: (405) 340-1717

www.womackadvisers.com

Central Banks Have Spoken

email@womackadvisers.com (Greg Womack) — Mon, 25 Mar 2024 20:43:38 GMT

The central banks have spoken.

No one expected the United States Federal Reserve to announce a rate change last week – and it didn’t. But Fed Chair Jerome Powell’s comments and the actions of other central banks led to new records being set in stock markets around the world, reported Randall Forsyth of Barron’s.

“…the world’s central banks, led by the U.S. Federal Reserve…have all but green-lighted lower policy interest rates in coming months in the expectation that inflation will continue to make downward progress without triggering recessions. The Fed’s counterparts at the European Central Bank and the Bank of England similarly signaled lower rates ahead, while the Swiss National Bank made a surprise cut this past week…Meanwhile, major Latin American central banks, led by Brazil and Mexico, are well along in their rate cuts, having been much prompter in raising their rates to fight inflation starting in 2021, a year or more ahead of the Group of 10.”

In the United States, a lower federal funds rate could be good news for consumers and businesses. So, how low could rates go?

The Fed’s updated Summary of Economic Projections (SEP) shows that Fed officials expect the federal funds rate to move lower over the next three years, and beyond, based on what they know today. Here’s the SEP year-by-year forecast:

2024: 63-4.87 percent by year end. (Implying three quarter-point rate cuts over the year.)
2025: 88-4.12 percent by year end. (Implying three quarter-point rate cuts over the year.)
2026: 13-3.37 percent by year end. (Implying three quarter-point rate cuts over the year.)
Longer term: 38-2.62 percent. (Implying additional rate cuts.)

When the fed funds rate moves lower, lending rates usually fall as well. So, consumers who buy a home or a car, apply for a home equity or business loan, or use a credit card over the next few years, could see lower interest rates.

For more information on how to be financially prepared, contact our office at (405) 340-1717 or email greg@womackadvisers.com

Greg Womack

1366 E. 15 ^th Street

Edmond, OK 73013

Phone: (405) 340-1717

www.womackadvisers.com

The Tea on Stock Markets and Elections

email@womackadvisers.com (Greg Womack) — Mon, 18 Mar 2024 18:36:19 GMT

Here’s the tea on stock markets and presidential elections.

Last week, a slew of headlines mentioned stock market bubbles and frothy valuations. The implication was that markets might be headed lower because they’ve risen so high. Last Wednesday, Lewis Krauskopf of Reuters reported:

“Some market participants believe the relentless U.S. stock rally is poised for a breather, even if it remains unclear whether equities are in a bubble or a strong bull run. The benchmark S&P 500…is up over 25% in the last five months, a phenomenon that has occurred just 10 times since the 1930s, according to BofA Global Research…the S&P has already made 16 record highs this year, the most in any first quarter since 1945, CFRA Research data showed.”

By the end of last week, we’d seen 17 record highs for the Standard & Poor’s (S&P) 500 Index.

If there is a market downturn this year, election sentiment is likely to be one of the reasons for the move. “Market moves during election years do tend to follow a similar pattern—declines leading up to early November, then a surge through year end once the winner is revealed.” While past performance does not guarantee future results, the S&P 500 has typically finished presidential election years higher, reported Nicholas Jasinski of Barron’s.

Despite the historic record, election rhetoric can make it difficult to remember that markets are efficient and adjust to changing risks. While election sentiment may sway stock markets over the shorter term, global economic growth, company fundamentals, central bank policies, and other factors, such as “the implications of the artificial intelligence [AI] boom on corporate earnings” are likely to matter more over the longer term, reported Jasinski.

No matter how emotional the election becomes, remember that your portfolio was built to meet your financial goals. If your longer-term goals and risk tolerance have not changed, making significant portfolio changes because of worries about the election outcome is not a sound idea.

That said, if you’re uneasy about the election and its potential effect on your savings and investments, please get in touch. We want to hear about your concerns and will help you identify potential solutions.

For more information on how to be financially prepared, contact our office at (405) 340-1717 or email greg@womackadvisers.com

Greg Womack

1366 E. 15 ^th Street

Edmond, OK 73013

Phone: (405) 340-1717

www.womackadvisers.com

Off to a Good Start

email@womackadvisers.com (Greg Womack) — Mon, 11 Mar 2024 19:59:15 GMT

The week got off to a good start...

In testimony before House and Senate committees, Federal Reserve (Fed) Chair Jerome Powell noted that prices had been falling and unemployment rates remained quite low. As a result, he expected the Fed to begin lowering the federal funds rate in 2024.

“I think we’re in the right place,” he said. “We’re waiting to become more confident that inflation is moving sustainably at two percent. When we do get that confidence—and we’re not far from it—it’ll be appropriate to begin to dial back the level of restriction so that we don’t drive the economy into recession rather than normalizing policy as the economy gets back to normal.”

After Powell’s comments, the likelihood of a June rate cut rose, and so did U.S. stock indices. The bond market rallied, too, with yields across all maturities of U.S. Treasuries dropping lower through Thursday.

On Friday, a mixed bag of employment data arrived. It showed that:

Hiring was stronger than expected in February. Employers added 275,000 new jobs over the month – 75,000 more than expected – although gains in December and January were revised lower.
Wage growth was slower than expected, rising 4.3 percent year-over-year in February when economists had predicted a 4.5 percent annual increase, according to Meghan Leonhardt of Barron’s.
The unemployment rate rose, increasing from 3.7 percent to 3.9 percent. (The unemployment rate is derived from a separate and smaller survey of households.)

The data suggested that the labor market was strong but cooling, and bolstered hopes that a soft landing might be ahead. While that was positive news, it was overshadowed by weakness in technology stocks. Sarah Hansen of Morningstar reported, “The stock market started 2024 with a blistering rally…But the relentless pace of gains has some watchers worried about soaring valuations on stock prices and frothy trading.”

On Friday, major U.S. stock indices finished the week lower. However, U.S. Treasury bonds rallied as yields declined over the week.

For more information on how to be financially prepared, contact our office at (405) 340-1717 or email greg@womackadvisers.com

Greg Womack

1366 E. 15 ^th Street

Edmond, OK 73013

Phone: (405) 340-1717

www.womackadvisers.com

Bull Market Is Alive and Well

email@womackadvisers.com (Greg Womack) — Mon, 04 Mar 2024 20:41:22 GMT

The bull market is alive and well.

“We know what investors are thinking,” reported Jacob Sonenshine of Barron’s. “The gains can keep coming, driven by an economy that is neither too hot nor too cold…The economy is growing, but only moderately, and the Federal Reserve can keep thinking about when it can start cutting interest rates…This dynamic is why nobody wants to miss out on the rally—and why they think it can keep going. A recent survey from Investors Intelligence shows the number of bulls outnumbered their bearish counterparts by the widest margin since late 2021.”

Recent market performance owes much to:

Solid earnings growth and strong corporate profits. Last week, 97 percent of the companies in the Standard & Poor’s 500 Index had shared how well they performed in the fourth quarter of 2023. Overall, blended earnings for companies in the Index grew 4 percent year-over-year, exceeding expectations. Blended net profits were stable at 11.2 percent year-over-year, reported John Butters of FactSet.
Slowing Inflation. Last week, one of the Fed’s favorite inflation gauges, the personal consumption expenditures (PCE) price index, showed inflation moved lower year-over-year. Prices rose 2.6 percent over the 12 months through December 2023 and 2.4 percent over the 12 months through January 2024. While inflation trended lower over the longer period, it increased month-to-month. In December 2023, prices rose 0.1 percent, and in January 2024, prices rose 0.3 percent.
Enthusiasm for artificial intelligence (AI). Investors expect AI to boost productivity and corporate earnings. “Innovations in electricity and personal computers unleashed investment booms of as much as 2% of U.S. GDP as the technologies were adopted into the broader economy. Now, investment in artificial intelligence is ramping up quickly and could eventually have an even bigger impact on [economic growth],” reported Goldman Sachs.

Last week, the Standard & Poor’s 500 and Nasdaq Composite Indices closed at record highs, while the Dow Jones Industrial Average retreated. All three indices finished February with gains, reported Chuck Mikolajczak of Reuters. The U.S. Treasury market rallied with yields falling for all but the shortest maturity of Treasuries.

For more information on how to be financially prepared, contact our office at (405) 340-1717 or email greg@womackadvisers.com

Greg Womack

1366 E. 15 ^th Street

Edmond, OK 73013

Phone: (405) 340-1717

www.womackadvisers.com

Optimisim From Investors

email@womackadvisers.com (Greg Womack) — Fri, 01 Mar 2024 22:02:38 GMT

Optimism abounds!

Enthusiasm for everything related to artificial intelligence (AI) drove a global stock market rally last week. Equity markets in the United States, Europe, and Japan hit all-time highs after a leading chipmaker reported better-than-expected earnings and an extraordinary surge in demand for its artificial intelligence-targeted processors, wrote Rita Nazareth of Bloomberg.

Investors took the news “as evidence that the generative AI boom is both real and spreading. [The company’s] spectacular earnings report and forward guidance are spurring investors to buy shares of almost any company with a stake in the AI race—everything from computer and networking hardware providers to cloud computing plays to enterprise application software,” reported Eric J. Savitz of Barron’s.

Investors weren’t the only ones feeling optimistic last week. Economists who participated in a February Bloomberg survey expect the U.S. economy to grow this year and next year, although a significant minority say that a recession is possible in 2025, reported Augusta Saraiva and Kyungjin Yoo of Bloomberg. They cited a source who stated:

“The U.S. economy remains the envy of the world…Both real economic growth and employment growth remain strong while inflation rates and interest rates are falling.”

Chief executive officers (CEOs) are feeling optimistic, too. The Conference Board Measure of CEO Confidence™ survey found that CEOs are feeling much better than they did at the end of last year.

32% said economic conditions were better than they were six months ago (up from 18% in the fourth quarter).
31% said conditions in their industries were better than they were six months ago (up from 27% in the fourth quarter).
36% expect economic conditions to improve over the next six months (up from 19% in the fourth quarter).

Last week, major U.S. stock indices moved higher, yields on longer maturities of U.S. Treasuries moved lower.

For more information on how to be financially prepared, contact our office at (405) 340-1717 or email greg@womackadvisers.com

Greg Womack

1366 E. 15 ^th Street

Edmond, OK 73013

Phone: (405) 340-1717

www.womackadvisers.com

The Most Valuable Brands

email@womackadvisers.com (Greg Womack) — Wed, 14 Feb 2024 21:06:28 GMT

Have you ever wondered which brands are the most valued worldwide? At the beginning of 2024, the world’s most valuable brand was Apple, valued at $517 billion, which marked a 73.6% increase year-on-year. Apple wasn’t the only American brand exhibiting strong demand. Six out of the top 10, and 51 out of the top 100, most valuable brands were from the United States. Brand Finance's annual rankings for 2024 listed the most valuable brands by country in the visual below. The data used is related to the value of a specific brand, as opposed to general measures of value such as market cap.

Outside of the U.S., South Korea’s Samsung took second place with a value of $99 billion. In recent years, Asian brands attained notable value worldwide. TikTok, originating from China (and its domestic equivalent, Douyin), became recognizable around the world and gained a value of $84 billion. Additionally, Japan's Toyota and Saudi Arabia's Saudi Aramco held brand values of $53 billion and $42 billion, respectively. In Europe, Germany's Deutsche Telekom is Europe's most valuable brand at $73 billion.

For more information on how to be financially prepared, contact our office at (405) 340-1717 or email greg@womackadvisers.com

Greg Womack

1366 E. 15 ^th Street

Edmond, OK 73013

Phone: (405) 340-1717

www.womackadvisers.com

China Is Out of Favor With Investors

email@womackadvisers.com (Greg Womack) — Tue, 13 Feb 2024 19:46:26 GMT

For decades, China was among the fastest-growing economies in the world. Its real gross domestic product, which is the value of all goods and services it produces, grew by about nine percent a year, on average, from 1978 through 2022, according to The World Bank. However, the pace of economic growth in China slowed over the last decade and dropped sharply during the pandemic.

Many investors expected China to rebound quickly in 2023 after its Zero Covid policy ended, but that hasn’t happened. Instead, “Exports weakened and deflation deepened, but the big letdown was consumer spending, which slumped as young people struggled to find jobs and the long-awaited reckoning for the housing market finally arrived,” reported Allen Wan of Bloomberg.

China’s stock market performance reflected its economic malaise. “The market value of China’s and Hong Kong’s shares is down by nearly $7 [trillion] since its peak in 2021. That is a fall of around 35%, even as [the market value] of America’s stocks has risen by 14%, and India’s by 60%,” reported The Economist via X.

In recent months, investors have been pulling money out of China. “Much of that cash is now heading for India, with Wall Street giants…endorsing the South Asian nation as the prime investment destination for the next decade. That momentum is triggering a gold rush…The euphoria has made Indian equities among the most expensive in the world,” reported Srinivasan Sivabalan, Chiranjivi Chakraborty, and Subhadip Sircar of Bloomberg.

The Chinese government has been trying to stimulate growth and reassure investors. In late January, “the People’s Bank of China announced a larger-than-expected cut in banks’ required reserve ratio…But sentiment remains about as downbeat as can be, despite reports that authorities are considering a package to bolster the stock market totaling some two trillion yuan (almost $280 billion). That’s not just among Chinese domestic investors—that negativity is shared around the world,” reported Randall Forsyth of Barron’s.

In contrast, U.S. investors have been bullish. Last week, the Standard & Poor’s 500 Index closed above 5,000 for the first time. The U.S. Treasury bond market remained relatively steady as yields on many maturities of Treasuries finished the week about where they started it.

Americans Agree on Some Things

email@womackadvisers.com (Greg Womack) — Mon, 11 Dec 2023 20:27:52 GMT

The Old-Age, Survivors and Disability Insurance (OASDI) program plays a significant role in the lives of many Americans. In 2022, it provided monthly benefits to 51 million retired workers and their dependents, 9 million disabled workers and their dependents, and the dependents of 6 million deceased workers.

In 2022, the program spent $1.24 trillion and took in $1.22 trillion. From here on out, the program’s spending is expected to exceed its funding. Under current assumptions, the trust fund will be depleted by 2034 – unless something changes.

An issue brief from the American Academy of Actuaries (AAoA) stated, “If Congress has not acted by 2034, we will be faced with an automatic 20% cut in benefits to people already receiving benefits, the need to immediately increase Social Security taxes by 25%, or some combination of cuts in benefits and increases in taxes.” The AAoA discussed options for keeping Social Security solvent, including:

· Increase the payroll tax rate by 25 percent. Currently, the payroll tax rate is 15.3 percent on up to $160,200 of a workers’ income. The worker pays half, and the employer pays half. This would cover 100 percent of the 2034 shortfall.

· Raise or eliminate the wage limit ($160,200 in 2023). This would cover 36 percent to 78 percent of the 2034 shortfall.

· Increase Social Security’s investment income by investing a portion of the money raised through taxes in equities.

· Tax Social Security benefits similarly to the way pensions are taxed. This would cover 8 percent of the 2034 shortfall.

· Reduce benefits for higher income recipients who are not yet eligible for benefits. This would cover 10 percent or less of the 2034 shortfall.

· Raise the retirement age for future recipients. If normal retirement age is raised to 69 by 2034, it would cover about 10 percent of the shortfall.

Many Americans are concerned about the future of Social Security. According to a survey conducted by Republican firm North Star Opinion Research, Democratic firm Global Strategy Group, and the nonpartisan Peter G. Peterson Foundation:

· 97 percent of Democratic participants and 97 percent of Republican participants want Congress to “reform Social Security and ensure it’s available for current retirees and younger generations.”

It’s uncertain whether Congress will address Social Security funding before automatic cuts take place. If you would like to talk about the role of Social Security in your retirement plan, please get in touch.

Has Inflation Gone Down?

email@womackadvisers.com (Greg Womack) — Mon, 11 Dec 2023 20:12:14 GMT

Still exceeding expectations.

Last week, the United States Treasury market rallied. Yields fell and bond prices rose as some bond market investors enthusiastically embraced the idea that the Federal Reserve will soon change course. Michael Mackenzie and Rich Miller of Bloomberg explained:

“Softening inflation and employment data in the past month have convinced investors that the Federal Reserve is done raising interest rates and ignited bets that cuts of at least 1.25 percentage points are in store over the next 12 months. Treasury yields, which touched highs of 5% as recently as October, have declined sharply, with the U.S. 10-year benchmark sliding more than three-quarters of a percentage point.”

Bond investors were hoping that last week’s unemployment report would show jobs and wage growth slowing in November. Instead, employers added more jobs than expected (199,000 jobs vs. 180,000), and the unemployment rate fell to 3.7 percent.

On Friday, the Treasury market reversed course. Yields on long and short-term Treasury bonds rose sharply and prices fell, reported Karishma Vanjani of Barron’s.

The employment report also showed that average hourly earnings increased in November – rising 4 percent year-over-year. Wages have risen faster than inflation for seven months, reported Sarah Foster of Bankrate. However, many workers are still feeling a pinch.

“While inflation has come down, broadly speaking, prices have not. There is a kind of continuing, virtual sticker shock that continues to weigh on the minds and pocketbooks of consumers that is meaningful,” according to Senior Bankrate Economic Analyst Mark Hamrick.

Last week, the Standard & Poor’s 500 Index gained for the sixth consecutive week, according to Bloomberg, and yields on most maturities of U.S. Treasuries moved higher.

The Word of the Year Is Here!

email@womackadvisers.com (Greg Womack) — Mon, 04 Dec 2023 19:14:32 GMT

Last week, the Merriam Webster Dictionary unveiled its 2023 Word of the Year, as well as other words that gained attention as the dictionary’s 2023 data was analyzed. Some of the words that stood out were:

· Rizz was the most frequently looked up word after it was added to the dictionary in September. It’s slang that describes someone’s ability to flirt with, or charm, a person they are romantically interested in. Rizz can be a noun or a verb, and it might be derived from “charisma.”

· Deepfake also gained interest from the public in 2023. A deepfake is “an image or recording that has been convincingly altered and manipulated to misrepresent someone as doing or saying something that was not actually done or said,” explained Merriam Webster.

· EGOT came to the fore after Viola Davis won a Grammy for the audiobook of her memoir. EGOT describes a person who has won an Emmy, a Grammy, an Oscar and a Tony. The word has been in the dictionary as a noun since 2019, although it may also become a verb after Davis exclaimed, “I just EGOT!”

· Doppelgänger, which means two people who look extremely similar, gained notoriety for several reasons in 2023. In one case, two minor league baseball players, who share the same name, also resemble each other. The pair are mistaken for one another so often, they took a DNA test to find out whether they’re related. They’re not. They’re just doppelgängers.

While all of these words gained attention in 2023, the editors at Merriam Webster chose authentic as the word of the year. “A high-volume lookup most years, authentic saw a substantial increase in 2023, driven by stories and conversations about AI, celebrity culture, identity, and social media. Authentic has a number of meanings including ‘not false or imitation,’ a synonym of real and actual; and also ‘true to one’s own personality, spirit, or character.’ Although clearly a desirable quality, authentic is hard to define and subject to debate – two reasons it sends many people to the dictionary.”

Where Are We in the Economic Cycle?

email@womackadvisers.com (Greg Womack) — Mon, 04 Dec 2023 19:10:02 GMT

We’re cycling along.

It’s easy to forget that economic activity tends to move in cycles. A full cycle, known as the business cycle, typically includes four stages:

Contraction occurs when economic growth slows as an economy produces fewer goods and services. Economic contractions often include recessions. As productivity contracts, it can negatively affect the profitability of companies, as well as the number of jobs available and the income security of workers. The United States economy contracted during the first two quarters of 2022.
Trough is the stage at which economic growth hits bottom for the cycle. It occurs before an expansion begins. The month following a trough is the first month of an expansion.
Expansion occurs when an economy produces more goods and services. The United States economy has been expanding since mid-year 2022. Productivity, as measured by gross domestic product, grew 5.2 percent year-over-year in the third quarter of this year.
Peak is the stage at which economic growth reaches its highest point for the cycle, just before a contraction begins. The month following a peak is the first month of a contraction.

“It might be tempting to think the stages of the business cycle are like the cycles on your dishwasher – regular cycles that occur in predictable patterns: The rinse cycle always begins after the wash cycle has completed, and each rinse always lasts the same length of time…But there is nothing ‘regular’ about the business cycle,” wrote Scott A. Wolla in the St. Louis Federal Reserve’s Page One Economics ^® blog.

At the start of the fourth quarter, the United States was in the late cycle stage of expansion, according to Fidelity Insights. That doesn’t necessarily mean we’re heading into a contraction, though. Expansions usually end when the economy experiences a shock of some kind, reported Wolla.

“Economists suggest that shocks that cause recessions might include financial market disruptions, international disturbances, technology shocks, energy price shocks, and actions taken by monetary policymakers to restrain inflation.”

Major U.S. stock indices finished last week higher, reported Barron’s, and U.S. Treasury yields moved lower as investors embraced the idea that rate cuts may be ahead in 2024.

Drip Pricing and Inflation

email@womackadvisers.com (Greg Womack) — Tue, 28 Nov 2023 20:34:56 GMT

DRIP. DRIP. DRIP. As inflation recedes, fees and charges may continue to affect the cost of some goods and services. Last summer, NPR’s Stacey Vanek Smith reported on the phenomenon after having lunch delivered.

“I decided to splurge and order a burger and fries for delivery. Subtotal for my meal? $14.07. A little pricey, but it’s a good burger and $14 seemed like a totally acceptable price for dinner, especially when it's delivered to my door. Then came the fees: Delivery fee: $5.49; Service fee: $3; Tip: $4; Tax: $1.25. Grand total for my delivery burger: $27.81. My lazy Monday went from costing me $14 to almost $30. The price had doubled. What was going on?”

The answer is drip pricing. It happens when the price of a good or service is broken into multiple components that the buyer becomes aware of as the purchase proceeds, according to an article published by Alexander Rasch, Miriam Thöne and Tobias Wenzel in the Journal of Economic Behavior and Organization.

Many industries employ this pricing strategy. For example, travelers may purchase airline tickets by choosing the lowest base price and then find themselves paying additional fees to check bags, select desirable seats or sit in seats adjacent to younger family members.

One luxury automobile company added a new twist to car buying. It asked buyers in the United Kingdom, Germany, New Zealand and South Africa to pay a subscription fee to activate its factory-installed seat warmers. The automaker eventually abandoned the subscription, but it plans to expand pay-on-demand services. In an interview with James Attwood of Autocar, a company board member explained:

“We actually are now focusing with those ‘functions on demand’ on software and service-related products, like driving assistance and parking assistance, which you can add later after purchasing the car, or for certain functions that require data transmission that customers are used to paying for in other areas.”

Inflation and rising prices are critical aspects of retirement planning. If you would like to talk about how inflation may affect your savings and investments over time, please get in touch.

Investors More Optimistic than Consumers

email@womackadvisers.com (Greg Womack) — Tue, 28 Nov 2023 20:16:52 GMT

Bearish vs Bullish

In November, investors were more optimistic than consumers.

At the start of November, investors were decidedly bearish. During the week of November 1, the AAII Investor Sentiment Survey found that about 50 percent of respondents were pessimistic about the prospects for stocks over the next six months, and about 24 percent were bullish. The current historic averages are 31 percent bearish and 37.5 percent bullish. (The remainder are neutral.)

Many believe the survey is a contrarian indicator, meaning that stocks are likely to rise when investors are bearish and fall when investors are bullish. November offered some data to support the theory as United States stocks trended higher during the month.

As stock markets gained, participants in the AAII survey became more bullish. The Thanksgiving week survey found that more than 45 percent of respondents were feeling bullish, and as we already mentioned, just 24 percent were feeling bearish. Quite a reversal from four weeks earlier.

Consumers were considerably less optimistic. While sentiment improved from last year, it dropped almost 4 percent from October to November, according to the University of Michigan Consumer Sentiment Survey. It was the fourth consecutive month of declining sentiment.

“November’s reading reflects a balance of factors, some of which improved while others worsened. More-favorable current assessments and expectations of personal finances were offset by a notable deterioration in expected business conditions…Younger and middle-aged consumers exhibited strong declines in economic attitudes this month, while sentiment of those age 55 and older improved from October,” wrote Surveys of Consumers Director Joanne Hsu.

The survey found consumers expect inflation to average 4.5 percent over the next 12 months, and 3.2 percent over the longer term even though inflation has slowed significantly and was just 3.2 percent over the last 12 months. Despite recent declines, consumers are worried inflation could change course.

Stocks moved higher last week as many investors remained confident the Federal Reserve was done raising rates. Some anticipate rate cuts early next year, reported Barron’s. Bond markets weren’t so sure, though, and U.S. Treasury yields moved broadly higher during the week.

This Just In: Interest Rates Raised 0.75 Percentage Points

Wed, 02 Nov 2022 18:56:08 GMT

For the fourth time in a row, the Federal Reserve has raised interest rates by 75 basis points in efforts to quell inflation, aligning with predictions and catalyzing stock market rises.

According to The Wall Street Journal, statements from Fed officials have relayed that rates will continue to rise, but likely in smaller amounts—“The committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.”

At 2:30PM ET, Fed chair Jerome Powell will be expected to elaborate more on future rate hike anticipations, as well as take on other questions from reporters.

If you have any questions, reach out to Greg Womack at greg@womackadvisers.com or call (405) 340-1717.

Best regards,

Womack Investment Advisers

Sources:

https://www.wsj.com/articles/fed-approves-fourth-0-75-point-rate-rise-hints-at-smaller-hikes-11667412242?mod=livecoverage_web

https://www.cnn.com/business/live-news/stocks-market-fed-rate-hike/index.html

Fed Raises Interest Rates by 0.75% to Fight Inflation

email@womackadvisers.com (Greg Womack) — Wed, 21 Sep 2022 19:58:26 GMT

Fed Raises Interest Rates by 0.75% to Fight Inflation

The Federal Reserve today announced they were raising the benchmark interest rates by another 3/4 of a percentage point. They also indicated that higher rates in the future will be forthcoming.

Greg Womack, of Womack Investment Advisers located in Edmond, OK, says: “In an effort to curb inflation, the Fed has been raising rates aggressively this year. At the end of the day, they are basically imposing a slow-down in the economy, and creating higher borrowing cost for businesses and consumers.” A higher interest rate environment has the potential to negatively impact consumers spending, and business profits; which could end up negatively affecting stock prices. “Investors would be prudent to review their portfolio in light of recent Fed actions, and position for the new era of higher inflation and higher interest rates” , added Womack.

If you’d like more information on how higher interest rates may affect your portfolio, please give us a call at 405-340-1717, or click HERE to take a FREE risk assessment and a FREE portfolio valuation.

It’s important to be prepared in these current economic times. We look forward to having a discussion about your portfolio, and to help you be prepared.

Best regards,

Womack Investment Advisers, Inc.

WOMACK INVESTMENT ADVISERS, INC.
Oklahoma / Main Office: 1366 E. 15th Street - Edmond, OK 73013
California Office: 4660 La Jolla Village Dr., Ste. 100 - San Diego, CA 92122
Phone (405) 340-1717 - Toll Free (877) 340-1717

Website: www.womackadvisers.com

Womack Investment Advisers, Inc. (WIA) is a registered investment adviser whose principal office is located in Oklahoma. Womack Investment Advisers, Inc.

is also registered in the State of California, the State of Illinois, the State of Indiana, and the State of Texas. WIA only transacts business in states

where it is properly registered, or excluded, or exempted from registration requirements .

Market’s Inflation And Its Causes

newleafmarketingok@gmail.com (Amy Singleton) — Wed, 29 Jun 2022 04:49:53 GMT

Inflation is an economic concept that refers to the sustained increase in the price of goods and services in an economy. In other words, it measures how much the cost of living has increased over time. It's a normal part of economic growth; however, when inflation gets too high, it can harm the economy as it can lead to higher interest rates and a decrease in purchasing power.

Understanding this concept is essential as it affects our everyday lives in several ways. So, please continue reading to know how it works.

How Is Inflation Determined?

The US government relies on the Consumer Price index (CPI) and the Personal Consumption Expenditures Index (PCE).

Consumer Price Index

The CPI measures the prices of a basket of goods and services that represent what consumers purchase. This index is released monthly by the Bureau of Labor Statistics.

Personal Consumption Expenditures Index

The PCE index is similar to the CPI but includes a broader range of goods and services and is released quarterly by the Bureau of Economic Analysis.

What Causes Inflation?

Several factors can lead to inflationary pressures in an economy:

Demand-pull inflation: is when too much money is chasing too few goods and services. This can happen when the economy is growing too quickly or if there is an increase in government spending.
Cost-push inflation: when production costs start to increase, leading to higher prices. This can be caused by an increase in the price of raw materials or a decrease in productivity.
Exchange rate inflation: when a country's currency becomes weaker, imports become more expensive, leading to inflation.

What Are The Effects Of Inflation?

Inflation can have both positive and negative effects on an economy:

Positive effects: it encourages spending and investment as people expect prices to continue rising. This can lead to economic growth.
Adverse effects: it can reduce purchasing power as wages may not keep up with the rising prices. This can lead to higher interest rates and increased borrowing costs. In extreme cases, it can lead to hyperinflation, which is extremely harmful to an economy.

We'll Help You Deal With Inflation

Womack Investment Adviser is a team of financial advisors that can help you deal with inflation. Our team will help you understand how it works and affects your finances. Also, we'll provide you with strategies to protect your investment and grow your assets. Thanks to us, you'll have the financial freedom you need to live the life you want.

Don't hesitate to contact us today to learn more about our financial planning services! You'll not regret it!

Benefits Of Working With A Financial Advisor

newleafmarketingok@gmail.com (Amy Singleton) — Wed, 29 Jun 2022 04:48:13 GMT

Imagine not having to worry about your spending every month. Some people live without this headache because they have a financial plan. While some educate themselves on finance, others decide to ask for help. This is where financial advisors come in. They are professionals who can help you plan your spending, set goals, and find ways to save money.

When it comes to financial planning, working with a professional is the best thing if you know nothing about the topic. A good advisor can provide sound advice and guidance, helping you make the right decisions for your future.

Key Benefits Of Working With A Financial Advisor

Create A Comprehensive Financial Plan

A financial adviser can help you take a holistic view of your financial situation. This means looking at all aspects of your finances. They can help you decrease your expenses, protect your investments, and insurance coverage. They can then help you create a comprehensive financial plan that considers all of these factors and sets you on the path to reaching your financial goals.

Stay Disciplined With Your Finances

Getting caught up in the moment and making impulsive purchase decisions is easy. A financial adviser can help you stay disciplined with your spending and keep you focused on your long-term financial goals. They can also help you avoid making common money mistakes, such as chasing investment performance or taking on too much debt.

Provide Impartial Advice

Your friends and family may have strong opinions about what you should do with your money. A financial adviser can provide impartial advice based on your specific situation and goals. This can help you make decisions that are in your best interest without worrying about pleasing everyone else.

Portfolio Management

If you have investments, a financial adviser can help you manage your portfolio to meet your risk tolerance and return objectives. They can also help you rebalance your portfolio as needed to keep it aligned with your goals.

Financial Advisors You Can Trust In Edmond, OK

Womack Investment Advisers is the best financial advice company in OK. You're guaranteed individualized attention and service. Our professionals will help you make the best decisions for your future. We understand that everyone's financial situation is different, so we offer custom-tailored solutions to meet our client's diverse needs.

Contact Womack Investment Advisers today to learn more about how we can help you reach your financial goals!

REACH OUT

Financial Planner's Red Flags

Wed, 29 Jun 2022 04:45:52 GMT

Wealth Management is an aspect full of risk that most people decide to hand over to a professional. Financial planners are famous for decluttering someone's economic life and creating a roadmap for their wealth management journey. Most help with advice, products, and services to meet specific goals. However, some financial planners make mistakes that leave their clients worse off.

When considering hiring a financial planner, it's essential to be aware of the potential red flags that may indicate they're not the right fit for you.

7 Red Flags To Watch Out For

Lack Of Experience Or Credentials

Make sure your financial planner has the experience and credentials to give sound financial advice. Check their credentials against those required by the Financial Planning Standards Council.

Pressuring You To Make Decisions

A good financial planner will never pressure you into making hasty decisions about your finances. If your planner is pressuring you to act now or make impulsive decisions, walk away.

Not Understanding Your Goals

A good financial planner will take the time to understand your unique financial situation and your goals. If they don't ask about your dreams or don't seem interested in what you want to achieve, they're not the right planner for you.

Focusing On The Short-Term

Your financial planner should be focused on helping you meet your long-term financial goals. If they seem more interested in helping you make money or get rich quickly, they're not looking out for your best interests.

Not Being Transparent

Transparency is vital when working with a financial planner. You should always know what fees they're charging, what products they're recommending, and how they're being compensated. If your planner isn't being transparent, walk away.

Not Being Accessible

Your financial planner should be accessible and responsive to your questions and concerns. If they're hard to get a hold of or don't return your calls promptly, they're not the right planner for you.

Failing To Update You

Your financial planner should keep you up-to-date on changes in the market, changes to your portfolio, and any other relevant information. They're not doing their job if they're not keeping you in the loop.

Reliable Financial Advisors

If you encounter any of these red flags, it's best to find a new option. Womack Investment Advisers is a team of reliable and trustworthy financial advisors that can help you reach your financial goals. We have a vast catalog of financial services, from retirement planning to insurance planning and portfolio management to estate planning.

We're here to answer any questions and help you navigate your financial journey. Contact us today to get started.

SCHEDULE APPOINTMENT

How To Find A Good Estate Planner

newleafmarketingok@gmail.com (Amy Singleton) — Wed, 29 Jun 2022 04:42:48 GMT

We understand that death is a complex topic to think about and talk about. No one wants to face their mortality, but estate planning is an important step everyone should take, regardless of age or health. By putting your affairs in order, you can ensure that your family is taken care of in the event of your death.

In the same way, imagine how difficult it would be for your loved ones to decide about your medical care or finances if you were suddenly incapacitated. By creating an estate plan, you can ensure that your wishes are carried out and that your loved ones are taken care of in the event of incapacity.

Estate planning is not just for the wealthy. Everyone has an estate, regardless of the value. An estate is simply everything you own—your home, savings, life insurance policy, and more. If you have any assets, it's vital to have an estate plan in place. So, please continue reading to learn more about estate planning and how to find a good financial advisor.

What Is Estate Planning?

Estate planning is organizing your affairs so that your family can access your assets upon death or in the event of incapacity. An estate plan can be as simple as having a will in place or more complex, depending on your needs.

How To Choose An Estate Planner

When choosing an estate planner, it is crucial to find someone qualified and experienced. Here are some necessary qualifications to look for:

Estate planning experience : You want to ensure that your attorney has experience in estate planning. You can see this by the years it has been practicing and the number of estate plans they have created.
A Certified Financial Planner (CFP) designation : While not required, this designation indicates that the financial planner has the necessary skills and knowledge to help you with your estate planning.
Support Staff: A good estate planning team will have a support staff, such as paralegals and administrative assistants, to help create your estate plan.

Womack Advisers Will Make Sure Your Will Is Respected

Womack Investment Advisers is a firm of highly qualified and experienced financial advisors. Our firm has been helping clients over the years. We have the experience and knowledge necessary to ensure that your wishes are carried out according to your will. Additionally, our team of financial advisors is qualified to help you with many other services, like portfolio and wealth management.

At Womack Investment Advisers, we understand that estate planning is a complicated and sensitive topic. However, we believe it's an important step everyone should take, so we'll work by your side as your friend. You can be sure that your best interests are always our top priority.

SCHEDULE APPOINTMENT

How To Face Market's Current Uncertainty? Pt 2

newleafmarketingok@gmail.com (Amy Singleton) — Wed, 29 Jun 2022 04:41:00 GMT

In the face of all the problems we are facing today, it's more important than ever for businesses and investors to be able to adapt quickly and make the right decisions. That's why market research is essential in today's climate. It can help you understand what you should do to stay ahead of the curve and make the most of opportunities as they arise.

In this blog we´ll cover part 2 of how to deal with the market´s uncertainty. Please continue reading to find some useful tips.

How To Keep Your Money Safe

Invest In Things That Add Value Over Time

When investing, it's crucial to consider how something will increase its value over time. Some things, like gold or other precious metals, tend to have their value well during periods of inflation. Others, like real estate, can be a more volatile investment. However, real estate can still be a good option if you're careful about where you put your money.

If you are afraid of making a wrong decision regarding which industry to put your money in, you can contact a financial advisor who will guide you to protect your investment.

Don't Believe In Fast-Earning Investments

During difficult economic times, people will always try to take advantage of others. They may promise quick and easy returns on investments that are too good to be true. Be wary of these offers, as they are often not as good as promised.

The most common investment scams include Ponzi schemes, pyramid schemes, and fake investments. If someone approaches you with an offer that seems too good to be true, it's best to do your research and talk to someone you trust before making any decisions.

Don't Put All Your Eggs In One Basket

When it comes to investing, it's essential to diversify your portfolio. This means you shouldn't put all your money into one investment. For example, if you only invest in stocks, you could lose everything if the stock market crashes. However, you can minimize your risk if you have a mix of investments.

Another financial rule states that you should have around three sources of income. If one of them goes down, you will still have some money coming in.

Be Prepared For The Worst

No one likes to think about the worst-case scenario, but it's essential to be prepared. This means having a plan in place in case of a financial setback. Start by educating yourself and understanding your options. And most important, don't be afraid to ask for help if you need it.

Reliable Wealth Management Services

At Womack Investment Advisers, we provide a wide range of financial services to assist you during these difficult times. We have a staff of financial advisors who can help you on tax planning and manage your assets. Additionally, we offer investment management services to help you grow your wealth.

Don't put it off any longer; contact us right away so that we may help you prepare for the future. We guarantee that you will be satisfied with our recommendations.

REACH OUT

How To Face the Market's Current Uncertainty? Pt 1

newleafmarketingok@gmail.com (Amy Singleton) — Wed, 29 Jun 2022 04:37:43 GMT

The world's economy is currently facing unprecedented challenges. The Russian war vs. Ukraine upended global supply chains and disrupted businesses worldwide. At the same time, COVID-19 is still raging in many countries, causing economies to shutter and people to lose their jobs. Additionally, these challenges came when the world economy was already facing significant headwinds.

So if you are worried about the uncertainty we are facing today, continue reading to find some valuable tips during these difficult times.

How To Protect Your Wallet

Stay Informed

It's essential to stay up-to-date on the latest events that could impact the economy. This way, you can be prepared for anything that comes your way. You can subscribe to daily newspapers, listen to business news programs, or even set up Google Alerts for key terms. Nonetheless, getting affected by bad news is easy, so make sure you don't dwell on negative headlines for too long.

Follow A Budget

One of the best ways to weather any economic storm is to stick to a budget. This will help you keep your spending in check and ensure you're not overspending on things you don't need.

You can follow easy financial rules like "50/30/20" to guide yourself. This means that 50% of your income should go towards essentials like food and shelter, 30% can go to discretionary items and 20% should be saved.

Of course, this is just a general guideline. You may need to adjust your budget depending on your circumstances. We understand it may be difficult as most people are not used to planning their spending, so you can contact a financial advisor to be your partner for a while.

Start An Emergency Fund

An emergency fund is a crucial part of weathering any economic storm. It's a savings account that you only use in case of unexpected expenses like a job loss or medical emergency. It should have enough money to cover 3-6 months of living expenses. This may seem like a lot, but it's essential to have a cushion in tough times.

Wealth Management At Your Disposal

Womack Investment Advisers is a financial firm that offers different services to help you during difficult times. We have a team of financial advisors who can guide and protect your investments. We can help you with tax planning, wealth management, and investment advice. Moreover, we can help you do market research so you can be up to date with the latest industry trends.

Please don't wait until it's too late; contact us today and let us help you plan for a bright future. We guarantee that you will be happy with your advice. After all, our number one priority is your satisfaction.

The Federal Reserve Raises Interest Rates by 0.75%

email@womackadvisers.com (Greg Womack) — Wed, 15 Jun 2022 22:22:50 GMT

The Fed raised it’s benchmark interest rate by 0.75 percentage points, the biggest increase since 1994.

In a move to curtail the highest inflation rate in 40 years, the federal reserve raised the benchmark interest rate at its most aggressive hike since 1994. They also significantly cut their economic growth outlook for 2022, to just 1.7% gain in growth domestic product (GDP), which is down from its forecast of 2.8% from March. (Source: CNBC.com).

The Fed is playing catch-up after earlier in the year claiming that inflation was just transitory. Now they have no choice but to aggressively raise rates. The Fed is normally late to the game, and it continues to lose its credibility as a viable player to control economic activity. “Higher interest rates will do nothing more than hurt the economy”, says Greg Womack, President of Womack Investment Advisers, in Edmond Oklahoma. “Higher interest rates will curtail economic activity, where the issue is not just high demand, it’s also the low supply caused by the supply-chain shut-downs from the pandemic. The cost of doing business for US companies is going higher, and more pressure will be on the consumer, at a time when many are still feeling the pressures from the last two years.

Womack says, “when economic policy is encouraged to free-up more supply, such as energy and other technology products, this will help to bring prices down naturally. It’s not just about curtailing demand by higher interest-rates, it’s also about creating more supply in the system, which was extremely strained by the previous shut down of the economy. We are now feeling the effects of what happens when the government intervenes and shuts down the whole economy, these are the symptoms that appear. When you jack with the free-markets, it usually ends up in worst conditions. Take a look at the bubbles the fed has created over the last 20 years by historically low interest rates, only to be burst by raising rates too much”.

Policy changes are desperately needed to encourage the free-growth of energy production and fixing the supply chain limitations that are overhanging from the pandemic shutdowns. Until these issues are addressed head-on, you can expect high inflation to continue and a sluggish economy, Womack contends

For more information, you can contact Womack at greg@womackadvisers.com .

Estate Planning Best Practices

newleafmarketingok@gmail.com (Amy Singleton) — Tue, 14 Jun 2022 21:52:20 GMT

There are several great practices that you should keep in mind when it comes to estate planning. These will help ensure that your estate is managed most effectively and efficiently and that your loved ones are taken care of according to your wishes.

Best Practices For Estate Planning

Making A Will

This is one of the most important estate planning documents, as it sets out your wishes for how your assets should be distributed after your death. Without a will, your estate will be subject to the laws of intestate succession, which may not align with your wishes.

Naming Executors

An executor is a person who will be responsible for administering your estate and carrying out your wishes. It’s important to choose someone you trust to carry out this role, so take some time to consider your options before deciding.

Creating Trusts

Trusts can be used for a variety of purposes in estate planning, such as minimizing taxes, protecting assets, and providing for loved ones with special needs. Speak to an estate planning attorney to see if creating a trust is right for your situation.

Organizing Your Financial Documents

Keep all of your important financial documents organized and in one place so that your executor can easily access them. That includes bank statements, investment account statements, insurance policies, and tax returns.

Communicating Your Wishes

Once you have your estate plan in place, it’s important to communicate your wishes to your executor and loved ones. That will help ensure that your wishes are carried out according to your plan.

Following these best practices for estate planning will help ensure that your estate is managed most effectively and efficiently. If you have any questions about estate planning or need assistance creating an estate plan, contact an experienced financial advisor.

Find The Best Financial Advisors At Womack Investment Advisers!

At Womack Investment Advisers, we understand that estate planning and state planning practices can be difficult to understand. We have a team of experts who can help you through the process and make sure that your family is taken care of in the event of your passing. We will work with you to create a plan that fits your needs and ensures that your loved ones are taken care of.

There are many moving parts and numerous ways to structure your estate. Our team of experienced financial advisors can help you navigate the process and create a custom plan that meets your needs. We can also help you with your portfolio management, retirement planning, and tax planning needs. We are here to help you every step of the way so that you can make the best decisions for your future.

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Russian Invasion, Inflation, And Interest Rate Uncertainty

newleafmarketingok@gmail.com (Amy Singleton) — Tue, 14 Jun 2022 21:45:22 GMT

The recent Russian invasion has thrown the global financial markets into turmoil. Investor confidence is shaken, and there is great uncertainty about the future. In times like these, it's important to have a Financial Advisor who can help you navigate the choppy waters and make the best decisions for your portfolio. One of the biggest concerns right now is inflation.

The Russian ruble has plummeted in value, which has led to a sharp increase in the price of imported goods. That is likely to cause inflation to rise in the short term, eating into your investment returns. Another worry is that the conflict could escalate and lead to a full-blown war. That would have a devastating effect on the global economy and cause a sharp drop in stock prices.

What Has Caused The Conflict Between Russia And Ukraine?

The ongoing conflict between Russia and Ukraine has created a lot of economic uncertainty. That, coupled with high inflation and interest rates, has made it difficult for people to plan their finances and make sound investments .

As a result, many people are turning to financial advisors for help. Financial advisors can guide how to navigate these uncertain times and make the most of your money.

There are various factors to consider when it comes to financial planning and investment management. For instance, sanctions can significantly impact gas prices and inflation. As a result, it's important to work with a qualified financial advisor who can help you with your investment planning.

Get A Financial Advisor To Help You Manage Your Investments

If you're thinking about working with a financial advisor, be sure to do your research and choose someone qualified and experienced in helping people facing similar situations. Working with a qualified financial advisor can help you weather the storm and come out ahead financially.

Womack Investment Advisers Can Assist You With Your Financial Planning Needs

The current global economic conditions are creating a lot of uncertainty, and many investors are wondering what to do next. One of the biggest concerns is the potential for inflation. As you know, inflation can erode the purchasing power of your investment portfolio, so it's important to have a strategy in place to deal with it and take care of your wealth management.

At Womack Investment Advisers, we can help you develop a comprehensive financial plan that includes strategies to protect your assets from inflation. We will also work with you to create an investment portfolio that is diversified and positioned to take advantage of opportunities that may arise in the current market environment.

What Is Estate Planning?

newleafmarketingok@gmail.com (Amy Singleton) — Tue, 14 Jun 2022 21:42:20 GMT

Portfolio management is often confused with estate planning, but they are two very different things. Portfolio management is about managing your investments and growing your wealth during your lifetime. Estate planning is basically about what happens to your assets after you die. That includes creating a will, setting up trusts, and making arrangements for the care of your dependents.

It's essential to have an estate plan to take care of your loved ones after you die. Without one, your assets could not be distributed as you intend, and your family may have to go through the court system to settle your affairs.

Who Needs Estate Planning?

Estate planning is for everyone, regardless of how much money you have. Even if you don't have any significant assets, you should still create a will to designate a guardian for your minor children.

How Is The Process Of Estate Planning?

The estate planning process can sometimes be complex, but many resources are available to help you. You could start by meeting with a financial advisor to discuss your options and create a plan that meets your needs.

The process of estate planning can be divided into four main steps:

1. Identify your assets and liabilities.

2. Make a checklist of your goals and objectives.

3. Choose the right tools to achieve your goals.

4. Implement your plan.

How Does Estate Planning Work For Business Owners?

If you're a business owner, estate planning is especially important. Without a plan, your business may have to close its doors after your death. Estate planning can help you ensure that your business is passed on to the right person and continues to operate smoothly after you're gone.

What Are The Different Types Of Estate Planning Tools?

There are different estate planning tools available, and the right ones for you will depend on your goals and objectives.

Some common estate planning tools include:

Wills: A will is a legal document that specifies how you want your assets to be distributed after your death.
Trusts: A trust is a legal entity that can hold assets on your behalf. Trusts can be used for various purposes, including avoiding probate, minimizing taxes, and protecting your assets from creditors.
Powers of Attorney: A power of attorney is a legal document that gives someone else the authority to make financial decisions on your behalf. That can be helpful if you become incapacitated and are unable to make decisions for yourself.
Advance Directives: An advance directive is a legal document that allows you to specify your medical treatment preferences if you can't make decisions.

Estate planning is a complex process, but it's important to put a plan into action to protect your loved ones and your assets. Working with a financial planner can help you create a plan that meets your unique needs.

Get Your Estate Planning Started With Professional Advisers!

At Womack Investment Advisers, we are here to help you with estate planning every step of the way. We're aware that this can be a difficult and overwhelming process, so we offer our expertise and knowledge to help make things as smooth and stress-free as possible for you.

There are a lot of important factors to consider when it comes to estate planning, and we'll be working with you to make sure that all of your bases are covered. We will help you identify your goals and create a specific plan for your needs. We will also provide the best way to structure your assets to minimize taxes and maximize benefits for your loved ones.

CALL THE EXPERTS

Tax Changes In 2022

newleafmarketingok@gmail.com (Amy Singleton) — Tue, 14 Jun 2022 21:38:54 GMT

The Tax Cuts and Jobs Act of 2017 changed the tax code, many of which are set to expire after 2025. That means that taxes will go up for many Americans in 2022 unless Congress takes action to extend the provisions.

Provable Consequences Of Tax Changes

- The standard deduction will increase. For 2021, the standard deduction is $12,550 for single taxpayers and $25,100 for married couples filing jointly. In 2022, it is scheduled to increase to $13,000 for single taxpayers and $26,000 for married couples filing jointly.

- The child tax credit will decrease. For 2021, the child tax credit is $2,000 per child. In 2022, it is scheduled to decrease to $1,000 per child.

- The mortgage interest deduction will decrease. For 2021, the mortgage interest deduction is available for mortgages up to $750,000. In 2022, it is scheduled to decrease to mortgages up to $625,000.

- The Alternative Minimum Tax will increase. For 2021, the Alternative Minimum Tax exemption is $113,400 for single taxpayers and $83,400 for married couples filing jointly. In 2022, the exemption is scheduled to decrease to $72,900 for single taxpayers and $50,600 for married couples filing jointly.

If you are planning to itemize your deductions in 2022, it is important to be aware of these changes to adjust your tax planning accordingly. If you have any questions about how the changes could affect you, don't hesitate to get in touch with a professional financial advisor.

Why Is A Financial Advisor So Helpful?

Financial advisors can help your tax planning for the future and make the most of your money. They can offer advice on various topics, including investment strategy, retirement planning, tax planning, and estate planning. A financial advisor can also help you set financial goals and monitor your progress. If you are unsure where to start, a financial advisor can help you get on the right track.

When it comes to your finances or understanding how corporate or individual taxes work, it is important to make sure you are getting the most out of your money. A financial advisor can help you do just that. With their help, you can make informed decisions about your finances and reach your financial goals.

Get The Best Financial Advisor At Womack Investment Advisers

At Womack Investment Advisers, we believe that working with a financial advisor should be a straightforward and enjoyable experience. Our job is to help you make the most of your money, so you can focus on what's important to you. We are proud to offer our clients the best financial advice and service possible.

Our team of experienced professionals is here to help you with every step, from investment planning to retirement planning and everything in between.

If you're looking for a financial advisor, look no further than Womack Investment Advisers. We would be honored to help you achieve your financial goals.

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About Child Taxes: Understanding Your Letter 6419

newleafmarketingok@gmail.com (Amy Singleton) — Tue, 14 Jun 2022 21:31:29 GMT

When it comes to taxes, children can be a bit of a mystery. Like adults, children are required to file a federal tax return if they earn income during the year. But unlike adults, there are a few special rules that apply to taxes and children. The first thing to understand is that any income a child earns is taxed at the child's tax rate.

Even if the income is earned through a part-time job or from interest and dividends earned on investments. So, if your child has income from a part-time job, be sure to have them set aside enough money to pay the taxes on that income.

Another thing to keep in mind is that if your child's income is below a certain amount, you may be able to claim the child as a dependent on your tax return. That can save you money on your taxes, so it's worth looking into.

What Is The 6419 Letter About?

The letter 6419 is a notice from the Child Tax Credit (CTC) unit of the Internal Revenue Service (IRS). The letter is used to inform taxpayers about their eligibility for the Child Tax Credits and provide instructions on how to claim the credit.

How Can Your Child Be Eligible For A Child Tax Credit?

To be eligible for the Child Tax Credit, taxpayers must have a dependent child under the age of 17 and who meets the residency, relationship, and joint return requirements. In addition, the Child Tax Credit is subject to income limitations.

The Child Tax Credit is a non-refundable tax credit that can reduce a taxpayer's federal income tax liability. The credit is worth up to $2,000 per qualifying child.

While having children does come with some tax benefits, like the Child Tax Credit, it can also mean additional responsibility for filing your federal tax return. If you're not careful, you could owe the IRS money.

How To Avoid Owing Money To The IRS?

One way to avoid this is to plan and estimate your taxes for the year. That can be difficult to do on your own, so working with a tax advisor or financial planner can be helpful. They can help your tax planning and help you understand the various deductions and credits you may be eligible for. They can also estimate your taxes, so you don't end up owing money at the end of the year.

If you end up owing money, the IRS will send you a bill. This bill will include the amount you owe in interests and penalties. If you're unable to pay the full amount, you can set up a payment plan with the IRS.

Hire a Tax Advisor For Your Child Taxes Needs!

If you have any questions or need help estimating your taxes for the year, reach out to investment advisors or financial planners today. They can help you understand the Child Tax Credit and other deductions and credits you may be eligible for to help you plan for a bright financial future.

Womack Investment Advisers, Your Reliable Tax Advisor!

At Womack Investment Advisers, we are here to help you with your taxes. We have a team of experienced tax professionals who can help you understand Child Tax Credit. Contact us today to set up a consultation. We look forward to helping you!

CONTACT THE EXPERTS

10 Questions You Need To Ask Your Financial Advisor ASAP

newleafmarketingok@gmail.com (Amy Singleton) — Wed, 18 May 2022 21:43:38 GMT

Begin By Asking Your Financial Advisor These Questions

Nobody is 100% certain of what the future might bring. It's important to have a solid financial plan for what is coming. But if you're like most people, you may not know where to start. That's where your financial planner comes in. A good advisor can help you create a plan that meets your specific needs and goals.

Before you work with an advisor, there are some questions you need to ask to ensure the quality and accuracy of their assessment. Keep reading for a list of the most important questions to ask your financial advisor .

Begin By Asking Your Financial Advisor These Questions

Are You A Fiduciary?:

By law, financial planners must act in their clients' best interests. However, not all advisors adhere to this standard. Some may have other agendas and may only recommend products that generate the highest commission for them, regardless of whether or not it's the best option for you.

Make sure your advisor is a fiduciary by asking them point-blank. If they hesitate to answer or avoid the question altogether, that's a major red flag.

What Are Your Qualifications?:

Next, you'll want to ask about an advisor's experience and credentials. How long have they been in the industry? Do they have any specialties or areas of expertise? What professional designations do they hold?

The more experience and credentials an advisor has, the better. They should also be able to easily answer any questions you have about their qualifications.

How Do You Get Paid?:

It's important to understand how your advisor is compensated for their services. Some charge hourly rates, while others receive commissions on the products they sell. Some may even charge a combination of both.

Be sure to ask about the fees you'll be expected to pay and how your advisor will be compensated. This will help you avoid any potential conflicts of interest down the road.

What Is Your Investment Philosophy?:

Every investor has a different risk tolerance and set of goals. Your advisor must understand your unique needs before making any recommendations.

Be sure to ask about an advisor's investment philosophy and how it aligns with your risk tolerance and goals. If they're not on the same page, they may not be the right fit for you.

What Are The Potential Risks And Rewards Of The Investments You're Recommending?:

No investment is without risk, but some carry more risks than others.

Before making any decisions, ask your advisor about the potential risks and rewards of the investments they're recommending. This will help you make an informed decision that's right for you.

What Are The Fees And Expenses Associated With The Investments You're Recommending?:

As with any investment, there are costs associated with buying and selling. These include brokerage commissions, management fees, and other assorted expenses. Ask your advisor about all the fees and expenses associated with the investments they're recommending. This will help you avoid any surprises down the road.

What Is Your Experience With Investing In (Industry Or Type Of Investment)?:

It's important to work with an advisor who has experience investing in the types of products you're interested in. For example, if you're interested in buying real estate, you'll want to work with an advisor who has experience investing in that asset class.

Be sure to ask about an advisor's experience with the industry or the type of investment you wish to get involved in. This will help you avoid any potential pitfalls.

What Is Your Track Record?:

A good financial advisor should have a solid track record of success. Be sure to ask about their past performance and how they've helped their clients achieve their financial goals.

What Is Your Process For Making Investment Decisions?:

It's important to understand an advisor's process for making investment decisions. This will help you know what to expect and whether or not they're a good fit for you. Be sure to ask about an advisor's investment decision-making process. This will help you understand their thinking and whether or not they're a good fit for you.

What Other Services Do You Offer?:

Many financial advisors offer other services , such as tax preparation, estate planning, and retirement planning. If you're interested in these services, ask about them.

Get Professional Wealth Management With Us

Knowing the critical questions to ask a financial advisor in your first meeting is crucial to a successful working relationship. At Womack Investment Advisers, we take the time to get to know you and understand your priorities and values.

We'll help you develop a custom wealth management strategy that addresses the most important issues for you. We can assist you in determining the best retirement techniques to preserve your money and the best investments to help you accomplish your objectives.

2022 Investment Market Summary & How To Face The Next Quarter

newleafmarketingok@gmail.com (Amy Singleton) — Wed, 18 May 2022 21:31:15 GMT

2022 First Quarter Summary: The Events

As we reach the end of the first quarter of 2022, it's time to look back and see how the financial markets have performed. This period has been marked by dramatic events, including rising inflation, the war in Ukraine, rising interest rates, sanctions on Russia, and a new COVID-19 outbreak in China.

Let's take a closer look at how these events have affected various markets worldwide and how to begin your investment planning for the next quarter.

Rising Inflation:

One of the big stories of the first quarter was rising inflation. This was driven by some factors, including higher energy prices, higher food prices, and strong economic growth. The result was that central banks worldwide were forced to raise interest rates to combat inflation.

War in Ukraine:

Another major story this quarter was the war in Ukraine. This conflict began in early January when Russia launched a military offensive against Ukraine. The fighting has since escalated, with both sides exchanging artillery and missile strikes. The war has killed thousands of people and displaced millions more.

The conflict has also had a major impact on the markets, with investors selling off assets seen as risky. This has caused the prices of oil and gas to rise and the prices of other commodities.

Interest Rates:

Another big story this quarter was the rise in interest rates. This was driven by central banks worldwide raising rates to combat inflation. The result was that bond yields rose, and mortgage rates followed suit. This has made it more expensive for consumers to borrow money and has put pressure on the stock market.

Sanctions on Russia:

This quarter also saw the United States and European Union impose sanctions on Russia. These sanctions were in response to Russia's involvement in the war in Ukraine. The sanctions have caused the Russian economy to contract and have led to a sell-off in Russian assets.

COVID-19 Outbreak in China:

The final major event of the quarter was the outbreak of a new COVID-19 outbreak in China. This has led to a sharp sell-off in Chinese assets as investors worry about the potential economic impact of the virus.

How To Face The Next Financial Quarter With Financial Advisors

Now that we've looked at the first quarter's major events, let's look at how to face this next quarter. If you’re worried about current events and their effect on your finances, the first thing you should do is speak to a financial advisor . They can help you assess your current situation and make recommendations on how to best position yourself for the second quarter.

It's also important to stay updated on the latest news and developments. This will help you make informed decisions about your investments. Finally, remember that there is always risk in the markets- but by diversifying your portfolio and taking a long-term view, you can weather any storms that come your way.

Keep Track Of Your Wealth Management With Womack

Being prepared is never a bad idea. If you want to improve or begin your investment planning, contact our expert financial advisors at Womack Investment Advisers. Our wealth management experts have over 30 years of experience helping thousands of clients prepare their finances and investments to face even the hardest crisis.

Our services are 100% personalized according to your financial goals and expectations. We also provide advice and suggestions for emergency preparedness, using our independent research to guide our clients through a fluctuating financial market.

SPEAK WITH ONE OF OUR EXPERTS

Rising Shipping Costs Cause Supply Chain Problems

email@womackadvisers.com (Greg Womack) — Mon, 24 Jan 2022 22:14:38 GMT

Stunningly higher shipping costs are yet another element of the nation’s supply chain problems. Shipping costs have skyrocketed as shortages of trucks, truck drivers, warehouse workers and others constrict the shipping pipeline and raise costs.

The “Cass Freight Indexes”, produced by Cass Information Systems, are the go-to source for shipping data in the industry. The chart on the left shows that the total freight volume has returned to pre-pandemic levels, but…the chart on the right shows that the costs of shipping are higher by about 45% year over year, 62% from the same time two years ago, and 300% since 2010. And, of course, those costs are embedded into everything you buy or use.

The value of a dollar has plummeted lately

Tue, 18 Jan 2022 22:18:27 GMT

What can we do when the value of the dollar plummets?

The value of a dollar has plummeted lately with the recent ravages of inflation, but the loss of value is just a more severe and considerably steeper continuation of the long-term decline in the value of a dollar.

As measured by the Consumer Price Index (CPI), the dollar has lost about 40% of its purchasing power just since January 1, 2000.

Once called the “almighty” dollar, it seems that adjective is hardly warranted now. (Chart from wolfstreet.com)

When you work with Womack Investment Advisers, Inc. this type of data, and a whole lot more, go into our fiduciary responsibility.

We take a tactical approach to your investments and monitor trends and data constantly. It's one of the biggest things that sets a local investment advisor apart when thinking about who to trust with your financial portfolio.

If you're ready to work with someone with YOUR best interest in mind, schedule a call with Greg today ! We'll get you off on the right foot to help you plan to create, grow, nurture, protect & finally pass on your wealth to those you hold most dear.

(Learn More) Investment Counselor | Womack Adviser

Tue, 18 Jan 2022 14:48:35 GMT

Want to learn more about what it means to be an investment counselor at Womack Advisers? Learn about what they do and what it takes to become one today.

What is an Investment Adviser?

Investment adviser , sometimes used interchangeable with investment counselor, is a licensed professional who provides clientele with financial advice regarding their current situation with the goal of getting them closer to their monetary goals.

These professionals deal strictly with investment advice and work on building their clientele’s portfolio to minimize risk by diversifying, while still providing the most value.

Can I Give Investment Advice Without a License?

A lot of people think that giving investment advice is a simple process that anyone can do; and while it might be true that you could become an investment counselor with enough motivation, it’s not as easy as calling yourself an investment counselor.

Every practicing investment counselor must have passed a test to certify them as a professional in the industry. Obtaining a license as a registered investment adviser is a critical part of the industry, meaning that not anyone can just start giving you advice.

Fortunately, this is a safeguard against poor advice and fly-by-night operations, as building a positive reputation is a part of your career as an investment counselor.

How Long Does it Take to Become an Investment Adviser?

There is no set route for how long it takes to become an investment adviser. Without counting the years of college it takes to obtain a degree in financial management or economics, it typically takes three to seven years to become an investment adviser depending on the level of post-graduate training and the time between applying for licensure.

Ultimately, the time in training to become an investment adviser is not indicative of success as practical experience in the industry is, as every counselor must pass a certain threshold of knowledge to practice.

At Womack Advisers, we have over thirty years of experience in the wealth management and investment services space, helping our neighbors make the best financial decisions they can when planning for a family, retirement, or estates.

How Much Do Investment Counselors Make?

An investment counselor makes an average salary providing financial advice and assistance to clientele.

A counselor may make money a variety of ways, from an hourly fee, annual fee, or flat fee depending on the structure of the company they are with, as well as the needs of the client.

Uncertain about whether it’s a good fit for you?

We provide a free consultation so you can come in, meet our investment counselor, and ensure we are a good fit for your needs. Get in touch with our team today to book your appointment at our Edmond OK office today.

Talk to the Experts

At Womack Investment Advisers, Inc., we are here to help you make sense of the financial world.

When you are starting to plan for life, it makes sense to have an investment counselor on your side to help you make the tough decisions.

Serving all of Edmond, OK and surrounding regions, we are proud to call our clients neighbors. Give us a call today to see how we can help you.

(Learn) The Role of a Financial Adviser | Womack Advisers

Fri, 14 Jan 2022 18:54:28 GMT

Have questions about what it means to seek financial advice? Womack Advisers have the answers for you – with over 30 years of experience in Edmond, OK.

What Is the Role of a Financial Adviser?

A financial adviser is dedicated to providing you with sound financial advice based on your current monetary situation, the market, and economic forecasting.

They will help you make tricky financial decisions by providing you with answers to questions, additional information about what certain financial products are, and provide advice and recommendations that help you further your goals in life.

Any good financial adviser will have your best interests in mind, becoming your personal confidant when it comes to both short-term and long-term goals.

Whether you need help with budgeting, making sense of stocks and bonds, understanding tax laws, or making decisions about investments, the team at Womack Advisers are here to help you start planning for life, achieving your goals and securing a healthy relationship with your wealth.

How Much Money Should You Have Before Hiring a Financial Adviser?

While there is no true minimum that you need to seek professional advice about your finances, your options expand with the more you have in assets.

Investible assets may include cash on hand, credit, and physical collateral; all of which should typically reach $100,000 in total value.

Individual advisers you work with may require a minimum amount to work with you so they understand the limits of the assets from the start.

How Do You Know If Your Financial Adviser Is Good?

The success of your financial adviser’s previous clientele will say a lot about how good they are as a professional.

At Womack Investment Advisers, Inc., our team takes the time to work with you and take a holistic look at your financial health.

This allows us to determine the best path forward for your current assets to help you reach your goals, customizing a financial strategy for your future.

What Is a Good Return for a Financial Adviser?

The exact number of what a “good return” means for you will vary based on your financial goals.

At the bare minimum however, it is important that you make your money back. Most returns are calculated based on investment portfolio returns as it is the easiest data point to capture, in which case, a return of 1.5% - 4% is recommended, though you may see different returns based on your goals and the flexibility of your current assets.

Need a Financial Adviser? Talk to Womack

The world of finance can be difficult to navigate, and you have enough to worry about in life. Let us help you make sense of these decisions and terminology around your financial health and start planning for wealth.

Centrally located in Edmond, OK, our team is dedicated to helping you start your family life or retirement off right with proper wealth management and financial advice services.

Our team holds your best interests in mind, maintaining a strong fiduciary duty to you. In our small business, we treat you like a neighbor and as a part of our family. When you work with Womack, you’ll understand why.

Get in touch with our team today to schedule your free consultation with a financial adviser today.

(Essential Guide) Estate Planning | Womack Advisers 2022

Tue, 04 Jan 2022 19:16:50 GMT

Curious about what it means to have an estate plan? Talk to the professionals with over 30 years of experience at Womack Investment Advisers, Inc. today to learn more.

What is the Main Idea of Estate Planning?

In the simplest form, an estate plan is a way to ensure that all your assets are accounted for after you pass. Despite not being able to handle these assets yourself at the time, it will record the list of beneficiaries who are listed as receiving these assets.

When Should You Do Estate Planning?

It is never too early to start your estate plan. While you might not have a lot of assets, and you may not have a proper estate, anyone can have an estate plan if they have assets of value to leave their next of kin. You should consider filing an estate plan when you are ready to have a family, when you are considering retirement, or if you find yourself with health problems.

Who Should Have an Estate Plan?

Anyone can have an estate plan even if you do not have a proper estate. While the name of the document may be outdated, it still stands as an important set of documents to ensure your valuable assets – such as vehicles, property, brokerage accounts, or other assets – go to the right loved ones.

An estate plan can not only ensure that your wishes are established, but that your assets are listed and covered so that none are overlooked. This estate plan can be filed and updated at any point in life. This document is important to maintain periodically as relationships change in your life.

What is the Order of Inheritance?

If you don’t have a will or estate plan in place, the order of inheritance defaults to the closest relatives unless otherwise specified by a will. The exact order may vary by state, however, the next of kin are typically considered to be your surviving spouse, if applicable, followed next by your biological or adopted children.

Grandchildren are next in line to inherit assets, followed by your parents, siblings, and so on until the family line widens and extends, typically ending with your cousins, if you have any.

If you want to control the order of inheritance, it is important to define this in your will. In some estate plans, it may also be outlined for specific assets, however, it is most often done as a part of the will.

Discuss Your Plans with Womack Advisers

At Womack Investment Advisers, Inc., our team is dedicated to providing you with the industry’s best financial advice, helping you plan for the future and ensure your estate assets are dealt with how you want them to be. It’s never too early to start your estate plan, even if you don’t have an estate.

Located in Edmond, OK, our team is proud to provide estate planning services for our neighbors in and around Oklahoma. We’ve helped dozens of clients achieve their lifelong goals and live a happier, more satisfied life knowing they are in good hands.

It’s time to discuss what you want out of life. Give us a call today to set up your free consultation and see how we can help you achieve your goals in life.

Edmond, Oklahoma – Financial Advice and Planning | Womack Investment Advisers, Inc.

Wed, 29 Dec 2021 18:36:19 GMT

Womack Advisers is located in the heart of Edmond OK at 1366 E 15 ^th St. We are proud of our city, and are here as your neighbor to help you plan for life.

There is always something to do in Edmond, Oklahoma.

Whether you are enjoying the summer at the Pelican Bay aquatic center, or having dinner at the North Western Avenue plaza, this small city never disappoints with plenty of activity and a bustling culture.

You don’t have to go far to find true hospitality, enjoy a night out on the town, or explore the sights of Arcadia Lake and other natural areas.

Just north of Oklahoma City, you don’t have to go far to experience the excitement and fun of major festivals and events, with a short commute home to a quiet and comfortable hometown.

At Womack Investment Advisers, Edmond is our hometown and there are plenty of reasons to stay, including the wonderful neighbors we’ve met over the years.

What Is Edmond Oklahoma Known For?

Edmond, OK is known for a variety of things, but many people agree that the natural sights and the small hometown feel of Edmond is superior to many other areas in Oklahoma, making it an excellent retirement destination.

Beyond good food and compassionate neighbors, Edmond is also known for superior education, home to one of the top school districts in the state.

What is the Weather Like in Edmond?

As a city in the heart of Oklahoma, Edmond receives all four seasons with fairly equal proportions, giving residents the southern comfort of warm summers, with the refreshing coolness of a short winter. While the city is in the risk zone for tornadoes, precautions are in place to provide safety during strong storm seasons.

Is Edmond Oklahoma a Good Place to Retire?

Edmond, Oklahoma is an excellent place to retire , with plenty of natural sights and urban entertainment to be had. Dog lovers especially will love the Miki’s trail park, a dedicated space for dogs to roam around and play while you get your exercise.

For the nature lover, Edmond also has beautiful sights during any season, whether you’re visiting Mitch Park or the famous Arcadia Lake. History buffs will love getting involved with the historical society and browsing the museum collection, while others might prefer the Clauren Ridge vineyard.

No matter what your preferred activities are, Edmond has a lot to offer during retirement, making it an excellent choice for anyone.

Let Womack Advisers Help You Plan for Life

At Womack Advisers, we understand that you have life goals, whether it’s living simply or traveling and seeing the world. We take pride in serving our Edmond, OK neighbors with professional and reliable planning and advisory services, whether you need help with your estate, retirement, or finances.

As a small-town business with over 30 years of experience, we strive to do our best for our clients and neighbors, which is why our advisors maintain a strict fiduciary duty, putting your interests first with a bespoke approach to your needs.

For your retirement planning, financial advice, and estate planning needs, don’t work with just anyone. Work with Womack Investment Advisers, right here in the heart of Edmond, Oklahoma.

Give us a call today and see how we can help you achieve your goals in life.

What Exactly Is Fast Fashion?

email@womackadvisers.com (Greg Womack) — Mon, 27 Dec 2021 21:25:05 GMT

While most adult readers of an economic situation report such as this one would be forgiven for never having heard of a company named “Shein”, there’s a good chance the young women in their families have. The Chinese clothing retailer and manufacturer Shein has exploded in growth over the past year and half.

Google data shows it surpassed other major online brands like H&M, Zara, and Asos. Shein specializes in what analysts call “fast fashion”—a term meaning designs from fashion shows and runways that it then makes available to the public almost instantly. Shein’s tight control of production and relatively small batch manufacturing of selected items tied with its super-low prices results in a powerful feedback loop with social media influencers. On a recent day, an astonishing 8,895 new products were added—and 9,634 were added the day before!

How Can You Protect Your Financial Health?

email@womackadvisers.com (Greg Womack) — Tue, 21 Dec 2021 22:11:14 GMT

4 Steps to Protect Your Financial Health Today and Tomorrow

Way, way back at the beginning of the Common Era, Epictetus offered some advice that remains relevant today: ¹

“It's not what happens to you, but how you react to it that matters.”

In 2021, a lot has changed – and Americans are reacting. We’re adapting to pandemic conditions, hoping for economic improvement, positioning for financial market uncertainty, and coping with a lot of stress.

One way to address stress is to take positive action by conducting a year-end review of your financial plan. That may not sound like it will reduce your stress but taking control of something you can control may really help. You’ll be able to start the new year with confidence, knowing exactly what you need to do to protect your financial health today and tomorrow. Our financial planners in Edmond, Oklahoma are here to help our neighbors...

These four steps can help you get started:

1. Assess your work and income situation

Coronavirus has rapidly changed the business landscape. Some companies are at a standstill while others are busier than ever. Earlier in the year, Gartner Research reported: ²

“Dramatic changes in customer demand are putting organizations under huge stress: Sharp declines in demand present serious financial challenges to many businesses, while those facing demand surges and resource shortage risk disappointing and disengaging customers.”

Think about your industry and your company. Will coronavirus have a short- or longer-term impact? How could your income be affected? If it could be affected, are there steps you need take to reduce income risk? What are they?

2. Review your spending and expenses

The end of the year is a good time to review spending and expenses, and make sure your spending plan is ready for the new year. If your income will be significantly different in the new year, your spending plan may change.

Typically, a spending plan keeps spending and saving aligned with income. If your income will be lower next year, you may need to reduce the amount you spend and save. If your income increases, you may be able to increase the amount you spend and save.

If you cannot find a way to align income and spending, taking a distribution from a retirement plan may be an option. The Coronavirus Aid, Relief, and Economic Security (CARES) Act eased restrictions on early distributions from eligible workplace retirement plans and IRAs.

Retirement accountholders may be able to take distributions of up to $100,000 from plan accounts without owing penalty taxes. Income taxes on the amount distributed could be paid over three years. This option may help people who have experienced adverse financial consequences fill income gaps because of the coronavirus. ³

3. Evaluate your financial plans

It’s important to review your current financial plan to see whether and how progress toward your financial goals will be affected by changes in spending and saving. Sometimes, looking at current spending and saving decisions through the lens of your financial goals can help you decide how to modify your plans.

For instance, when income falls, some people choose to save less, knowing it will push their financial goals further into the future. Others decide to spend less so they stay on track to reach their goals. Often, people decide on a combination of reduced spending and reduced saving.

The choices you make depend on your circumstances. A family with students in college may not be able to significantly reduce spending, although more abundant financial aid may become available to them.

Similarly, if a family member has significant healthcare issues, spending reductions may be limited and they may have to save less. It’s the reason many plans may offer risk management solutions like long-term care or disability income insurance.

If you plan to take a CARES Act distribution, consider how it will affect your retirement goals. Do you have enough time before retirement to rebuild your savings? Will you need to retire later? Will you need to spend less in retirement? The answers to these questions may help you decide whether to take a distribution and, if you do take one, how much to withdraw.

4. Conduct year-end tax planning

Sound tax planning can help you reduce the amount you owe in taxes. This year, there may be additional considerations, including:

The Coronavirus Aid, Relief, and Economic Security (CARES) Act tax provisions. Individuals should understand the refundable tax credit, which is also known as your stimulus check. The amount received was a credit against tax liability. ⁴

Tax Cuts and Jobs Act provisions could end sooner than 2025. Some generous tax provisions were made possible by the Tax Cuts and Jobs Act, which is set to expire in 2025, but could change before then depending on the government.

The Act is the reason the estate tax exemption is higher than it has been before. If you plan to gift large amounts or transfer significant wealth through your estate plan, confirming your plans this year could help you take advantage of current circumstances. Accounting Today reported: ⁵

“The historically low interest rates and lifetime gift and estate tax exemptions present a powerful estate-planning opportunity. Many estate and gift tax strategies hinge on the ability of assets to appreciate faster than the interest rates prescribed by the IRS. In addition, the economic fallout of COVID-19 is depressing many asset values. There’s a small window of opportunity to employ estate-planning techniques while interest rates are still low and the lifetime gift exemption is at an all-time high.”

Unemployment benefits are taxable. Any unemployment benefits received are considered to be taxable income. If you did not request that taxes be withheld, you may need to set aside funds to pay any taxes due, reported CNBC. ⁶

Having a discussion with your tax or financial professional may help you minimize taxes owed this year.

2021 has been a year for the record books, often in unwelcome ways. The way you react to what has happened may significantly affect your financial health and well-being over the short-term and your ability to reach your financial goals over the long-term. Let Womack Investment Advisers, Inc be the catalyst to improving your purview of your finances, and your opportunity for growing your wealth.

If you would like help with your financial plan, please get in touch .

Sources:

¹ https://www.brainyquote.com/quotes/epictetus_149126

² https://emtemp.gcom.cloud/ngw/globalassets/en/doc/documents/720647-covid-19-outbreak-short-and-long-term-actions-for-cios.pdf (or go to https://s3.console.aws.amazon.com/s3/object/peakcontent?region=us-west-2&prefix=Peak+Documents/Dec_2020_Gartner-Coronavirus_Outbreak-Short_and_Long_Term_Actions_for_CIOs-Footnote_2.pdf)

³ https://www.irs.gov/newsroom/coronavirus-related-relief-for-retirement-plans-and-iras-questions-and-answers

⁴ https://taxfoundation.org/cares-act-senate-coronavirus-bill-economic-relief-plan/

⁵ https://www.accountingtoday.com/list/top-10-year-end-tax-planning-tips (or go to https://peakcontent.s3-us-west-2.amazonaws.com/Peak+Documents/Dec_2020_AccountingToday-Top_10_Year-End_Tax_Planning_Tips-Footnote_5.pdf)

⁶ https://www.cnbc.com/2020/11/05/you-may-need-to-set-aside-money-for-taxes-if-youve-taken-these-steps.html (or go to https://peakcontent.s3-us-west-2.amazonaws.com/Peak+Documents/Dec_2020_CNBC-You_May_Need_to_Start_Setting_Aside_Money_for_Taxes-Footnote_6.pdf)

Margin Debt Balloons Over the Past 20 Months

email@womackadvisers.com (Greg Womack) — Mon, 20 Dec 2021 16:33:59 GMT

Borrowing money to buy stocks adds buying pressure during a move up, but can be catastrophic on the way down. One of the worst phrases a trader will ever hear is ‘margin call’—when a broker demands more cash to cover a losing position or else have it forcibly liquidated.

In down markets, these forced liquidations contribute to the crashes that often occur near bottoms. Adding to the alarm bells already ringing, margin debt for the overall market - the amount of money investors have borrowed to buy stocks - has ballooned over the past 20 months. Despite the slight downtick of $17 billion in November, margin debt remains at a gargantuan $918.6 billion.

Inflation Hits Highest Level Since 1982

email@womackadvisers.com (Greg Womack) — Wed, 15 Dec 2021 17:52:56 GMT

The Markets

Inflation met expectations. Inflation is something we follow to determine the value of our money. It's defined as, "a general increase in prices and fall in the purchasing value of money" and it can greatly effect our investment strategy and the way we live our day-to-day lives.

When the Bureau of Labor Statistics released the Consumer Price Index (CPI) last week, it showed that inflation was at levels last seen in 1982. In November, prices were up 0.8 percent month-to-month and 6.8 percent year-to-year.

“It was the blowout, superhot inflation number that everyone was expecting—and it was met with a shrug,” reported Ben Levisohn of Barron’s . “The major indexes, for their part, rose a touch on Friday to finish what turned out to be a fantastic week: The S&P 500 gained 3.8% to hit a new high, while the Dow Jones Industrial Average rose 4.0% and the Nasdaq Composite gained 3.6%.”

The bond market’s response to the CPI was unexpected, as well. “Indeed, Treasury inflation-protected securities were saying price pressures in future years will be abating instead of getting worse,” reported Randall W. Forsyth of Barron’s .

Forsyth was referring to the breakeven rate, which is the difference in the yields of Treasuries and the yields of inflation-protected Treasuries with the same maturities. The breakeven rate is a measure of investors’ inflation expectations for the next five years. On Friday, the 5-year Breakeven Inflation Rate was 2.76 percent. That was below its November high of 3.17 percent.

The financial markets’ tepid response to the CPI sparked debate about whether inflation has peaked.

No matter which side of the argument you come down on, “The surge in inflation since the start of 2021 means that it is guaranteed to remain elevated in annual terms for a while to come. A relatively optimistic forecast would have inflation returning to its pre-pandemic norm only at the very end of 2022,” reported The Economist .

S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods. Sources: Yahoo! Finance, MarketWatch, djindexes.com, Federal Reserve Bank of St. Louis, London Bullion Market Association. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

Starbucks Workers Vote to Unionize at Buffalo, NY Store

email@womackadvisers.com (Greg Womack) — Tue, 14 Dec 2021 15:11:53 GMT

A Starbucks location in Buffalo, NY, voted for unionization during the past week. It was the first time a union won the right to represent Starbucks workers in that company’s history.

Starbucks has an army of 235,000 workers in the U.S. and Starbucks management has spent significant resources over the years successfully dissuading its stores from unionizing.

Is this a sign of a turn in the fortunes of union membership? Over the past 50 years, private sector unionization has collapsed. Private sector unionization has dropped by almost three fourths, from about 24% in the early 70’s to about 6% currently. If the Starbucks vote is a sign of things to come, there’s a long road back to previous glory! (Chart from chartr.co)

Weekly Market Update

email@womackadvisers.com (Greg Womack) — Wed, 08 Dec 2021 22:22:50 GMT

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Twitter Daily Active Users

email@womackadvisers.com (Greg Womack) — Mon, 06 Dec 2021 17:14:10 GMT

This week Jack Dorsey resigned from his role as CEO of Twitter. For over 15 years Dorsey has been an iconic figure in Silicon Valley. Under his leadership, Twitter implemented wide censorship on its platform, which appeared to many to be mostly directed at conservatives. To some, he is “Saint Jack”, to others, “Jack the Ripper”.

Despite his controversial tenure, what isn’t up for debate is the steady consistent growth Twitter has shown over the past several years. Daily active users almost doubled from 109 million in 2017 to over 210 million in 2021.

Weekly Market Update

email@womackadvisers.com (Greg Womack) — Wed, 01 Dec 2021 19:49:15 GMT

The Markets

COVID-19 strikes again.

Coronavirus cases have been on the rise in Europe, climbing from about 700,000 new cases a week in September to 2.6 million a week in November, reported Richard Pérez-Peña and Jason Horowitz of the New York Times. As Thanksgiving approached, there was concern that travel and togetherness could increase the number of cases in the United States, too, creating stress on already taxed healthcare systems. Jamie Smyth and Caitlin Gilbert of the Financial Times explained:

“…what was expected to be a celebration has become fraught with danger in some Midwestern states, where vaccination rates are low and COVID-19 cases are rising rapidly after a summer lull…Nationally, cases have increased by nearly 30 percent since the beginning of the month…”

Financial markets took the fall surge in stride. They were less sanguine when news broke last week that a new variant of coronavirus, called “omicron,” had been identified in South Africa and was spreading.

Little is currently known about omicron. In Nature, Ewan Callaway reported the variant has a significant number of mutations, which is concerning. Scientists are tracking omicron’s spread and working to “understand the variant’s properties, such as whether it can evade immune responses triggered by vaccines and whether it causes more or less severe disease than other variants do.”

Global stock indices and oil prices dropped sharply on Friday, which was a holiday-shortened trading day, reported Chris Prentice and Carolyn Cohn of Reuters. U.S. Treasury bonds rallied as bond prices were pushed higher by investors seeking lower-risk opportunities. FactSet reported:

“[The Standard & Poor’s 500 Index] logged its worst day since late February and all major indices finished the week in negative territory. All sectors ended lower with moves highly influenced by today's [COVID-19] variant concerns…Healthcare held up best...”

Although it was overshadowed by news of a new coronavirus variant, the pace at which the Federal Reserve will tighten monetary policy (to keep inflation in check) also was on investors’ minds last week. Reuters reported that strategists at Goldman Sachs expected the Fed to tighten faster than anticipated, suggesting that interest rates could move higher sooner.

Seasonal Workers Hired by Amazon

email@womackadvisers.com (Greg Womack) — Mon, 29 Nov 2021 18:44:25 GMT

At the end of September, Amazon employed almost 1.5 million people around the world, with nearly a million in the U.S. alone. That translates to roughly 1 in every 150 American workers getting a paycheck from Jeff Bezos and company. During the holidays that number goes up even more. This year, Amazon announced it would take on another 150,000 seasonal employees—that’s essentially the equivalent of hiring the entire workforce of a company like Nike - twice . (Chart by chart.co)

Infrastructure and Economic Growth

email@womackadvisers.com (Greg Womack) — Wed, 24 Nov 2021 17:36:40 GMT

The bipartisan Infrastructure Investment and Jobs Act (IIJA) was signed into law last week, and the Build Back Better Act (BBBA) passed the House of Representatives and moved on to the Senate.

For decades economists have tried to determine how spending on infrastructure – roads, bridges, canals, railways, broadband and other projects – contributes to economic growth. There are diverse opinions on the subject. Here are a few:

“Increasing infrastructure investment has significant macroeconomic benefits. Near term it has a large so-called multiplier—the increase in GDP for a dollar increase in investment. It is among the highest compared with other types of federal government spending and tax policy… In a full-employment economy, the GDP multiplier on traditional infrastructure is estimated to be 1.23 one year after the investment, and 1.12 for nontraditional infrastructure. It is higher when the economy is operating below full employment.”

— Mark Zandi and Bernard Yaros, Jr., Moody’s Analytics, July 21, 2021

“Infrastructure spending by government can boost long-run economic growth by making an economy more productive, in part by improving connectivity – both physical and digital…The point here is that there can be diminishing returns from spending…I view infrastructure investment primarily as a way of boosting the economy’s speed limit. Government should focus on high-value projects.”

— James Pethokoukis, American Enterprise Institute, April 2, 2021

“A new era of large-scale infrastructure investment would necessarily be less revolutionary than the railways and roads of the past. Yet it might nonetheless prove surprisingly transformative in its direct economic impact, its knock-on effects on private industry—and in the psychological spur it provides to a country that could do with a bit of reinvigoration and renewal.”

— The Economist, May 1, 2021

“Finally, even if infrastructure investment had no impact on employment, productivity, and growth, it’d still deliver public goods that should be available to all but that may not be profitable to produce privately (such as rural broadband).”

— Marcela Escobari, Dhruv Gandhi and Sebastian Strauss, Brookings Institute, March 17, 2021

The IIJA will invest approximately $1.2 trillion, including $550 billion in new spending, on infrastructure projects across the United States. IIJA is expected to increase the deficit by about $256 billion over the next 10 years, according to the Congressional Budget Office.

Profits? We Don’t Need No Stinkin’ Profits!

email@womackadvisers.com (Greg Womack) — Mon, 22 Nov 2021 19:55:00 GMT

To paraphrase the famous line from the Humphrey Bogart movie “The Treasure of the Sierra Madre”, recent IPOs seem to be saying “Profits? We don’t need no stinkin’ profits!” Rivian Automotive, a maker of electric “adventure vehicles” based in Irvine California recently went public with an eye-watering first-day valuation of $105 billion. This is a higher valuation than both Ford, whose valuation is $78 billion, and GM at $90 billion.

There’s just one slight problem - Rivian does not make a profit. In fact, according to Professor Jay Ritter at the University of Florida’s Warrington College of Business, in the last year only about 20% of IPO’s were by companies that actually made money. This is a complete reversal since the 80’s, when 80% of IPOs were profitable. And it is reminiscent of 2000, when a similarly tiny percentage of IPOs were profitable - right before the dot.com crash.

The U.S. Federal Reserve and Uncertainty About the Nature of Inflation

email@womackadvisers.com (Greg Womack) — Wed, 17 Nov 2021 19:22:56 GMT

That’s the highest level for inflation in 30 years, according to The Economist, and well above the United States Federal Reserve’s policy goal of two percent inflation over the longer term.

Uncertainty about the nature of inflation has left the U.S. Federal Reserve wedged in an uncomfortable policy position. The Economist explained:

“As inflation has accelerated economists and officials have debated whether it is a transitory phenomenon—reflecting overstretched supply chains—or a more persistent problem. It is far more than an academic debate. If inflation is short-lived, the right move for the Federal Reserve would be to look through it, aware that jacking up interest rates may do more harm than good. If, however, inflation is stubbornly high, the central bank is duty-bound to tame it,”

Taming inflation could mean tapering bond buying and raising rates more quickly than planned and higher rates tends to slow and, sometimes, stall economic growth.

When making policy decisions, Personal Consumption Expenditures (PCE) is the Fed’s preferred inflation gauge. The readings for the CPI and the PCE rely on information from different sources.

“The CPI uses data from household surveys; the PCE uses data from the gross domestic product report and from suppliers. In addition, the PCE measures goods and services bought by all U.S. households and nonprofits. The CPI only accounts for all urban households,” reported Fanglue Zhou of Callan Associates.

PCE data will be released on November 24.

Major U.S. stock indices retreated a bit last week, according to Ben Levisohn of Barron’s, leaving the Standard & Poor’s 500 Index up 24.7 percent year-to-date. The yield on 10-year U.S. Treasuries rose last week.

How Much Money Did Apple Make Today?

email@womackadvisers.com (Greg Womack) — Mon, 15 Nov 2021 15:52:56 GMT

Apple is a money-making machine of astounding proportions. In the time it took you to read that sentence, Apple brought in $20k. And by the end of the day, Apple will have made a billion dollars in revenue – just today! Thehustle.co produced the graphic below showing the astounding rate at which Apple racks up sales revenue. It is breathtaking.

The "Infrastructure Week" Curse is Broken!

email@womackadvisers.com (Greg Womack) — Fri, 12 Nov 2021 16:13:56 GMT

Curses often offer explanations for disappointments. The Billy Goat curse on the Chicago Cubs reportedly kept the team from winning a World Series for more than a century. Every actor is wary of the curse of Macbeth, which holds that the play is cursed and brings bad luck to those who perform it.

During the past few years, the term “Infrastructure Week” appeared to be cursed. Every time the White House planned an Infrastructure Week, it was overshadowed by more urgent events, according to Emily Cochrane and Eileen Sullivan of The New York Times. It was concerning because America’s infrastructure isn’t as sound as it once was. The American Society of Civil Engineers (ASCE) has been issuing a Report Card on America’s Infrastructure since 1998, and the best grade earned was a C in 1998.

Last week, the apparent curse was broken when the House of Representatives passed the Infrastructure Investment and Jobs Act (IIJA) with bipartisan support. The bill includes:

$110 billion to build and repair roads and bridges across the country, fund research and relieve congestion, reported Katie Lobosco and Tami Luhby of CNN.
$65 billion for power and water system improvements, including building new power lines, expanding renewable energy and upgrading water infrastructure.
$66 billion for passenger and freight rail systems.
$65 billion for broadband internet, particularly expanding broadband availability in rural areas and low-income communities.
$46 billion for flooding, coastal and climate resiliency that helps cities and states prepare for droughts, wildfires, floods and other climate issues, reported the ASCE.
$42 billion to update ports, waterways and airports.
$15 billion for electric vehicle charging stations and zero-emission school buses.

The IIJA will be funded by repurposing unspent coronavirus relief money and imposing tax-reporting requirements on cryptocurrencies. The infrastructure bill is expected to increase the deficit – the difference between the amount the United States spends and how much it takes in each year – by $250 to $350 billion over 10 years, depending on who is doing the math.

Feeling Bullish

email@womackadvisers.com (Greg Womack) — Wed, 10 Nov 2021 17:05:17 GMT

The Markets

Feeling bullish…

Investor bullishness ticked higher last week on all four investor sentiment gauges tracked by Barron’s. Investor optimism may have been fanned by positive financial and economic news. For example, last week:

The jobs report was better than expected. Last week, the Bureau of Labor Statistics (BLS) reported that 531,000 new jobs were added in October, lowering the unemployment rate to 4.6%. In addition, the employment numbers for August and September were better than previously reported. The BLS Employment Diffusion Index measures the breadth of employment gains across the economy. It rose from 63.6 in September to 71.8 in October for private industry, and from 57.3 to 70 in manufacturing. The increase suggests that job gains were spread across diverse industries rather than concentrated in specific ones.

Central banks took a measured approach to policy changes. Investors who were concerned that central banks might pull back stimulus too soon were reassured last week. The U.S. Federal Reserve announced that it will begin tapering its bond buying program, and that the Federal Open Market Committee is not talking about raising rates yet, reported MarketWatch. In addition, the Bank of England surprised investors by not raising rates last week, reported Elliot Smith of CNBC.

Corporate earnings remained strong. Companies’ profits increased during the third quarter. So far, 81% of the companies in the Standard & Poor’s 500 Index have reported a positive earnings surprise, reported John Butters of FactSet. (A positive earnings surprise occurs when earnings are better than analysts expected.) So far, the blended earnings growth rate for the S&P 500 was 39.1 percent in the third quarter.

Major U.S. stock indices finished the week at record highs, again, according to Randall W. Forsyth of Barron’s. ⁹ U.S. Treasuries rallied, too.

The average price of a new vehicle has spiked about 25%

email@womackadvisers.com (Greg Womack) — Mon, 08 Nov 2021 15:53:05 GMT

The average price of a new vehicle has spiked about 25% since the start of the pandemic, from about $35,000 to a whopping $44,000, according to auto data firm J.D. Power. Shortages of key materials, such as semiconductors, have not only limited the number of vehicles being produced, but also incentivized automakers to build only the most expensive, highest-trim versions of their vehicles.

The result: automakers and dealers are making enormous amounts of gross profits per vehicle sold in their showrooms in a “take or leave it” scenario. In October, dealers made on average $5,129 per unit in gross profit, including contributions from finance and insurance (F&I) sales, smashing the prior record and up an amazing 75% from the same time last year.

Are You Ready For The November Holidays

email@womackadvisers.com (Greg Womack) — Fri, 05 Nov 2021 19:28:57 GMT

ARE YOU READY FOR THE NOVEMBER HOLIDAYS? November is chock full of holidays. Thanksgiving, Veteran’s Day, Dia De Los Muertos, Diwali, Hanukkah, and Giving Tuesday are widely celebrated, and there are a significant number of less widely celebrated holidays on the calendar, too. These include:

World Vegan Day: Celebrating the vegan lifestyle (November 1).
National Sandwich Day: Celebrating all sandwiches, from peanut butter and jelly to BLTs (November 3).
National Stress Awareness Day: It’s a day to begin to identify, manage, and lower stress in your personal and professional lives (November 3).
World Tsunami Awareness Day: Within a decade, almost half of the world's population will live in coastal areas that are vulnerable to tsunamis. The United Nations reports that having plans and policies in place can help manage the effects (November 5).
National Redhead Day: Celebrate all of the red-headed people in your life (November 5).
World Freedom Day: Commemorating the fall of the Berlin Wall, as well as the end of communist rule in Central and Eastern Europe (November 9).
Marine Corps Birthday: Celebrating the men and women who serve in the U.S. Marines (November 10).
World Kindness Day: Promoting the idea that kindness and compassion has the power to build and unite us (November 13).
National Absurdity Day: Celebrate the ridiculous, unreasonable, and crazy in everyday life and throughout history (November 20).

Here are two tree things you can talk about on National Absurdity Day: (1) Tulips were once more valuable than gold; and (2) There are almost 100 holidays in November.

Renew. Regenerate. Refocus.

email@womackadvisers.com (Greg Womack) — Wed, 03 Nov 2021 15:07:54 GMT

The Markets

The road to recovery is slow and bumpy.

Last week, we learned that economic growth slowed in the third quarter as a new wave of COVID-19 surged across the United States, reported The Bureau of Economic Analysis. Gross Domestic Product (GDP), which is the value of all goods and services produced in the United States, increased by 2 percent annualized in the third quarter.

Consumer spending dropped sharply during the period. The change may reflect the limited availability of goods due to supply-chain issues, a reluctance to pay higher prices, or a drop in disposable personal income. Jeff Cox of CNBC reported:

“Spending for goods tumbled 9.2%, spurred by a 26.2% plunge in expenditures on longer-lasting goods like appliances and autos, while services spending increased 7.9%, a reduction from the 11.5% pace in [the second quarter]. The downshift came amid a 0.7% decline in disposable personal income, which fell 25.7% in [the second quarter] amid the end of government stimulus payments. The personal saving rate declined to 8.9% from 10.5%.”

Despite slower economic growth and lower consumer spending, many companies remained highly profitable during the third quarter. At the end of last week, John Butters of FactSet reported:

“At this point in time, more S&P 500 companies are beating EPS [earnings-per-share, which is a measure company profits] estimates for the third quarter than average, and beating EPS estimates by a wider margin than average…The index is now reporting the third highest (year-over-year) growth in earnings since [second quarter] 2010. Analysts also expect earnings growth of more than 20% for the fourth quarter and earnings growth of more than 40% for the full year.”

It appears that public companies remain adaptable and resilient despite the ongoing challenges created by the pandemic. Last week, the three major U.S. stock indices finished the week at record highs, according to Ben Levisohn of Barron’s . The Treasury yield curve flattened as yields on longer-term U.S. Treasuries also moved lower.

Tesla Exceeds $1 Trillion Market Cap - WIA

email@womackadvisers.com (Greg Womack) — Mon, 01 Nov 2021 20:39:59 GMT

Shares of Tesla surged over 22% this week, pushing the company’s market capitalization to over $1.01 trillion.

Tesla now has a price-to-earnings (P/E) ratio of over 330 in an industry where P/E ratios of 10 to 30 are typical. With its current market cap, Tesla is now worth as much as the next 10 most valuable global automakers combined, as this chart from wolfstreet.com illustrates. Ridiculous, or prescient? Time will tell.

What Do You Know About Bonds?

email@womackadvisers.com (Greg Womack) — Fri, 29 Oct 2021 17:46:35 GMT

WHAT DO YOU KNOW ABOUT BONDS? The bull market in bonds has persisted for 40 years. In September 1981, the interest rate on 10-year U.S. Treasury bonds was 15.8 percent. In 2020, the interest rate bottomed at 0.52 percent and has moved higher. Whether the bull market ends or continues, it’s important for investors to know bond basics. Test your knowledge of bonds by taking this brief quiz.

1) In general, a bond is:

A. A loan that an investor makes to a company, a government, or another organization

B. An investment that pays a specific amount of interest over a set period of time

C. An investment that is expected to return an investor’s principal at maturity

D. All of the above

2) If interest rates rise, what will typically happen to bond prices?

A. Prices rise

B. Prices fall

C. Prices remain stable

D. There is no relationship between interest rates and bond prices.

3) Bonds are called many different names. Which of the following is not an alternative name for bonds?

A. Fixed income

B. Notes

C. Equities

D. Debt securities

4) The interest rate on floating-rate notes adjusts as rates change. When might it be advantageous to have these bond investments in a portfolio?

A. When interest rates fall

B. When interest rates rise

C. Anytime

D. Never

If you have any questions about the quiz or about bonds and the role they play in your portfolio, give us a call or click here to visit Greg's Calendar to schedule a quick phone call.

Weekly Focus – Think About It

“Don't think money does everything or you are going to end up doing everything for money.”

—Voltaire, philosopher

Answers: 1) d; 2) b; 3) c: 4) b

It's a MESSI!

email@womackadvisers.com (Greg Womack) — Wed, 27 Oct 2021 15:58:09 GMT

It’s MESSI!

No, this commentary is not about Lionel Messi, the Argentine soccer phenom who is widely regarded one of the greatest footballers of all time. However, it is about something that economists say may be as rare as Messi’s talent: Moderating Expansion with Sticky Supply-driven Inflation (MESSI).

You can see why we prefer the acronym.

MESSI is a type of inflation that occurs when “strong, but cooling demand is met by constrained, but accelerating supply, leading to transitory, yet sticky inflation.” ¹ The coronavirus pandemic may have produced just the right circumstances, according to Gregory Daco of Oxford Economics.

“Initially, extreme health conditions, severe social distancing measures, and unprecedented fiscal transfers to households supported a surge in spending on goods. With domestic and international supply struggling to rebound quickly and inventories being run down, prices for goods surged. Later, as the health situation improved, the re-opening of the economy led to greater demand for services which also ran into the tight supply conditions, leading to higher service sector inflation.”

The recent rapid rise of inflation has many people concerned that we may experience runaway inflation, which occurs when prices rise rapidly, or stagflation, which occurs when economic growth slows while inflation rises. Daco doesn’t believe either will prove to be the case:

“It’s not runaway inflation, and it’s certainly not stagflation…In the debate between transitory and runaway inflation, we have repeatedly said that the truth lies somewhere in the middle, with inflation likely to be ‘sticky but not oppressive.’”

The baseline view from Oxford Economics is that higher inflation will persist into the first half of 2022 before falling back to about two percent by the end of next year.

Time will tell.

Last week, the Dow Jones Industrial Average closed at a record high, and the Standard & Poor’s 500 Index and Nasdaq Composite also finished higher, according to Ben Levisohn of Barron’s. The yield on 10-year U.S. Treasuries also moved higher.

U.S. Inflation Rate: Transitory or Beginning of a New Monetary Trend?

email@womackadvisers.com (Greg Womack) — Mon, 25 Oct 2021 17:04:40 GMT

With inflation in the United States now more than double the Federal Reserve’s stated target of 2% inflation, economists have been at odds on whether this is ‘transitory’ or just the beginning of a new monetary trend. With the vast majority of the developed world instituting economic lockdowns and massive government stimulus to combat the COVID‑19 pandemic, it makes sense that this would fuel inflation in modernized countries with just-in-time supply chains, negligible spare capacity…and then sudden injections of massive stimulation from governments.

There is one country that stood alone bucking the global trend—Sweden. Sweden did not mandate shutdowns or lockdowns and consequently saw no need to over-stimulate the Swedish economy since everyone was still working. Now Sweden’s services inflation level is about 3 percentage points less than the U.S., and within its “normal” range.

The $64,000 question: will the US follow suit and see its inflation decline, or will the massive current and proposed stimulation continue to generate unmet demand and consequent inflation?

Pumpkins, Tombstones & Zombies, Oh My!

email@womackadvisers.com (Greg Womack) — Fri, 22 Oct 2021 15:39:11 GMT

Americans expect to spend more than $10 billion on Halloween this year, according to the National Retail Federation. That’s about $103 per consumer, although families with children spend well-above average on the spookiest night of the year.

Not all of them pay full price, though.

A purveyor of discounts dug deep into its data graveyard and unearthed the states that are most possessed by Halloween spirit. States that have been spellbound by…horror of horrors…the magic of Halloween coupons.

The spookiest section of the United States is the South, where residents purchased 37 percent of the Halloween coupons sold across the land. Southerners jumped at the opportunity to buy costumes, ghost hunts, haunted house tickets and haunted tours at low, low prices. The epicenter of the devilry was Louisiana, which accounted for 29 percent of the company’s coupon sales. The Bayou State also is home to New Orleans, which is purported to be one of the most haunted cities in the world.

The South has a taste for spooky estates to rival that of the West. Californians howl for haunting, having purchased the majority discounted ghost tours sold in the western U.S. and one of every five sold in the entire nation. The Sunshine State is also home to the infamous Winchester Mystery House, an architectural wonder that was under construction from 1886 to 1922, when its owner, Sarah Winchester, died. Rumor has it, the firearms heiress expanded continuously to keep her fear of ghosts at bay.

Sarah Winchester was originally from the Northeast, a region with a frugal reputation, although its residents purchased less than a quarter of the Halloween coupons sold across the country. Of course, if you crack the code, you’ll discover the chilling truth…Northeasterners purchased the most coupons per capita over the last five years!

The real secret, though, is that a district – not a state – is the biggest consumer of Halloween discount offers. That’s right, on a per capita basis, Washington D.C. consumes more spooky coupons than any state in the country.

Notably, the Midwest had relatively little hunger for Halloween coupons. That may be because trick-or-treating isn’t quite the same when a costume must fit over, or be covered by, a winter coat.

Is Inflation as 'Transitory' as the Federal Reserve Asserts?

email@womackadvisers.com (Greg Womack) — Mon, 18 Oct 2021 14:52:33 GMT

As prices continue to march higher for food, gas, and just about everything else, everyday people are beginning to realize that maybe inflation won’t be as ‘transitory’ as the Federal Reserve continues to assert.

According to the New York Fed’s Survey of Consumer Expectations, inflation expectations for three years from now jumped to 4.2% - the highest level in the survey dataset – and to 5.3% for one year out. But expectations for income growth are way behind expected inflation, at just 2.9%. If these expectations come true, Americans will be forced into a lower standard of living as expenses outrun incomes.

Current Mismatch in Energy Supply and Demand Across the Globe

email@womackadvisers.com (Greg Womack) — Fri, 15 Oct 2021 15:29:33 GMT

LOW ENERGY. Currently, there is a mismatch in energy supply and energy demand in many parts of the world. In some places, it is creating issues that countries haven’t experienced in some time. For instance:

In Europe, the cost to heat the average home rose about fivefold from September 2020 to September 2021, according to The Economist.

In India, where about 70 percent of electricity is generated by burning coal, coal supplies are running low, according to Arunoday Mukharji of BBC.

In China, rolling blackouts have implemented to address an electricity shortage, reported Peter Hoskins of BBC.

In Lebanon, power plants went offline over the weekend and the country is expected to be without power for several days, reported Laila Bassam of Reuters.

In the U.S., oil prices are at a seven-year high, and the price of gasoline was above $3 a gallon. In some places, it was above $5 a gallon, reported Pippa Stevens of CNBC.

There are many reasons for the current energy shortage, reported Will Englund of The Washington Post. “The economic recovery from the pandemic recession lies behind the crisis, coming after a year of retrenchment in coal, oil and gas extraction. Other factors include an unusually cold winter in Europe that drained reserves, a series of hurricanes that forced shutdowns of Gulf oil refineries, a turn for the worse in relations between China and Australia that led Beijing to stop importing coal from Down Under, and a protracted calm spell over the North Sea that has sharply curtailed the output of electricity-generating wind turbines.”

The energy shortage may be more challenging to overcome than some other types of shortages, opined The Economist, because investment in fossil fuels has been declining as the world moves toward lower emissions and greener energy sources. “The long-term challenge is to smooth out volatility as the switch to renewables continues.”

Pfizer is Projected to Double Revenue in 2021

email@womackadvisers.com (Greg Womack) — Mon, 11 Oct 2021 15:09:57 GMT

Pfizer, the world’s third largest pharmaceutical company based on prescription drug sales, is receiving a massive injection of revenue from its COVID-19 vaccine.

Pfizer projects that revenue will almost double in 2021 compared to 2020. BNT162b2, as Pfizer’s vaccine is officially called, is expected to account for more than 40% of Pfizer’s revenue for the year, dwarfing any other drug in its vast portfolio .

Can We Talk?

email@womackadvisers.com (Greg Womack) — Fri, 08 Oct 2021 18:48:41 GMT

The pandemic accelerated the adoption of autonomous checkouts at retailers. Some stores have self-checkouts, while others have installed a “combination of sensors, cameras, computer vision and deep learning” that makes it possible to eliminate cashiers and checkouts entirely, reported Anna Oleksiuk on the Intellias blog.

At the other end of the shopping-experience spectrum is the “Kletskassa,” also known as the “chatty checkout,” which was implemented by a large grocery store chain in the Netherlands. It’s a checkout line that promises conversation with the cashier.

“1.3 million people in the Netherlands are older than 75 years – and one large supermarket chain is making sure they’re not getting too lonely in their elder years. The Dutch government with its campaign, ‘One Against Loneliness,’ has galvanized organizations, towns, companies, and individuals to find solutions. The [grocery store chain]…is doing their part with its innovative chatty check outs,” reported The Good News Network.

The slower, chatty lane was developed specifically for older citizens, but may appeal to a much wider group of people on days when they have the time to engage.

TikTok Reaches One Billion Active Users

email@womackadvisers.com (Greg Womack) — Mon, 04 Oct 2021 17:57:40 GMT

Initially released just five years ago, video-sharing app TikTok announced this week that the company has hit one billion active users.

The billion-user club is very small, with the likes of Facebook, YouTube and Instagram. However, no member of the billion-user club has achieved that status in such a short time as TikTok – just 5 years!

This is significantly shorter than the time it took the others to join the club…and works out to an average 16,666,667 new users every single month for the last 5 years.

China Bans All Cryptocurrency

email@womackadvisers.com (Greg Womack) — Thu, 30 Sep 2021 14:20:02 GMT

BANNED IN CHINA . China has been trying to limit cryptocurrencies for a long time without much success. In 2019, cryptocurrency trading was banned; however, the practice persisted. Earlier this year, the Chinese government restricted banks and payment companies from providing services related to cryptocurrency transactions and warned buyers they would have no protection if they traded cryptocurrencies, reported the BBC.

Last week, China banned all cryptocurrency transactions and announced that ten regulatory agencies will work together to enforce the ban, reported Alun John, Samuel Shen, and Tom Wilson of Reuters.

Cryptocurrency is “any form of currency that only exists digitally, that usually has no central issuing or regulating authority but instead uses a decentralized system to record transactions and manage the issuance of new units, and that relies on cryptography to prevent counterfeiting and fraudulent transactions,” according to Merriam Webster.

China also banned cryptocurrency mining. Unlike many types of money, cryptocurrency is not issued by a nation’s central bank. It is mined using an energy-intensive process that “relies on many distributed computers verifying and checking transactions on a giant shared ledger known as the blockchain,” reported the BBC. Prior to the ban, China was one of the world’s largest mining centers because of its relatively low energy costs and inexpensive computer hardware.

The ban doesn’t mean China won’t have digital currency. China’s central bank is developing an official digital currency that is being tested now and is expected to be introduced more widely next year. “The ban on crypto appears designed to build support for the official digital currency while signaling to Chinese residents that financial transactions must be traceable and won’t be tolerated on decentralized blockchains,” reported Daren Fonda and Joe Woelfel of Barron’s.”

The United States also is considering how to regulate cryptocurrencies.

Optimism Declines

email@womackadvisers.com (Greg Womack) — Fri, 24 Sep 2021 15:30:01 GMT

The Markets

In recent weeks, bullish sentiment has drifted lower like sediment settling after a storm.

Every month, Bank of America (BofA) surveys global asset managers. The most recent survey, which was conducted in early September, showed that fewer managers remain optimistic about prospects for global economic growth (13 percent) or corporate profitability (12 percent). That’s half the number in the previous survey and the lowest percent since April 2020, reported Katie Martin of Financial Times.

When optimism declines, managers typically retreat to safer harbors and portfolio exposure to stock declines. That hasn’t happened this time. About one-half of the global asset managers surveyed in early September by BofA were overweight stock. Cash allocations were rising slowly and there appeared to be little appetite for government bonds, according to Financial Times.

The BofA survey also reported on the concerns of global asset managers. “Inflation is the biggest tail risk for markets, followed by taper tantrum, and COVID-19 Delta variant,” reported Bloomberg. Tail risk is the chance that a loss will result from an unusual event.

Rapidly changing conditions in China also may be a concern for investors. The Chinese government’s recent regulatory enforcement actions during 2021 have negatively affected market values of companies in education, technology, entertainment and home building sectors.

Last week, a number of financial bloggers and commentators were arrested in China, and many financial websites and blogs were scrubbed from China’s social media platforms. The change could help reduce fraud with the unwelcome side effect of eliminating non-government viewpoints, reported Financial Times.

“The uncertainty hovering over China now includes threats of tougher regulation, higher tax rates, greater charitable giving and government influencing business decisions,” reported Financial Times. A China expert cited by the newspaper commented, “‘All of that just leads to the fundamental question of what happens to that excess return that you used to be able to get as an investor in China, and how much is that disappearing or eroding in this new environment…’”

Uncertainty also is an issue in the United States where another debt-ceiling crisis appears to be looming. Jack Hough of Barron’s explained:

“As rising partisan rancor has turned everyday legislating into a death struggle, politicians have grown more willing to use the debt ceiling as leverage. A standoff in 2011 resulted in a credit downgrade to the U.S. government, a brief but angry slide in stocks, and a temporary move higher for bond yields, which accountants later said cost the U.S. government billions of dollars in added interest. The outcome was a shaky compromise, which fell apart in 2013, but Congress hadn’t yet regained its appetite for another round of fiscal chicken, so it suspended the ceiling. There have since been many extensions, the last of which expired at the end of July. The Treasury is now reaching under its couch cushions for funds. Without action from Congress, America will default by mid-October.”

Last week, major U.S. stock indices finished lower, reported Ben Levisohn of Barron’s. The yield on 10-year U.S. Treasuries moved higher.

S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized;

and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods. Sources: Yahoo! Finance, MarketWatch, djindexes.com, Federal Reserve Bank of St. Louis, London Bullion Market Association.

Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

Percentage Change in Job Openings by Industry

email@womackadvisers.com (Greg Womack) — Mon, 20 Sep 2021 16:34:07 GMT

In December of 2019 then-candidate Joe Biden famously told a crowd in a hard-hit coal mining town to “learn to code” in order to transition to “the jobs of the future”. While there has probably never been a better time to be looking for a job in the United States, it was bad advice then and even worse advice now.

Recent data from the Bureau of Labor Statistics showed that while job openings in Manufacturing and Leisure and Hospitality have surged 103% and 88% since mid-2019, respectively, jobs in the Information sector are second from the bottom—up just 11% in two years.

Will the Delta Variant Take a Toll on Economic Growth?

email@womackadvisers.com (Greg Womack) — Wed, 15 Sep 2021 14:46:38 GMT

The Delta variant could take a toll on economic growth.

There was some good news last week. The 7-day moving average of COVID-19 cases in the United States declined. The bad news was that the rate of infection remained about 99 percent higher than it was one year ago.

As Delta variant infections surged across the United States, expectations for economic growth dropped more sharply than anticipated. Lisa Beilfuss of Barron’s reported on changes to third-quarter forecasts for U.S. gross domestic product (GDP) growth.

“Goldman Sachs cut its forecast to 3.5% from 5.25%, Oxford Economics revised its call to 2.7% from 6.5%, and Morgan Stanley lowered its estimate to 2.9% from 6.5%. That’s as the Atlanta Fed’s GDPNow model predicts 3.7% for the quarter, down from 5.3% at the start of the month,” Beilfuss wrote in Barron’s.

Economists aren’t the only ones revising expectations. Some companies have cautioned that their revenue and earnings expectations were too high. Several airlines reported that cancellations have increased and ticket purchases have declined, which will impact the companies’ financial performance. In addition, some manufacturers indicated that unresolved supply chain issues and the high cost of raw materials will affect their performance for the quarter, reported Yacob Reyes and Sam Ro of Axios.

A chief investment officer cited by Axios said it’s unlikely that many more companies will cut their revenue or earnings forecasts; however, “…he does expect fewer companies to announce better-than-expected earnings when they announce Q3 results.” During the second quarter of 2021, 87 percent of companies in the Standard & Poor’s 500 Index reported better-than-expected earnings.

Last week, major U.S. stock indices trended lower, reported Al Root of Barron’s. The yield on 10-year Treasuries also finished the week higher.

All Unicorns vs. Apple

email@womackadvisers.com (Greg Womack) — Mon, 13 Sep 2021 16:41:09 GMT

A “unicorn” in business is a startup with a valuation of a billion dollars or more – so-called because they used to be “as rare as a unicorn”. Not any longer!

Floods of startups and even bigger floods of venture capital have resulted in more than 800 private startups with valuations of a billion dollars or more. Some recent “hotties” are the likes of Stripe, SpaceX, Bytedance and Epic Games. Adding up the current valuations of all 800+ unicorns comes to a staggering $2.6 trillion! A sobering thought is that all of those 800 unicorns add up to…1 Apple!

Summary of Economic Projections From The Federal Reserve

email@womackadvisers.com (Greg Womack) — Thu, 02 Sep 2021 19:32:02 GMT

“Raise your words, not your voice. It is rain that grows flowers, not thunder,” advised the Persian poet Rumi.

Last week, Federal Reserve (Fed) Chair Jerome Powell’s words helped grow the week’s equity market returns. In his speech at the Economic Policy Symposium in Jackson Hole, Wyoming, Powell confirmed that the United States economy had made substantial progress toward the Fed’s maximum employment and price stability goals. Consequently, the Fed is likely to slow and eventually stop the bond purchases that have been ensuring smooth market functioning during the pandemic.

Powell also offered assurance that the target range for Federal funds rate, which is one of the Fed’s tools for influencing short-term interest rates, will remain unchanged until “…the economy reaches conditions consistent with maximum employment, and inflation has reached 2 percent and is on track to moderately exceed 2 percent for some time.

Investors were delighted by the Fed’s stance, as well as positive data on second quarter’s economic growth and corporate earnings. The Bureau of Economic Analysis reported that gross domestic product (GDP), which is the value of all goods and services produced in the United States, increased 6.6 percent from April through June. That was an improvement on the January to March quarter when the economy grew by 6.3 percent.

Corporate earnings, which reflect companies’ profits, were also strong during the second quarter. Companies had relatively easy year-over-year comparisons to 2020’s dismal second quarter and, with almost 98 percent of companies in the S&P 500 reporting in, earnings for companies in the S&P 500 are expected to be 95.4 percent higher, year-over-year, and 79.9 percent higher when the energy sector is excluded, reported Tajinder Dhillon and Thomas Alonso of Refinitiv.

Last week, the Standard & Poor’s 500 Index closed at a record high for the 52 ^nd time in 2021, reported Lewis Krauskopf and Saqib Ahmed of Reuters. The Dow Jones Industrial Average and Nasdaq Composite also finished the week higher, as did the yield on 10-year Treasuries.

The Correlation Between Consumer Sentiment and the S&P 500

email@womackadvisers.com (Greg Womack) — Mon, 30 Aug 2021 15:33:16 GMT

The University of Michigan reported a recent plunge in its Consumer Sentiment Index. Contrary to what you might logically expect, this is actually a positive for the stock market.

Analyst Mark Hulbert notes that the American consumer is a fairly reliable contrarian stock market indicator, and calculated the data in the chart below. More often than not, large declines in consumer confidence have been followed by above-average stock market returns.

As Warren Buffett says - it is wise for investors to be “fearful when others are greedy, and greedy when others are fearful.”

Picking the Right Place to Live

email@womackadvisers.com (Greg Womack) — Fri, 27 Aug 2021 20:01:01 GMT

The COVID-19 pandemic caused many people to reconsider how and where they want to live. People relocate for a variety of reasons. They may want to be closer to family and friends, live in a more affordable place with lower taxes or have better employment opportunities.

Another reason people relocate is climate. While many people move to regions with better climates, today they also are avoiding areas with high climate risk, reported a 2021 survey from RedFin.

“About half of respondents who plan to move in the next year said extreme temperatures and/or the increasing frequency or intensity of natural disasters played a role in their decision to relocate. More than a third (36%) said rising sea levels were a factor.”

Those who planned to move and lived in the northeastern and southern U.S. were most concerned about the frequency and intensity of natural disasters, while those in the West were most concerned about extreme temperatures. The two factors tied for most serious concern in the Midwest.

The importance of climate change to relocation decisions varied by age. People age 55 and older were less likely to factor climate risk into relocation decisions, while younger respondents, especially 35- to 44-year-olds, prioritized climate risk issues.

When all respondents, regardless of whether they intended to move, were asked whether natural disasters, extreme temperatures or rising sea levels would affect their decision to buy a home, the majority said they would hesitate to buy homes in areas with these issues (79%, 75% and 76% respectively).

Home buyers aren’t the only ones thinking about climate risks. A real estate developer told Swapna Venugopal Ramaswamy of USA Today, “…real estate investors such as banks and insurance companies used climate risk data to inform their investing decisions.”

It seems that climate risk is becoming a factor in personal and business investment decisions.

Weekly Market Update

email@womackadvisers.com (Greg Womack) — Wed, 25 Aug 2021 16:34:18 GMT

Markets were shaken last week by a potent cocktail of central bank tapering and economic growth concerns mixed with coronavirus and a splash of the new Chinese privacy law.

On Wednesday, the minutes of the United States Federal Reserve’s Open Market Committee Meeting were released. They confirmed the Fed could begin tapering – buying fewer Treasury and U.S. government agency bonds – sooner rather than later, reported Jack Denton and Jacob Sonenshine of Barron’s. While that wasn’t new information, investors startled like cats surprised by cucumbers, triggering a broad sell-off.

In the United States, economic data was mixed. The U.S. Census reported that retail sales declined in July, suggesting weakening consumer demand. Normally, that’s not great news because consumer demand drives U.S. economic growth. However, with inflation at the highest level in more than a decade, lower demand could help relieve upward price pressure.

Lower consumer demand was accompanied by improving supply. Lisa Beilfuss of Barron’s reported, “…business inventories rose in June at the fastest clip since October as wholesalers and manufacturers posted solid increases and retailers saw inventories rise for the first time in three months. From a year earlier, inventories across American businesses rose 6.6%, compared with a 4.6% pace a month earlier.”

Of course, we could see supply bottlenecks again if a COVID-19 surge results in new lockdowns and continued worker shortages.

Finally, on Friday, Chinese stocks dropped sharply after Beijing announced that a new strict data-privacy law will take effect on November 1, 2021. Investors remain concerned that China’s regulatory tightening will affect other market sectors, including fintech, gaming and education, reported Hudson Lockett of the Financial Times.

“American investors’ shock at an ongoing regulatory crackdown in China points to a fundamental difference between the two countries,” reported Evelyn Cheng of CNBC. “…whereas the U.S. system is designed to let corporations influence the government, China’s system is designed to bring corporations in line with government goals.”

Major U.S. stock indices finished the week lower. The yield on 10-year U.S. Treasuries finished the week where it started.

OnlyFans Blocks Sexually Explicit Content

email@womackadvisers.com (Greg Womack) — Mon, 23 Aug 2021 21:59:38 GMT

A popular “creator” internet platform called ‘OnlyFans’, which has rocketed in popularity worldwide among millions of fans of creator-produced porn, made a shocking announcement this week. Starting October 1, porn content will be banned. There are currently an astounding 2 million content producers offering their, um, wares on OnlyFans, and the most popular among them have made huge multi-million dollar incomes.

Analysts were quick to point out the similarities to a porn ban by Yahoo!-owned ‘Tumblr’, a site that in 2018 that had over 520 million monthly visitors. Tumblr’s subsequent traffic decline was swift and unforgiving. Tumblr became a shell of its former self and relatively worthless. Yahoo! bought Tumblr in May of 2013 for $1.1 billion, saying it “promises not to screw it up.” That promise was not kept. In May of 2019, Tumblr was sold to Automattic (the owner of WordPress) for…get ready for it…$3 million. In other words, a 99.7% loss.

Emotional Investing by Generation

email@womackadvisers.com (Greg Womack) — Mon, 16 Aug 2021 16:57:10 GMT

Jimmy Dugan, the manager of the Rockford Peaches (played by Tom Hanks), famously told his crew of women ballplayers in “A League of Their Own” that “There’s no crying in baseball!” It seems, however, there’s a LOT of crying in investing – at least in some generational age brackets.

A survey of more than 1,100 individual investors by Magnify Money revealed that investors generally, and Gen-Z investors in particular, have experienced regrets over impulsive investing decisions, have lost sleep over their investments, have invested while drunk, and defied Jimmy Dugan by crying about it. Boomers are much less prone to these behaviors than the other age cohorts, but even Boomers have some regrets.

Boosting Productivity in the Aftermath of Covid-19

email@womackadvisers.com (Greg Womack) — Fri, 13 Aug 2021 16:48:02 GMT

While the United States has not yet recovered all of the jobs lost during the pandemic – 22 million were lost and 16.6 million have returned – productivity is higher than it was when more people were employed. The Economist reported:

“Though output reached a new high in the second quarter, employment remained more than 4 percent below its pre-pandemic level… . At present, America is producing more output than it managed just a year and a half ago, with roughly 6 [million] fewer workers.”

Higher productivity undoubtedly reflects the ingenuity of American businesses. The pandemic forced companies to find ways to remain productive. In response, many adopted new technologies, implemented new patterns for working, and changed their business models.

However, not all companies have experienced gains in productivity, reported Eric Garton and Michael Mankins in the Harvard Business Review. Those that proved to be the best at managing time, talent and energy – the top 25 percent of companies – were 40 percent more productive than other companies. (The productivity of companies in the lower quartiles was averaged to make the comparison.)

Not all sectors of the economy are equally productive, either. “The surge in output per worker also reflects the changing mix of the workforce. Employment in the leisure and hospitality industries, where productivity tends to be low, remains about 10 percent below the pre-pandemic level, compared to a 3 percent shortfall in the higher-productivity manufacturing sector,” reported The Economist. As less productive sectors recover, productivity may return to previous levels.

In the meantime, some employees have been wondering whether it’s necessary to return to the workplace when productivity has been high while they’ve been working remotely. In an early July survey conducted by The Conference Board, a majority (56 percent) of employees asked whether returning to the workplace was wise, but just 18 percent of chief executive officers shared the concern.

Monetary Policy and the State of the Economy

email@womackadvisers.com (Greg Womack) — Wed, 11 Aug 2021 19:57:24 GMT

Are we there yet?

For months, investors have wondered when the Federal Reserve (Fed) might begin to “normalize” its policies, a process that will eventually lead to higher interest rates. Last week, a better-than-expected unemployment report – showing a gain of almost a million jobs – sparked speculation about whether we’ve arrived at that point. It’s difficult to know.

When the pandemic arrived, the Fed adopted policies that stimulated growth. It cut short-term interest rates to zero and began buying Treasuries and agency mortgage-backed securities to keep long-term rates low, too. Low rates make borrowing less expensive for businesses and individuals, reported the Brookings Institute. That’s important in economically challenging times.

In late July, the Fed said it would continue to keep rates low and buy bonds until it saw “substantial further progress toward maximum employment and price stability [inflation] goals.”

The Fed may have already achieved its inflation goal. Its favorite inflation gauge is called Personal Consumption Expenditures (PCE), excluding food and energy. It’s a statistic that reflects changes in how much Americans are paying for goods and services. In June, the Bureau of Economic Analysis reported that PCE was up 3.5 percent year over year. That’s well above the Fed’s two percent inflation target; however, the Fed’s new policy is to overshoot its target before raising rates.

If July’s employment numbers satisfy the Fed’s expectations for progress on jobs, the Fed may begin the process of normalizing monetary policy. The first step would be purchasing fewer bonds, a practice known as tapering. “Many market watchers are looking for [Fed Chair] Powell to discuss tapering at the central bank’s big policy meeting at Jackson Hole, Wyo., this month,” reported Randall Forsyth of Barron’s.

Major U.S. stock indices finished the week higher, reported Barron’s, and so did the yield on 10-year U.S. Treasuries.

Tesla Reports First Profitable Quarter Excluding Regulatory Credits

email@womackadvisers.com (Greg Womack) — Mon, 09 Aug 2021 16:02:36 GMT

Most investors in Tesla are probably not expecting to see big profits anytime soon. Instead, they’re focused on the electric vehicle revolution and Tesla’s likely large share the industry profits that will go with its leadership position.

In prior years, Tesla’s reported “profits” actually came from the sale of “regulatory credits” that accrue to the benefit of electric vehicle manufacturers for environmental reasons, and not from Tesla’s actual business. So Tesla investors were both shocked and pleased this week when Tesla revealed a quite large profit even after excluding regulatory credits. Elon Musk likes taking regulators and markets by surprise, and this was a big one.

Are You Ready to Compete?

email@womackadvisers.com (Greg Womack) — Fri, 06 Aug 2021 15:19:21 GMT

READY TO COMPETE? Watching the Olympics sparks the competitive spirit in many people. If you’re looking for a way to compete, try taking this financial literacy quiz. If you like, you can create your own event by having family and friends test their knowledge, too.

1. Which of the following does Experian say is the most important to your credit score?

a. Payment history

b. Amount owed

c. Credit history length

d. New credit applications

2. Which has the most risk, according to Investopedia?

a. Owning a diversified portfolio of small, large and mid-sized company stocks

b. Owning the stock of a large company

c. Owning a portfolio of technology company stocks

d. Owning a portfolio of small company stocks

3. If you put $100 in an account that earned 5 percent interest each year, how much would the account be worth after 10 years?

a. About $105

b. About $150

c. About $160

d. About $180

4. When shopping for chicken noodle soup, which of the following is the best value?

a. The store’s brand

b. The can with the highest discount

c. The can with the lowest price per ounce

d. The can with the lowest price in the size you need

You’ll find the answers below. When you have any financial or money questions, please get in touch.

Weekly Focus – Think About It

“An investment in knowledge pays the best interest.”

—Benjamin Franklin, American statesman

(1) A; (2) B; (3) C; (4) C

SEC's Response to China's New Regulations

email@womackadvisers.com (Greg Womack) — Wed, 04 Aug 2021 16:44:01 GMT

The Chinese dragon cast a shadow over free trade and foreign investment last week.

For decades, investors have recognized the investment potential of China. Since the country opened to foreign trade and investment in 1979, its economy has grown rapidly. Through 2018, its gross domestic product (GDP), which is a measure of economic growth, increased by 9.5% a year, on average, according to the United States Congressional Research Service.

The country’s gradual economic development lifted millions out of poverty. In 2020, about 20 percent of the world’s middle class lived in China. China’s middle class has an appetite for goods and services that rivals that of America’s middle class, creating demand for a wealth of goods and services, reported the Brookings Institute.

In recent months, investors have been unsettled as Chinese authorities aggressively implemented new regulations for its online education industry and its technology companies. Austin Carr and Coco Liu of Bloomberg reported:

“President Xi’s government has outlined sectors it wants to prioritize, including semiconductors and artificial intelligence. Xi has called the data its tech industry collects ‘an essential and strategic resource’ and has been pushing to tap into it for years.”

In early July, the Cyberspace Administration of China launched an investigation of the nation’s largest ride-hailing service company for monopolistic behavior. A month before, the company had raised $4.4 billion when it listed shares on the New York Stock Exchange. Jing Yang of The Wall Street Journal recently reported the company is considering delisting in an effort to placate Chinese authorities and compensate investors for losses.

Last week, “The selloff in Chinese stocks went from an orderly pullback to a full-blown panic…after China told its for-profit education companies that they would have to become nonprofits,” reported Ben Levisohn of Barron’s.

The Securities and Exchange Commission responded by announcing that it would stop processing registrations of U.S. IPOs and other sales of securities by Chinese companies until specific requirements were met.

The Shanghai Composite Index finished the week lower, as did major U.S. stock indices, reported Barron’s. The yield on 10-year U.S. Treasuries closed lower, too.

Apple (AAPL) 2nd Quarter Earnings Demolishes Wall Street Expectations

email@womackadvisers.com (Greg Womack) — Mon, 02 Aug 2021 14:45:42 GMT

Tech behemoth Apple reported quarterly earnings this week and demolished Wall Street expectations. The world’s most valuable company just reported more than $81bn of revenue for the three months ending in June - a 36% increase over the same quarter last year. That works out to roughly $900m a day or $10,000 every single second of the quarter.

While the iPhone remains Apple’s biggest product, its services businesses are getting many investors even more excited. Things like Apple Music, the App Store, Apple Pay, Apple TV, and potentially an Apple Car (under secret development since 2014) have or will have very lucrative profit margins.

Pandemic Recession: The Shortest in American History

email@womackadvisers.com (Greg Womack) — Wed, 28 Jul 2021 16:14:51 GMT

Last week, the National Bureau of Economic Research (NBER) finally announced the official dates for the recession that occurred in 2020. Economic activity peaked in February 2020 and bottomed in April 2020. That makes the pandemic recession the shortest in American history.

According to the NBER, “The recent downturn had different characteristics and dynamics than prior recessions. Nonetheless, the committee concluded that the unprecedented magnitude of the decline in employment and production, and its broad reach across the entire economy, warranted the designation of this episode as a recession, even though the downturn was briefer than earlier contractions.”

Since then, the United States’ economy has accelerated like a sports car on the German Autobahn, leading the developed world in the race toward economic recovery. A gradual slowdown was inevitable. However, three obstacles in the road may result in a sharp deceleration, reported The Economist.

#1. Inflation. A shortage of goods triggered inflation. Consumers have noted some price hikes, although others are less clear obvious. Makers of cereal, snacks, candy, and other products, are offering unchanged packages, priced as usual, that hold smaller quantities of product, reported Axios. The technique is known as shrinkflation.

#2. The end of pandemic policies. Enhanced unemployment benefits end in September, and the national moratorium on evictions ends in late July. The latter was the first of its kind and no one is certain how unwinding it will affect the economy, reported The Economist. Almost 36 percent of adults living in households that are behind on rent or mortgage payments, according to the latest Household Pulse Survey. We could see a housing boom and a housing crisis simultaneously.

#3. Spread of the Delta variant. The average number of coronavirus cases is up more than 180 percent over the last two weeks. “In the near term, the economic impact of the new wave of the pandemic in the U.S. could hinge on whether governments ratchet up restrictions intended to curb the virus’ spread.” reported Josh Nathan-Kazis of Barron’s.

While risks to economic growth persist, the earnings of publicly traded companies are strong. So far, 24 percent of the companies in the Standard & Poor’s (S&P) 500 Index have reported second quarter earnings. Year-to-year blended earnings growth has been stellar, in part, because of how bad things were during the second quarter of last year, reported John Butters of FactSet.

Net profit margins, which could have been trimmed by inflation, are currently 12.4 percent. That’s the second highest level since FactSet began tracking data in 2008. Analysts anticipate profit margins will average 12 percent through the end of 2021.

Stock Market Performance Since 2020

email@womackadvisers.com (Greg Womack) — Mon, 26 Jul 2021 15:51:49 GMT

If you went back in time to the start of 2020 and predicted the stock market would be up almost 35% over the year-and-a-half, most people would have probably believed you. After all, other than a few minor bumps the market had been on a solidly upward trajectory over the last few years. But then a global pandemic, a recession, and an explosion in unemployment claims rocked markets around the world.

Since 2011, U.S. markets have sharply outperformed international markets. Would that continue when the market picked itself up and began advancing again? Many forecasters predicted that, at long last, international markets – in particular, European markets - would lead the global recovery in stock markets and finally outperform the U.S. Except it didn’t happen. Once again, U.S. markets took the lead and never looked back, with a 34% advance in the S&P 500 since 1/1/2020, almost 5 times better than the 7% gain in the STOXX 600 European Stock Index.

What Will You Do With Your Child Tax Credit?

email@womackadvisers.com (Greg Womack) — Wed, 21 Jul 2021 18:42:59 GMT

Last week, 39 million American households that have children age 18 or younger received their first Advance Child Tax Credit payment.

The Internal Revenue Service (IRS) explained, “Advance Child Tax Credit payments are early payments from the IRS of 50 percent of the estimated amount of the Child Tax Credit that you may properly claim on your 2021 tax return during the 2022 tax filing season. If the IRS has processed your 2020 tax return or 2019 tax return, these monthly payments will be made starting in July and through December 2021, based on the information contained in them.”

The amount Uncle Sam sends depends on the age of the children and the income of the family. Eligible households should receive $300 per month for every child age 6 or younger and $250 per month for every child between the ages of 6 and 17, reported Andrew Keshner of MarketWatch.

For some families, the money will help cover the cost of basic expenses. For others, the cash is a welcome windfall that could be used to:

Fund a 529 education savings plan. These plans provide a tax-advantaged way to save and invest for a child or grandchild’s education. Typically, after-tax contributions are invested and any earnings grow tax deferred. If distributions are used to pay qualified education expenses, they are tax free, reported savingforcollege.com.

Fund an ABLE account. The Achieving a Better Life Experience (ABLE) Act of 2014 allows Americans with disabilities and their families to save up to $15,000 a year in a tax-deferred account similar to a 529 college savings plan, explained FINRA.

Fund a Roth IRA. It may seem counterintuitive to open a retirement account for a 6-year-old, but Bankrate’s Roth IRA Calculator shows that a $3,600 investment, earning 6 percent annually, has the potential to grow to almost $150,000 at retirement by the time a 6-year-old is ready to retire at age 70.

For those who qualify and prefer not to receive payments, the IRS has a website that can be used to manage these payments.

These Industries Welcome Remote Work

email@womackadvisers.com (Greg Womack) — Mon, 19 Jul 2021 19:25:29 GMT

With the worst of the coronavirus epidemic in the rear view mirror, many employers have begun pushing employees to return to the office. Surprising to perhaps no one, it turns out many workers would rather continue working from home.

According to LinkedIn’s Workforce Confidence Index, employers in the Software & IT, Transportation & Logistics and Legal sectors were most likely to allow employees to continue working from home. But workers in Public Administration and Education are most likely to be forced to return to the in-person daily grind.

U.S. Post-Pandemic Recovery Exceeds Other Nations

email@womackadvisers.com (Greg Womack) — Thu, 08 Jul 2021 18:51:24 GMT

The world is about halfway back to normal.

The Economist developed the Global Normalcy Index (GNI) to measure the post-pandemic return to normal. In March 2020, the GNI was 35 overall, with 100 being the normal pre-pandemic level. At the end of the second quarter, the worldwide GNI was 66, or about halfway back to normal.

Activity in the United States has been recovering faster than in other nations. The U.S. GNI was 72.8 on June 30. However, recovery in the U.S. has been uneven. For instance,

Employment is improving, but more slowly than anticipated. Last week’s jobs report showed a better-than-expected gain of 850,000 jobs in June. However, April and May jobs reports were below economists’ expectations, reported Randall Forsyth of Barron’s. In June, the unemployment rate was 5.9 percent, which is an improvement on the double-digit pandemic unemployment rate, but above the pre-pandemic level of 3.5 percent.

Employers are having trouble filling positions. Despite the fact that 9.3 million people remain out of work, trucking companies, airlines, restaurants, hotels, shipyards, factories, banks and other employers report having difficulty filling open positions, reported Julia Horowitz of CNN News.

In a Barron’s commentary, Suzanne Clark, the CEO of the U.S. Chamber of Commerce, stated that solving the worker shortage should be the nation’s top priority. She suggested expanding access to childcare, supporting employer-led skills training, ending supplemental unemployment benefits, welcoming global talent and prioritizing second-chance hiring.

Workers are leaving jobs. Hidden among the employment data was a surprising trend that some have dubbed ‘The Great Resignation.’ In June, 942,000 Americans – 9.9 percent of those who were unemployed – were job leavers. They had resigned from their jobs. For comparison, the number of people leaving jobs during the entire second quarter of 2019 was 809,000.

“As pandemic life recedes in the U.S., people are leaving their jobs in search of more money, more flexibility and more happiness. Many are rethinking what work means to them, how they are valued, and how they spend their time,” reported Andrea Hsu of NPR.

Prices are rising more quickly than anticipated. Anyone who shopped for groceries for a Fourth of July barbecue or made an above-asking-price offer for a house (and waived the inspection), knows that prices have moved higher.

Core Personal Consumption Expenditures (PCE without food or energy), which is the Fed’s favored measure for inflation, rose steadily during the second quarter. In May, core PCE was up 3.4 percent. When food and energy were included, PCE was up 3.9 percent.

Inflation concerns consumers. Consumer sentiment was up year-over-year from May 2020 to May 2021. However, inflation dampened sentiment and expectations declined from April 2021 to May 2021, according to the University of Michigan’s Surveys of Consumers.

“Twice as many consumers expected that the inflation rate would be 5% or more in the year-ahead rather than 2% or below (44% versus 22%). Importantly, consumers still anticipated declining inflation over the longer term,” reported Director of Surveys Richard Curtin.

The Delta variant is a wild card. At the end of last week, about 182 million Americans (64 percent of the population age 12 or older) had received at least one dose of a COVID-19 vaccine, and 157 million were fully vaccinated (55 percent of the population age 12 or older), per the Centers for Disease Control and Prevention. That helped reduce the number of COVID-19 cases and deaths, so the country could begin to move back toward ‘normal.’

Last week, the number of coronavirus cases in the U.S. began to creep higher as the highly contagious Delta variant spread. It was responsible for about 20 percent of new U.S. cases. Tanya Lewis of Scientific American reported, “Several experts said they do not expect the Delta variant to cause a nationwide surge here in the U.S. like the one that occurred last winter. But they do anticipate localized outbreaks in places where vaccination rates remain low.”

U.S. equity markets continued to move higher during the second quarter. The Standard & Poor’s 500 Index, “…gained 8.2% during the second quarter of 2021, its fifth consecutive quarterly gain, which is the longest streak since the fourth quarter of 2017. Its first-half gain of 14.4% was the best since 2019 and the second-best since 1998,” reported Ben Levisohn of Barron’s.

How Do I Prepare For An Estate Planning Meeting?

Thu, 08 Jul 2021 18:03:53 GMT

Help On How To Prepare For Your Estate Planning Appointment

An estate planning meeting will allow your financial advisor and attorney to get a clear picture of your situation and you and your family's financial goals. Estate planning is much more than what relates to children and personal property. There are many facets to be considered that may not be top of mind for most. The more you prepare before the initial meeting, the better prepared we can be for this important first step in creating an estate plan that meets your needs and protects those left behind.

Gather Assets, Financial Documents, Tax Papers & More

The first thing to do in order to run an efficient meeting, is to gather as much information as possible ahead of time. Some helpful items you can bring are all your financial reports, recent bank documents, existing wills, legal documents, and insurance & healthcare policies. Other papers that will help are retirement account statements, deeds, and other assets or investments reports. Additionally you may think of bringing any divorce decrees, premarital agreements and other relevant contracts you're subject to. This will give our estate planners sufficient information to determine where you currently are, and where we need to direct our efforts for your estate trust, wills, powers of attorney and more.

Fill Out The Attorney and Financial Planner Questionnaire

Once you have gathered your financial documents, fill out the intake questionnaire form that we will present to you. This document is a helpful way for estate planners and the attorney to get all of your information and details together, so we can be sure there are no surprises once we begin working on the will and other estate plan documents. It also allows us time to double check our recommendations and any existing estate planning documents against what you have now if necessary. Taking the time to gather all of this information and thoughtfully considering the intake questionnaire will make the most efficient use of your time with your estate planner when the face-to-face meeting occurs. If the information we receive is inaccurate or incomplete, our recommendations may not accurately reflect your actual need.

Trustee/Executor Choices: Attorney or Other Trusted Person.

The second part--and one that should happen early in the process with any estate planner--is deciding who will serve as executor or trustee in charge of winding down assets after death (this is generally not the same person who will help draft wills). Who do you want taking care of the finances? What kind of experience and knowledge would you like them to have? You may choose an arbitrating outside party such as a lawyer you trust, but aren't related to... Perhaps a financial adviser with experience in the area of carrying out fiduciary duties. This is one decision that needs to be at the top of the priority list when starting your estate planning process. We're happy to explore your potential executor choices with you to help guide you in your decision.

Beneficiaries: They Can Be More Than Children

You may want to begin thinking about how you'd like your assets to be distributed, and amongst whom. You may not know who/how/what is the best way to begin to decide, but that's not uncommon! That's why you're hiring an expert estate planner at Womack Investment Advisers, Inc! Your beneficiaries are a very personal decision that our experience is able to help guide you through. Many people choose to leave a portion of their estate to a non-profit or other charity organization that they're either involved with or one that serves a need or purpose that they are passionate about. A strong connection to an organization in one's community can allow you to leave a lasting legacy in your name when they're a beneficiary of your trust. Considering contingent (or alternative) beneficiaries in the event the primary is no longer around at your death is another aspect to think about.

Write Down & Save Questions For Your Estate Plan Meeting

Never hesitate to ask your estate planner any questions that you have! You can write them down and bring them up during your initial meeting. You'll quickly determine if you feel comfortable with the planner and attorney before you. The preparation you put in prior to meeting with these advisers is key to allowing you the clarity you need to judge your comfort level with these professionals. Without the fuss of trying to come up with addresses and account numbers on the fly, you can focus on building a relationship and trust with your adviser during your initial meeting.

Talking about money , taxes, wills, spouses, children, and death can be a very vulnerable place for our clients. Preparation will defuse the stress of these meetings and allow you to focus on what is truly important: your family's future. At Womack Investment Advisers, Inc. , we strive to make estate planning a relaxing experience. Our meetings are designed to be informative, friendly and non-threatening.

Keep in mind that estate planning is never done; it is an ongoing life event. Preparing for the end of your life means understanding not just how much money you have today, but also whether or not there is plan in place to ensure your legacy is preserved for generations to come.

Give us a call today to get started on your estate planning journey!

Early Retirement Surge Among U.S. Baby Boomers

email@womackadvisers.com (Greg Womack) — Tue, 06 Jul 2021 15:30:04 GMT

What if a large factor in the current worker shortage is...unexpectedly high retirements? Oxford Economics and Capital Economics analysts have highlighted the huge jump in recent baby-boomer retirements , each one of which is another worker removed from the country’s workforce.

Michael Pearce of Capital Economics writes “…that is equivalent to 2 million workers, which would explain more than half of the current shortfall in the labor force." Bob Schwartz of Oxford Economics notes that “…older households hold more wealth than younger ones, and the improved balance sheets of senior workers may well have tipped them over into retirement.” (Chart from Capital Economics)

What Begins With the Letter "I"?

email@womackadvisers.com (Greg Womack) — Wed, 30 Jun 2021 20:40:38 GMT

What begins with the letter “I”?

Infrastructure is essential and sometimes taken for granted. Pipes carry drinking water to our homes, offices, and healthcare facilities, and carry away sewage and wastewater. Highways, airports, railroads, waterways, roads, and bridges make efficient transportation of goods and safe travel possible. Energy systems and transmission lines keep the lights on and the stove cooking. Broadband data transmissions systems assure high speed internet access.

On Thursday, President Biden and a bipartisan group of senators announced that progress had been made on the framework for a bipartisan infrastructure plan. Investors were happy to hear it. Randall Forsyth of Barron’s reported:

“…Washington this past week finally took steps to address the nation’s manifest deficiencies in its infrastructure…Perhaps tellingly, the bond market had only a minimal reaction to the prospect of further government spending. But stocks of companies that could see a bonanza of dollars flowing from D.C. had double-digit gains on the week, and the indexes notched gains averaging around 3%, with the S&P 500 ending at a record.”

Financial markets paid less attention to the other “I” – inflation.

On Friday, The Bureau of Economic Analysis reported on the Federal Reserve’s favorite inflation measure, core personal consumption expenditures (PCE). Prices, excluding food and energy, were up 3.4 percent from May 2020 to May 2021. From April 2021 to May 2021, PCE increased 0.5 percent which was lower than the previous month-to-month increase.

Yields on 10-year U.S. Treasuries moved slightly higher last week, and U.S. stocks had their best week since February, reported Naomi Rovnick and Francesca Friday of the Financial Times.

The U.S. Deficit, National Debt, and Debt Limit

email@womackadvisers.com (Greg Womack) — Fri, 25 Jun 2021 16:10:37 GMT

This is a subtitle for your new post

What’s the difference? Over the next few months, we’ll probably begin to hear more about the deficit, the debt, and the debt limit. Here’s a primer to help you keep them straight.

The U.S. deficit: When the United States has a deficit, it means the government spent more than it took in. When the government spends less than it takes in, it is called a surplus. Deficits might be helpful. For instance, when a pandemic occurs, deficit spending may help stabilize a wobbly economy.

The U.S. government engaged in deficit spending in 2020 and early 2021 to support Americans, businesses, and the economy. It spent $6.6 trillion and took in $3.4 trillion in revenue ($1.3 trillion was payroll taxes that fund Medicare and Social Security). As a result, the budget deficit was $3.1 trillion in 2020.

The national debt: Whenever the U.S. spends more than it takes in, the national debt increases. The debt is the amount the U.S. government owes. Every annual deficit adds to the debt and every annual surplus reduces it. There are a variety of ways to measure the national debt. At the end of the first quarter of 2021, the national debt was:

· More than $28 trillion

· 127.5 percent of gross domestic product (GDP)

So, how much debt is too much? Research suggests the answer depends on a country’s economic growth rate, the level of interest rates, and the strength of its institutions and central bank, reported Heather Hennerich of the St. Louis Federal Reserve’s Open Vault Blog.

The debt limit: When a government runs a deficit, it borrows money to keep operating. The amount that it can borrow is determined by the debt limit, a.k.a., the debt ceiling. The debt limit is the amount of money the government is authorized to borrow to meet its obligations, such as Social Security and Medicare benefits, military salaries, national debt payments, income tax refunds, and other commitments.

“Since 1960, Congress has acted 78 separate times to permanently raise, temporarily extend, or revise the definition of the debt limit,” reported the U.S. Treasury.

The debt ceiling was suspended in 2019, and the suspension expires on July 31, 2021.

Financial Markets Weren't Thrilled by the News

email@womackadvisers.com (Greg Womack) — Wed, 23 Jun 2021 15:46:51 GMT

Is that a hawk?

The Federal Reserve Open Market Committee (FOMC) met last week. They get together eight times a year to review current economic and financial conditions, assess risks to price stability and economic growth, and adjust monetary policy accordingly.

When the Federal Reserve raises the fed funds rate to keep inflation and economic growth in check, it is ‘hawkish’. When the Fed lowers the fed funds rate to encourage inflation and economic growth, it is ‘dovish’.

Last week, the FOMC appeared to veer toward a more hawkish policy.

The FOMC did not change current policy. However, the dot plot – a chart that reflects meeting participants’ expectations for the fed funds rate in the years ahead – showed a majority leaning toward two rate hikes in 2023. That was new. The March 2021 dot plot, which showed no rate hikes before 2024, reported Ben Levisohn, Nicholas Jasinski, and Barbara Kollmeyer of Barron’s.

Financial market suspicions that a hawkish turn might be underway were confirmed on Friday when St. Louis Federal Reserve President James Bullard, who will become a voting FOMC member next year, told Rebecca Quick of CNBC’s Squawk Box:

“We were expecting a good year, a good reopening. But this is a bigger year than we were expecting, more inflation than we were expecting, and I think it’s natural that we’ve tilted a little bit more hawkish here to contain inflationary pressures.”

Financial markets weren’t thrilled by the news.

“The increasingly hawkish tilt caused stocks that benefit from a stronger economy and hotter inflation – the financials, energy, and materials sectors among them – to get hit hard, and has sparked a resurgence in the tech trade. Growthier tech stocks again beat cyclical and value stocks on Friday…All 11 sectors of the S&P 500 finished in the red on Friday,” reported Barron’s.

Major United States stock indices finished the week lower, and the Treasury yield curve flattened somewhat, suggesting slower economic growth may be ahead.

U.S. Secretary of State Rejects Claims of ‘Cold War’ Between U.S. and China

email@womackadvisers.com (Greg Womack) — Mon, 21 Jun 2021 18:40:24 GMT

During the recent London G7 meetings, the United States’ top diplomat, Secretary of State Antony Blinken, rejected questions claiming the U.S. is entering a “cold war” with China. The questions are not out of line with public opinion, however, as revealed in a recent poll.

Global public opinion and data company YouGov showed that in 2017 just 10% of respondents polled identified China as an “Enemy” of the U.S. Today, that number is closer to 35%, and is the most-selected choice, followed by “Unfriendly”.

Inflation Raises Its Ugly Head

Fri, 18 Jun 2021 19:17:40 GMT

Discover How Inflation is Affecting the Market

It’s transitory. It’s not transitory. It’s transitory. It’s not transitory.

Media analysts were plucking the inflation daisy petals last week. On Thursday, the Bureau of Labor Statistics released the Consumer Price Index Summary, which showed prices were up 5 percent year-to-year.

“Investors are debating whether the surge in prices at both a producer and consumer level will prove transitory, as the U.S. Federal Reserve believes, or become entrenched. Much of the angst over medium term inflation pressure becoming hotter is fueled by the backdrop of aggressive fiscal and monetary policy. This potentially combustible mix has a policy additive from a Fed prepared to tolerate a higher pace of inflation beyond its target of 2 percent for an unspecified period,” reported Michael Mackenzie of Financial Times.

Last week, investors took inflation data in stride. Barron’s reported the Standard & Poor’s 500 Index closed at a new all-time high on Friday. The Nasdaq Composite also finished higher, while the Dow Jones Industrial Index was slightly lower. The yield on longer U.S. Treasuries moved lower, too, which was notable. In theory, rising inflation and rising interest rates should go hand in hand.

Rising inflation remained a top concern for consumers in June, according to Richard Curtin, the University of Michigan Surveys of Consumers chief economist:

“Fortunately, in the emergence from the pandemic, consumers are temporarily less sensitive to prices due to pent-up demand and record savings, as well as improved job and income prospects. The acceptance of price increases as due to the pandemic makes inflationary psychology more likely to gain a foothold if the exit is lengthy.”

Inflation psychology occurs when consumers believe prices will continue to rise over time and begin to spend money as soon as they receive it, according to Investopedia. There is a remedy, according to Curtin. “A shift in the Fed's policy language could douse any incipient inflationary psychology, it would be no surprise to consumers, as two-thirds already expect higher interest rates in the year ahead.”

What Does a Financial Adviser Do? | Financial Planner vs. Financial Advisors

Tue, 15 Jun 2021 18:03:09 GMT

What Does a Financial Advisor Do, Anyway?

What Is a Financial Adviser?

A financial adviser is someone who specializes in personal finance. The right one for you may be hard to find if you don't know the rule, so to speak. Risk is always involved, but there's risk in driving, right? Is the thought of managing your own money terrifying to you? Well, that's what a financial advisor does. Is the task big? Yes! But it's totally worth finding the right one for your family and money. Financial advisers work with people to help them manage their money, plan for the future and provide sound advice on how best to handle your finances. They have knowledge of many areas including taxes, investments, retirement plans and more. A typical day at a company where one works as an advisor can be very different from another depending largely on what type of financial institution they're employed by (banks, insurance companies or mutual fund firms). Investopedia ( 1 ) actually says that "The financial adviser is also an educator!"

"The financial adviser is also an educator!"

~Investopedia

Financial Advisor

Common tasks will include managing portfolios full of stocks and bonds ; advising clients on appropriate asset allocation between stocks/bonds/cash holdings; investment planning for long-term goals like college savings or retirement income needs; reviewing tax implications when making decisions about investments; discussing future goals, plans, & more. You can find a fiduciary for your business or family to help you build wealth for the long term, and find your long-term strategy even when it's always a moving target. You can get your risk and terms to something you're agreeable to with the right fee schedule for you as well!

What Does a Financial Adviser do?

Financial advisers are responsible for many tasks, including managing portfolios full of stocks and bonds; advising clients on appropriate asset allocation between stocks/bonds/cash holdings; investment planning for long-term goals like college savings or retirement income needs. They also review tax implications when making decisions about investments, discuss future goals, plans, etc. They usually work in teams where each adviser has a different specialization, so they may not only be advising you on investments but also insurance or retirement planning.

What is the difference between a financial planner and a financial advisor?

Financial planners and financial advisors both work with clients to provide advice about the use of their assets. Financial planners usually focus on long-term planning, such as college savings or retirement income needs; while financial advisors are more likely to advise people on how they should invest for short-term goals like saving up enough money for a down payment on a new house.

What is the workplace of a financial advisor like?

Financial advisers work in a variety of settings, from brokerage firms to banks. They are usually private practitioners who provide financial advice for a fee as well as sell various products or services on behalf of the company they represent.

The American Financial Planning Association (APFA) reports that there were over 250,000 registered investment adviser representatives nationwide at the end of 2013 and more than 260,000 licensed securities professionals such as brokers and stockbrokers.

How much do financial advisers cost?

This varies depending on where you choose to go with your adviser. Fees can range anywhere from less than $100 per hour up to several hundred dollars per hour depending on which service is being offered by the adviser and what type of wealth management plan has to be developed. Most financial adviser firms offer a free consultation, however, to determine if the client is a good fit. When a firm is based on a fee structure, most fee structures start at 0.50% per year which includes services such as: monthly or quarterly reviews; asset allocation planning; portfolio management; estate planning coordination; retirement account distribution and more.

What types of financial advisors are there?

There are several types of financial advisers. The following are the two most common:

Advisors

Financial Planner (A certified professional with a degree in finance that is not licensed to sell securities)

Financial Adviser (Registered investment adviser who is both qualified and registered as an independent contractor with FINRA). To register this way, these advisors must complete courses & pass comprehensive exams administered by the National Association of Securities Dealers - NASD Series 65 or 68 examinations, which cover areas such as insurance, taxation, law and investments. They also need to complete 120 hours of qualifying experience before they can take their registration exam.)

Financial Advisers offer advice for clients on investing money through stocks, bonds mutual funds. This includes retirement planning advice on products such as Roth IRA's & individual IRAs.

Do you have to already be wealthy to hire a financial adviser?

Financial advisors are not just for the wealthy. They offer basic advice to people of all income levels, including working families. A financial adviser's time is an important investment in your future and a credentialed professional can help you reach your goals faster than if you were on your own. Financial advisers work one on one with clients to ensure their finances will be successful over the long term and provide guidance through both good times and bad.

Some benefits of hiring a financial adviser:

The benefits are varied depending on what your need is at the time; however some typical benefits include education about making sound decisions when it comes to investing, tax consequences (especially if this is your first job), and budgeting/financial advice. The folks over at Money & US News ( 2 ) have reported that “Financial advisors help investors untangle the knot of their financial lives.” So, if your finances are in tangles , give us a call and let our experience guide you through the untangling process.

"Financial advisors help investors untangle the knot of their financial lives."

~Money & US News

Womack Investment Advisers, Inc is an established and experienced fiduciary financial adviser that is here for you right here with our offices in Edmond, Oklahoma. We have been helping people with their investment needs for years and know the ins-and outs of working closely with our clients to help them reach their financial goals.

When Is It Time To Hire A Financial Advisor?

It's time to hire a financial adviser when you are thinking about your long-term financial goals, or if you're feeling the need for help managing day to day finances. Financial advisers can also be helpful in a crisis when you don't know what to do and want someone who is qualified to offer advice on how best to deal with specific issues.

Investment & Retirement

A good time to hire a financial advisor is as soon as you start making money! The earlier in life that people set up an investment plan – whether it's through their employer sponsored retirement program such as 401k, IRA (Individual Retirement Account), savings account, etc., the more likely they are able to accumulate wealth over time.

If You Need To Save Money Quicker...

When clients have trouble saving enough for emergencies or other expenses it might be time to sit down with a financial adviser and see where the flaws in the previous plan might have been.

In many cases, it's not necessary to hire an adviser at all--a little do-it-yourself research can be beneficial when making decisions about investments in high interest accounts (CDs), low risk stocks/bonds, perhaps your average mortgage loans, etc.; but there are times where hiring an advisor is crucial . For example, if someone wants help managing life insurance needs or managing retirement accounts, then a professional is definitely needed.

Womack Investment Advisers, Inc. (WIA) is a registered investment adviser whose principal office is located in Oklahoma. Womack Investment Advisers, Inc. is also registered in the State of California, the State of Illinois, the State of Indiana, and the State of Texas. WIA only transacts business in sates where it is properly registered, or excluded, or exempted from registration requirements.

References:

(1) https://www.investopedia.com/articles/personal-finance/050815/what-do-financial-advisers-do.asp

(2) https://money.usnews.com/financial-advisors/articles/what-does-a-financial-advisor-do

Covid-19 Vaccinations by Region

Mon, 07 Jun 2021 16:55:00 GMT

Analysts report that skepticism over the newly developed vaccines seems to be the common reason for hesitance everywhere, but even more so in Asia where fairly effective containment in the very early stages of the Covid-19 crisis seems to have led to a lower current sense of urgency. Africa, at less than 5%, is reportedly stymied by a triple-whammy of suspicious populations, under-developed distribution networks and widespread shortages of vaccines.

Are We at a Tipping Point?

Wed, 02 Jun 2021 21:25:00 GMT

Are we at a tipping point?

One side effect of the pandemic was a collapse in demand for oil, which led to “the largest revision to the value of the oil industry’s assets in at least a decade,” reported Collin Eaton and Sarah McFarlane of The Wall Street Journal .

Last week brought another reckoning for big oil as a court ruling and shareholder influence made it clear companies need to revisit their strategies for emissions reductions and clean energy. Here’s what happened:

Do it faster. In the Netherlands, a court ruled an Anglo-Dutch oil producer would need to lower its emissions by 45 percent from 2019 levels by 2030, far more quickly than the company had intended.

“Analysts said the…ruling could set a precedent for similar cases against the world’s biggest corporate polluters, which may now face related lawsuits and be forced to overhaul their business models,” reported Derek Brower and Anjli Raval of Financial Times .

Change direction. For weeks, a U.S. oil supermajor had done battle with an investment group that holds 0.02 percent of its shares. The investment group wanted the company “to gradually diversify its investments to be ready for a world that will need fewer fossil fuels in coming decades” rather than focus on carbon capture and storage solutions, reported Sarah McFarlane and Christopher Matthews of The Wall Street Journa l.

To that end, the investment group nominated four outside board-of-director candidates stating, “A Board that has underperformed this dramatically and defied shareholder sentiment for this long has not earned the right to choose its own new members or pack itself in the face of calls for change…shareholders deserve a Board that works proactively to create long-term value, not defensively in the face of deteriorating returns and the threat of losing their seats.”

Other shareholders agreed and, in a highly unusual outcome, two of the four candidates were elected to the board, reported Ben Geman of Axios .

Less is more. Two other multinational energy companies experienced shareholder uprisings recently, reported Sergio Chapa and Caroline Hyde of Bloomberg . Shareholder proposals to aggressively reduce emissions and limit pollution by a company’s customers were approved despite the companies’ boards urging shareholders to vote against the changes.

Major stock indices in the United States finished last week higher.

Womack Investment Advisers, Inc.

WOMACK INVESTMENT ADVISERS, INC.

Oklahoma / Main Office: 1366 E. 15th Street - Edmond, OK 73013
California Office: 4660 La Jolla Village Dr., Ste. 100 - San Diego, CA 92122
Phone (405) 340-1717 - Toll Free (877) 340-1717

Website: www.womackadvisers.com

Inflation Data Surprises Index Reaches a 20-Year High

Tue, 01 Jun 2021 16:42:00 GMT

Despite the Fed’s insistence that the present jump in inflation readings is “transient” and “temporary”, indications of widespread inflation are becoming so numerous as to be overwhelming. Deutsche Bank maintains a data series it calls the “Inflation Data Surprises Index”, which monitors unexpectedly-high or –low inflation reports across the economy. The current readings are the highest in the 20-year history of the index. Deutsche Bank strategist Jim Reid described the last 10 data points as “almost off the chart”.

Womack Investment Advisers, Inc.

WOMACK INVESTMENT ADVISERS, INC.

Oklahoma / Main Office: 1366 E. 15th Street - Edmond, OK 73013
California Office: 4660 La Jolla Village Dr., Ste. 100 - San Diego, CA 92122
Phone (405) 340-1717 - Toll Free (877) 340-1717

Website: www.womackadvisers.com

What Do Markets Hate?

Wed, 26 May 2021 15:53:00 GMT

What do markets hate?

They hate uncertainty, and recently there has been plenty of it. Some of the questions plaguing economists and pundits include:

Why aren’t people returning to work? Americans, like people in other parts of the world, have not been rejoining the workforce at the pace many had anticipated. One of the most frequently cited theories was explained by The Economist :

“In America businesspeople, almost to a pinstripe, are convinced that the $300-a-week boost to unemployment insurance explains the shortages. However, pundits do not agree on whether stimulus handouts really lead people to shirk. The evidence is hazy elsewhere, too…Australia ditched its job-protection scheme in March, and shortages have worsened.”

The unemployment data has inspired many theories about why jobs aren’t filling more quickly. These include fear of contracting COVID-19, low hourly pay, and lack of dependent care, to name a few. Some states recently modified unemployment programs, so there soon may be new data to help clarify the situation.

Is the Federal Reserve thinking about raising rates or slowing bond purchases? In June 2020, Fed Chair Jerome Powell famously said, “We’re not even thinking about thinking about raising rates.” Some are wondering whether that has changed. The minutes from April’s Federal Open Market Committee meeting, which were released last Tuesday afternoon, included a statement that raise questions. It said:

“A number of participants suggested that if the economy continued to make rapid progress toward the Committee’s goals, it might be appropriate at some point in upcoming meetings to begin discussing a plan for adjusting the pace of asset purchases.”

Of course, the economic picture isn’t as robust as it was in April. Since then, we’ve seen a weaker-than-expected employment report and higher-than-expected inflation data. While one month does not establish a trend, investors, economists, and pundits will be watching economic data releases closely for clues about economic recovery.

Will inflation prove to be transitory or will it persist? Investors also are worried the Federal Reserve will keep rates low for too long. James Politi of Financial Times reported:

“The Fed has argued that strong monetary support for the economy is still needed because of the risk of a slowdown in the recovery and the shortfall in employment compared to pre-pandemic levels. Nor does it expect the current spike in consumer prices to last, arguing that it is being fueled by supply chain bottlenecks and the economic reopening.”

Others aren’t so sure the Fed is right. Last Tuesday, former U.S. Treasury Secretary Lawrence Summers said the Fed’s latest forecasts suggest it is misreading the economy and encouraging complacency, reported Greg Robb of MarketWatch .

Womack Investment Advisers, Inc.

WOMACK INVESTMENT ADVISERS, INC.

Oklahoma / Main Office: 1366 E. 15th Street - Edmond, OK 73013
California Office: 4660 La Jolla Village Dr., Ste. 100 - San Diego, CA 92122
Phone (405) 340-1717 - Toll Free (877) 340-1717

Website: www.womackadvisers.com

Real Estate vs. S&P 500 Stocks: The Last 30 Years in Review

Mon, 24 May 2021 18:09:00 GMT

The following graph from analytics firm Visual Capitalist shows the total return since 1990 of the U.S. National Home Price Index compared to the benchmark S&P 500 stock market index. The Home Price Index has gone up a respectable 200% since 1990, but looks quite tame compared to the 1000% return from the S&P 500 over the same period.

Americans Feeling More Optimistic After Recent CDC Announcement

Fri, 21 May 2021 14:38:00 GMT

Results from the latest Axios-Ipsos Coronavirus survey, conducted in early May, found Americans were feeling more optimistic. Among those surveyed:

If your exuberance about resuming “normal” life has been tempered by a reluctance to change the routines you’ve adopted during the pandemic, you’re not alone. Medical experts at Northwestern University explained:

"The emotional impact of this past year may linger with us for longer than we might expect. The key is not to feel forced to snap back into a routine overnight. Give yourself time and understand that your emotional journey back to freely socializing in vaccinated cohorts may look very different from those around you.”

As some people say, “You do you.”

Womack Investment Advisers, Inc.

WOMACK INVESTMENT ADVISERS, INC.

Oklahoma / Main Office: 1366 E. 15th Street - Edmond, OK 73013
California Office: 4660 La Jolla Village Dr., Ste. 100 - San Diego, CA 92122
Phone (405) 340-1717 - Toll Free (877) 340-1717

Website: www.womackadvisers.com

How Covid-19 Has Impacted Inflation

Wed, 19 May 2021 18:05:00 GMT

Ever since the financial crisis, central banks have pursued expansionary monetary policies to encourage reflation and avoid deflation. Well, it’s taken some time, but inflation is finally here.

Last week, major stock indices in the United States moved lower after inflation, as measured by the Consumer Price Index (CPI), was four times higher than anticipated, reported Ben Levisohn of Barron’s .

Higher inflation is the result of a supply and demand imbalance. As the pandemic has calmed in the United States, consumers have emerged eager to spend money – so eager that consumer spending is about 5.5 standard deviations above average. That’s a lot.

The problem is finding stuff to buy. The Economist explained, “…red-hot demand is increasingly met slowly or not at all…Nowhere are shortages more acute than in America, where a boom is under way. Consumer spending is growing by over 10 percent at an annual rate, as people put to work the $2trn-plus of extra savings accumulated in the past year.”

Shortages are the result of two kinks in the supply hose.

The first is the supply chain. There is a shortage “of everything from timber to semiconductors,” which are essential to building other products. In addition, shipping containers have become a scarce resource, causing the cost of shipping goods from China to the United States to triple, reported The Economist .

The second is labor. This week’s higher-than-expected inflation data mirrored last week’s lower-than-expected employment data. No one is certain why the employment numbers were lackluster, although theories abound. Regardless, there are limits on what companies can produce when they have too few employees.

The question is whether supply chains can be straightened so demand for goods and services can be met. If so, higher inflation may prove transitory as the Federal Reserve and some economists anticipate. If not, inflation may stick around. Time will tell.

Womack Investment Advisers, Inc.

WOMACK INVESTMENT ADVISERS, INC.

Oklahoma / Main Office: 1366 E. 15th Street - Edmond, OK 73013
California Office: 4660 La Jolla Village Dr., Ste. 100 - San Diego, CA 92122
Phone (405) 340-1717 - Toll Free (877) 340-1717

Website: www.womackadvisers.com

Total Market Value of Cryptocurrency Surpasses U.S. Currency in Circulation

Mon, 17 May 2021 17:06:00 GMT

An interesting event occurred this past week. The total market value of the 300 largest cryptocurrency assets surpassed the value of all physical U.S. dollars in circulation. Statistician Willy Woo analyzed recent trading data and concluded this year’s bull run is different from the rest because speculative hands are not holding and seasoned investors – including banks and institutions - are buying up the slack at higher prices than ever. “This cycle is different; the movement of coins to strong holders is unprecedented,” he summarized.

Womack Investment Advisers, Inc.

WOMACK INVESTMENT ADVISERS, INC.

Oklahoma / Main Office: 1366 E. 15th Street - Edmond, OK 73013
California Office: 4660 La Jolla Village Dr., Ste. 100 - San Diego, CA 92122
Phone (405) 340-1717 - Toll Free (877) 340-1717

Website: www.womackadvisers.com

Check Out the Big Brain on Brett!

Fri, 14 May 2021 13:34:00 GMT

There is a long-standing scientific theory about the size of a mammal’s body relative to its brain offers an indication of intelligence. The findings of a recent study seem to debunk that idea, reported Science Daily .

An international team of scientists investigated how the brain and body sizes of 1,400 living and extinct mammals evolved over time. They made several discoveries. One was significant changes in brain size happened after two cataclysmic events in Earth's history: a mass extinction and a climatic transition.

Not every mammal changed in the same ways. Elephants increased body and brain size. Dolphins and humans decreased body size and increased brain size. California sea lions increased body size without comparable increases in brain size. All have high intelligence.

“We've overturned a long-standing dogma that relative brain size can be equivocated with intelligence…Sometimes, relatively big brains can be the end result of a gradual decrease in body size to suit a new habitat or way of moving – in other words, nothing to do with intelligence at all. Using relative brain size as a proxy for cognitive capacity must be set against an animal's evolutionary history,” stated Kamran Safi, a research scientist at the Max Planck Institute of Animal Behavior and one of the study’s authors.

Of course, intelligence doesn’t always translate into wise behavior.

Studies of behavioral finance have found the human brain is more interested in survival than saving. “It turns out that, when it comes to money matters, we are wired to do it all wrong. Our brains have evolved over thousands of years to focus on short-term survival in a dangerous world with limited resources. They were not designed for today’s optimal financial behaviors,” wrote financial psychologist Dr. Brad Klontz, a CNBC contributor.

No one knows how the COVID-19 pandemic will be remembered over time, but it appears to have influenced the way people think about money in some significant ways. An April 2021 Bank of America survey reported:

If the pandemic has changed your thinking, let’s review your financial plan and align it with your current circumstances and thinking.

Best regards,

Womack Investment Advisers, Inc.

WOMACK INVESTMENT ADVISERS, INC.

Oklahoma / Main Office: 1366 E. 15th Street - Edmond, OK 73013
California Office: 4660 La Jolla Village Dr., Ste. 100 - San Diego, CA 92122
Phone (405) 340-1717 - Toll Free (877) 340-1717

Website: www.womackadvisers.com

Last Week's Employment Report Delivered an Unexpected Surprise

Wed, 12 May 2021 19:52:00 GMT

Like a gender reveal gone wrong, last week’s employment report delivered an unexpected surprise. Economists estimated 975,000 new jobs would be created in April. The United States Bureau of Labor Statistics (BLS) reported there were just 266,000. That’s a big miss.

Economists, analysts, and the media offered a wealth of theories to explain the shortfall. These included:

Pandemic fear . A March U.S. Census survey found 4.2 million people aren’t working because they fear getting or spreading the coronavirus, reported Gwynn Guilford of The Wall Street Journal . That’s more than half of the 8.2 million non-farm jobs that need to be recovered to reach pre-pandemic employment levels.

Too-generous unemployment benefits . Another theory is federal unemployment benefits ($300 a week) have created a labor shortage. The theory is being tested. Last week, Montana announced it will no longer participate in federal unemployment programs. Instead, it will offer a $1,200 return-to-work bonus, reported Greg Iacurci of CNBC .

Low pay . Some say Americans are less willing to work for low pay than they were before the pandemic. Christopher Rugaber of the AP interviewed a Texas staffing office manager who reported job seekers are turning down jobs that pay less than unemployment benefits.

A former retail worker told Heather Long of The Washington Post , “The problem is we are not making enough money to make it worth it to go back to these jobs that are difficult and dirty and usually thankless. You’re getting yelled at and disrespected all day.”

Lack of childcare . Many women who want to work left jobs during the pandemic to care for children. The April employment report showed a slight decrease in the rate of unemployment for adult women; however, it resulted from women giving up on job searches rather than finding work. The Institute for Women’s Policy Research reported, “…more women continued to exit rather than enter the workforce: 165,000 fewer women had jobs or were actively looking for work in April than in March.”

Quirky data . Statistical distortions or seasonal factors could be responsible. “The more time the market has to digest [the] report, the more the report seems a bit of an anomaly relative to other data,” said a deputy chief investment officer cited by Mamta Badkar and Naomi Rovnick of Financial Times .

Other data include the ADP ^® National Employment Report ^™ which showed 742,000 new jobs in April. The report reflects real-time data on one-fifth of U.S. private payroll employment.

Rethinking work . “There is also growing evidence – both anecdotal and in surveys – that a lot of people want to do something different with their lives than they did before the pandemic. The coronavirus outbreak has had a dramatic psychological effect on workers, and people are reassessing what they want to do and how they want to work, whether in an office, at home, or some hybrid combination,” reported The Washington Post .

U.S. financial markets shrugged off the news. The Standard & Poor’s 500 Index finished the week at a record high, and 10-year Treasury rates finished Friday where they started.

Best regards,

Womack Investment Advisers, Inc.

WOMACK INVESTMENT ADVISERS, INC.

Oklahoma / Main Office: 1366 E. 15th Street - Edmond, OK 73013
California Office: 4660 La Jolla Village Dr., Ste. 100 - San Diego, CA 92122
Phone (405) 340-1717 - Toll Free (877) 340-1717

Website: www.womackadvisers.com

Dogecoin Passed a Market Cap of Over $75 Billion

Mon, 10 May 2021 15:45:00 GMT

After this weekend’s appearance on Saturday Night Live by populist Dogecoin promoter and Tesla CEO Elon Musk (during which he joked Dogecoin was a “hustle”), Dogecoin fell from a pre-SNL high of 72c to as low as 43c but had rebounded to 57c as of mid-Sunday evening. Whatever its merits or demerits, Dogecoin is certainly the most valuable joke in the known universe!

Best regards,

Womack Investment Advisers, Inc.

WOMACK INVESTMENT ADVISERS, INC.

Oklahoma / Main Office: 1366 E. 15th Street - Edmond, OK 73013
California Office: 4660 La Jolla Village Dr., Ste. 100 - San Diego, CA 92122
Phone (405) 340-1717 - Toll Free (877) 340-1717

Website: www.womackadvisers.com

5 Ways the World Will Look Different in 2100

Fri, 07 May 2021 16:50:00 GMT

The world’s 65 and older population is growing rapidly.

According to the most recent population estimates from the United Nations , “…1 in 6 people in the world will be over the age 65 by 2050, up from 1 in 11 in 2019. The latest projections also show the number of people aged 80 or over will triple in the next 30 years. In many regions, the population aged 65 will double by 2050, while global life expectancy beyond 65 will increase by 19 years.”

Longevity deserves more thought than it often receives. It is an essential part of every financial and retirement plan, influencing savings goals, investment choices, and retirement income levels. Yet, people often underestimate their potential longevity.

In the United States, the average life expectancy at age 65 is 19 years, according to the Centers for Disease Control (CDC). Consequently, many people assume they should plan to live to age 84. However, the CDC estimate is an average. Half of 65-year-olds will live beyond age 84.

When it comes to planning for the future, having above average expectations for longevity may be a good idea.

Best regards,

Womack Investment Advisers, Inc.

WOMACK INVESTMENT ADVISERS, INC.

Oklahoma / Main Office: 1366 E. 15th Street - Edmond, OK 73013
California Office: 4660 La Jolla Village Dr., Ste. 100 - San Diego, CA 92122
Phone (405) 340-1717 - Toll Free (877) 340-1717

Website: www.womackadvisers.com

Hello Spring and Economic Recovery

Thu, 06 May 2021 15:57:00 GMT

Last week, the Bureau of Economic Analysis reported the U.S. economy grew at a 6.4 percent annualized rate for the first three months of 2021 . While that’s good news for companies and workers, asset managers are checking their expectations.

The stock market reflects what investors think may happen in the future. During the past year, major U.S. stock indices moved higher as investors anticipated vaccines and economic recovery, reported Patti Domm of CNBC . Since its March 2020 low, the Standard & Poor’s 500 Index has gained 88 percent.

Amidst strong signs of recovery in the United States, some asset managers are positioning for “inflation and tapering,” according to a source cited by Naomi Rovnick of Financial Times . “ Investors have topped up their cash holdings at the fastest rate since March 2020 as debate intensifies over whether stock markets will continue rallying now the U.S. economic recovery from the pandemic is firmly under way.”

Investors were feeling cautious last week, but there were no signs of tapering, which occurs when the Federal Reserve begins to buy fewer bonds. On Wednesday, the Fed left its supportive policies in place.

When the Fed begins to change course and rates move higher, equity market valuations may adjust. “The main worry for stocks is that higher bond yields translate into lower equity valuations. Higher yields reduce the current value of future profits and therefore can reduce earnings multiples,” reported Jacob Sonenshine of Barron’s .

Profits were strong during the first quarter of 2021. U.S. companies continued to report exceptional earnings last week. With 60 percent of firms in the Standard & Poor’s 500 Index reporting, the blended earnings growth rate was 45.8 percent. More than 8 of 10 companies have reported better than expected earnings, reported John Butters of FactSet .

Major U.S. stock indices finished the week flat to down. Rates on 10-year Treasuries edged higher.

Best regards,

Womack Investment Advisers, Inc.

WOMACK INVESTMENT ADVISERS, INC.

Oklahoma / Main Office: 1366 E. 15th Street - Edmond, OK 73013
California Office: 4660 La Jolla Village Dr., Ste. 100 - San Diego, CA 92122
Phone (405) 340-1717 - Toll Free (877) 340-1717

Website: www.womackadvisers.com

Biggest Rise in The Bloomberg Agriculture Spot Index in Nearly a Decade

Mon, 03 May 2021 16:34:00 GMT

The Bloomberg Agriculture Spot Index has risen by 76% year-over-year - the biggest rise in nearly a decade. This is more than just a problem at the American dinner table as there is extensive literature connecting big jumps in food prices to periods of social unrest. The Arab Spring unrest in 2010-11 coincided with the last jump of this magnitude.

Deutsche Bank’s Jim Reid points out that “… emerging markets are more vulnerable to this trend, since their consumers spend a far greater share of their income on food than those in the developed world.” And Warren Buffet said at this weekend’s Berkshire Hathaway annual meeting that "We are seeing substantial inflation. We are raising prices. People are raising prices to us, and it's being accepted." Berkshire Hathaway owns, among many other holdings, food processing giant Kraft Heinz.

Proposed Capital Gains Tax Hike Targets Wealthy Investors

Thu, 29 Apr 2021 15:53:00 GMT

A capital gains tax hike has been proposed. Another factor that influenced last week’s stock market decline was the proposed capital gains tax hike. Investors’ response was a bit surprising since the tax increase wasn’t really news. Ben Levisohn of Barron’s reported:

“President Joe Biden made no secret of his plan to raise capital-gains taxes on the very wealthy. It was a campaign pledge, one that got enough attention for Goldman Sachs to release a note looking at the historical impact of previous increases on the stock market. (The answer: not very much.)”

According to Steve Goldstein of MarketWatch , the Goldman note reported the wealthiest U.S. households sold 1 percent of their equity assets prior to the 2013 capital gains tax increase. As a result, the S&P 500 Index experienced a short-lived loss six months prior to the tax hike and, six months after the tax hike, the Index was back in positive territory.

While the long-term impact on stock markets may be relatively small, the effect on high income investors could be significant.

The administration proposal, as written, would nearly double the capital gains tax rate for people with adjustable gross income of $1 million or more. (That’s about 0.3 percent of American taxpayers.) The current top long-term capital gains tax rate would increase from 20 percent to 39.6 percent, reported Laura Davison and Allyson Versprille of Bloomberg .

The capital gains tax increase is a proposed change. It has not been finalized, and there are indications the final tax may be lower if the bill is passed.

If you’re concerned about the potential tax increase and would like to learn more, please get in touch.

Best regards,

Womack Investment Advisers, Inc.

WOMACK INVESTMENT ADVISERS, INC.
Oklahoma / Main Office: 1366 E. 15th Street - Edmond, OK 73013
California Office: 4660 La Jolla Village Dr., Ste. 100 - San Diego, CA 92122
Phone (405) 340-1717 - Toll Free (877) 340-1717

Website: www.womackadvisers.com

Strong Corporate Earnings and Unfavorable Inflation Expectations

Wed, 28 Apr 2021 20:22:00 GMT

Last week, as investors weighed the news, strong corporate earnings were offset by higher grocery prices and rising numbers of global coronavirus cases.

Solid corporate earnings weighed favorably.

So far, 25 percent of the companies in the Standard & Poor’s (S&P) 500 Index have reported first quarter earnings, and 84 percent said profits grew faster than expected, reported John Butters of FactSet . The blended earnings growth rate for the S&P 500 (which includes estimated earnings for companies that have not yet reported and actual earnings for companies that have) was 33.8 percent last week. For context, the 5-year average earnings growth rate (actual earnings) for the S&P 500 was 6.9 percent as of last week.

It’s important to remember the impact of earnings is often muted as earnings expectations – good or bad – tend to be priced into the market long before they are reported.

Inflation expectations weighed unfavorably.

Investors were concerned about inflation – and so were consumers. While the Federal Reserve and many economists believe we’ll see a fleeting uptick in inflation, others think the increase will persist. “…A consistent drumbeat of price hikes from major companies, consumer reports, and market data suggest the world may not be going along with their conclusion,” reported Dion Rabouin of Axios .

It is likely markets may pay particularly close attention to Federal Reserve statements about inflation and interest rates this week.

Rising numbers of Covid-19 cases around the world tipped the scales.

Concerns about India’s coronavirus surge, Japan’s state of emergency, and rising numbers of cases around the world caused investors to reassess expectations and some sold shares of companies that were expected to benefit from the re-opening of world economies. Yun Li and Maggie Fitzgerald of CNBC reported:

“The sell-off in shares that are tied to a successful reopening came as the World Health Organization warned that global coronavirus infections were edging toward their highest level in the pandemic. In the United States, while the country is maintaining a pace of 3 million reported vaccinations per day, about 67,100 daily new infections are still being recorded.”

Despite uncertainties, most (67 percent) professional investors who participated in Barron’s Big Money Poll said they were bullish on the outlook for stocks in the next 12 months. Just 7 percent were bearish.

Major U.S. stock indices finished the week flat or slightly lower. U.S. Treasuries rallied briefly before finishing the week flat.

Best regards,

Womack Investment Advisers, Inc.

Website: www.womackadvisers.com

Goldman Sachs Strategists Expect U.S. GDP Growth to Remain Above Trend

Mon, 26 Apr 2021 16:54:00 GMT

Strategists at investment bank behemoth Goldman Sachs recently noted that their economists expect U.S. GDP growth to remain above trend through the next few quarters; however, they caution that this will not necessarily translate to equally outsize gains in the stock market.

In the chart below, stock market gains for the following 3, 6 and 12 month periods are grouped by Institute for Supply Management (ISM) index values at the start of the periods. What it shows clearly is that the best stock market gains come from good-but-not-spectacular ISM values, while the red-hot “greater than 60” ISM values are typically followed by low or even negative stock market returns. The current ISM value is 65 – squarely in that red-hot category.

Best regards,

Womack Investment Advisers, Inc.

Website: www.womackadvisers.com

Bitcoin Hit the $1 Trillion Market Cap Milestone Twice as Fast as Amazon and Three Times Faster than Apple, Data Shows

Mon, 19 Apr 2021 18:52:00 GMT

What took Microsoft 44 years, Apple 42 years, Amazon 24 years and Google 21? The answer: achieving a trillion dollar market capitalization. However, it took the Bitcoin cryptocurrency just 12 – the fastest ever.

At the beginning of 2021, Bitcoin had a market capitalization of $500 billion, but in just four months it has gained another $500 billion as tech CEO’s like Elon Musk and Jack Dorsey have made sizable investments, multiple exchange-traded funds are preparing to launch, the CoinBase cryptocurrency exchange has gone public, and many legacy financial institutions like PayPal, MasterCard, Visa, JP Morgan and the Bank of New York Mellon have come on board. The only question now seems to be, “How long till the next trillion?” As they say on the WallStreetBets Reddit message board, “To the Moon!” (Chart from visualcapitalist.com)

Best regards,

Womack Investment Advisers, Inc.

Website: www.womackadvisers.com

Help Wanted: Too Many Jobs and Not Enough Workers

Mon, 12 Apr 2021 15:24:00 GMT

Interviews reveal the prevailing attitude: it pays darn well to not work! The trillions of dollars in government stimulus are now incentivizing potential workers not to seek gainful employment, but to sit back and collect the next “stimmy check” for not working. The chart below, from Bank of America’s Global Research department, plots the National Federation of Independent Business (NFIB) “Hard to Fill” job openings category. As can be seen, the current level of 40 is the highest in the history of the index.

Best regards,

Womack Investment Advisers, Inc.

Website: www.womackadvisers.com

VOLTSWAGEN?

Mon, 05 Apr 2021 16:16:00 GMT

Volkswagen pulled an early April Fool’s joke on the world when it announced that it was henceforth changing its name to “Voltswagen”. Later, VW admitted it was indeed an April Fool’s joke, but it certainly succeeded in drawing attention to VWs very large ambitions in the Electric Vehicle (EV) industry. In fact, around the globe VW has been gaining market share rather sharply, and the consulting firm Wood Mackenzie predicts that VW will become the world’s largest EV producer by the end of this decade, producing about half of the total EV unit output. (Chart from chartr.co)

Best regards,

Womack Investment Advisers, Inc.

Website: www.womackadvisers.com

Coronavirus Hasn't Lead to the Baby Boom that was Anticipated, According to a New Study

Mon, 29 Mar 2021 16:02:00 GMT

With everyone locked up in their homes around this time last year, many scientists who study population demographics predicted a subsequent “baby boom”. This, however, does not seem to have been the case. The latest data from Europe suggests advanced economies are almost certainly in for the opposite—a baby bust.

Data from Spain estimates the number of babies born between December 2020 and January 2021 was down roughly 20% from the same time the year before. Data from Italy shows a similar pattern. Italy and Spain already have some of the lowest fertility rates in the world – well below the so-called “replacement rate” - and it is not hard to imagine why potential parents may have put off the enormous responsibility of having children over the past year. (Chart from Chartr.co)

With Rising Lumber Prices, Is Now a Good Time to Build?

Mon, 22 Mar 2021 16:02:00 GMT

2020 Air Travel Plummeted: How Much Did it Rebound by the End of Year?

Mon, 15 Mar 2021 16:14:00 GMT

Best regards,

Womack Investment Advisers, Inc.

Website: www.womackadvisers.com

Are We Still in the Early Stages of the Current Bull Market?

Mon, 08 Mar 2021 21:25:00 GMT

Looking at data over the past six decades, Truist asserts that the current bull-market may be both too young and too limited in terms of price gains to be over anytime soon. The current gains are much lower than the average gain since 1957, and the age of this bull is not even close to the average duration of 5 years.

Where are the World's Most Expensive Cities?

Mon, 01 Mar 2021 20:00:00 GMT

AND THE MOST EXPENSIVE CITIES IN THE WORLD ARE… Every year, The Economist Intelligence Unit (EIU) reports on the worldwide cost of living by surveying the cost of 138 goods and services in major cities around the world.

As of September 2020, prices were up just 0.3 percent, year-to-year. The cost of consumer staples remained fairly steady, overall. However, the prices for recreation (which includes personal electronics), personal care, tobacco, alcohol, and domestic help, increased. The report stated:

“Amid the pandemic, price-conscious consumers have also opted for cheaper products in many countries, increasing price competition for less-expensive goods…On the other hand, high-earning consumers have been comparatively unaffected by the pandemic. While they are likely to shop less, prices of premium products have remained resilient. Supply-chain problems have also had differing impacts on different goods, pushing up the price of high-demand products such as computers in some cities.”

Regionally, prices fell in Latin America, North America, Eastern Europe, and Africa. They increased in the Middle East, Asia, and Western Europe. The EIU’s World Cost of Living Index found, during 2020, the most expensive cities in the world were:

The least expensive were:

Best regards,

Womack Investment Advisers, Inc.

Website: www.womackadvisers.com

Make it happen

ik@ippei.com (Tori Klein) — Tue, 12 Mar 2019 17:00:13 GMT

Change your life and the world will thank you.

Use your voice and live by your actions. It is not an easy path, but it is the right one.