All in Economic Update
Markets gifted us with another burst of volatility and headlines are looking apocalyptic again.
Some folks might think it's time to bail on markets, but I'll tell you why that thinking is a mistake.
First, let's peel back some layers to explore what's driving markets. (Want to discuss any concerns directly? Just Contact Us.)
Markets bucked and sold off again. (1)
Should we be worried?
Not necessarily. These things happen pretty regularly, especially when headlines are negative.
In fact, you might recall that we kicked off 2022 with a big drop. (2)
So, let’s talk about what’s behind the latest wild market ride.
(Scroll to the end if you want to skip right to the reassurance.)
What led to the selloff?
A number of economists think that a recession may be on the horizon.(1)
The latest forecast by the International Monetary Fund predicts that Russia's invasion of Ukraine is going to take a chunk out of global growth this year and next.(2)
Fannie Mae is forecasting slowing growth in 2022 and a recession in 2023.(3)
When multiple forecasts start pointing in the same general direction, it’s worth paying attention.
So, what do we do with that information right now?
Do we panic and freak out? Bail on our investment strategies to head off losses?
Nope.
May 2022 bring us peace, prosperity, and a whole lotta love.
And some greater certainty about what lies ahead.
You're probably seeing an endless parade of emails, listicles, and thought pieces loaded with predictions for 2022.
Will these predictions be right?
Probably some of them.
Will they be wrong?
Almost certainly.
What do you need to know about how markets performed last quarter (and what could happen this quarter)?
We broke down what you need to know about markets and the economy into a five-minute read.
Keeping up with markets and the economy is a big part of my job, but I want to share some key takeaways and what I’m watching for in the months ahead.
What’s inside the $2 trillion CARES Act? What’s in it for me?
The Coronavirus Aid, Relief, and Economic Security (CARES) Act is designed to provide relief for individuals and businesses who have been hurt by the outbreak. I won’t try to include all 800+ pages in this email, but here are a few key provisions that you should know about:(1)
One-time cash payment. Taxpayers are eligible for a one-time direct deposit of up to $1,200 per adult ($2,400 per couple) plus $500 per child under age 16. Amounts are reduced for those who make more than $75,000 ($150,000 if married). If you have filed your 2019 taxes already, the IRS will use that income to calculate your payment; if not, they’ll use your 2018 tax filing.
At the end of 2019, Congress passed the most sweeping change to retirement rules in over a decade.(1)
Known as the Setting Every Community Up for Retirement Enhancement Act (SECURE Act), this legislation went into effect on January 1, 2020, and impacts retirement and estate planning rules.
Here are a few of the biggest takeaways from the Act:
RMDs Now Start at Age 72
Two days before the quarter ended, the Fed held the line on interest rates and formally suggested that no cuts were coming in 2019. The central bank suggested that one or two cuts might happen, but not until 2020. The Federal Open Market Committee voted 9-1 to keep the benchmark rate in a target range of 2.25% to 2.5% – hardly a split decision (St. Louis Fed President James Bullard voted to cut rates).
*Graphic shows 2018 net income of publicly listed companies (in billion U.S. dollars)
Link to original infographic: https://www.statista.com/chart/17545/worlds-most-profitable-companies/
Apple WAS known as the world’s most profitable company. However, Saudi state oil company Saudi Aramco disclosed company reports with US$111.1 billion in earnings in 2018, far surpassing competitors. https://www.economist.com/business/2019/04/06/saudi-aramco-made-a-111bn-profit-in-2018
