In today’s Steady Investor, we look at key factors that we believe are currently impacting the market and what could be next for the markets such as:
- Manufacturing rebounds across the globe
- Saving rate increased during the pandemic
- What does global demand for commodities say about current and future economic activity
Manufacturing and Services Rebound Around the World – A survey of manufacturing and services PMIs across the globe shows a similar pattern: a very steep decline in March and April activity, followed by a “v-shaped” bounce in May. This resurgence of activity took place across the U.S., Europe, and Asia, as the global economy slowly but surely pushes forward following pandemic-induced lockdowns. The U.S. composite index (produced by IHS Markit) rebounded to its highest level in four months, though to be fair still remains in contractionary territory (readings lower than 50). The United Kingdom and France saw rebounds in manufacturing, though demand remains weak. Japan’s services sector is showing bright spots, while its manufacturing rebound is lagging.1 Taken together, the manufacturing and services picture is mixed, but signs of life are returning, and it’s safe to say the worst of the economic crisis is now in the rear-view mirror – at least for now.
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Dividend-paying Stocks May Offer a Solution During this Pandemic
The challenge many retirement investors are facing through this crisis is knowing where to invest. Cash won’t do. But a portfolio invested in stocks with a strong track record of dividends and dividend growth may give investors the potential for a stable and predictable source of income in retirement.
To learn more about how to use dividend-paying stocks in your strategy to potentially generate cash flow for retirement, check out our guide “A Look Beyond Bonds: There May Be a Better Option for Your Retirement Income.”
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A Look Beyond Bonds: There May Be a Better Option for Your Retirement Income2
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Savings Rates Shot Higher – Americans shifted spending to essential goods and e-commerce during the height of the pandemic, but they also saved more. In a surprising data quirk released this week, the savings rate in America shot higher last month, as households stayed home (and therefore reduced spending) and as government stimulus actually resulted in pay increases for many. As the economy reopens, many consumers will be out shopping again, and it should also be noted that the $600 unemployment boost ends on July 31.3 As such, the pop in the savings rate is likely to be short-lived, but hopefully, the experience encourages more households and save and invest for the long-term.
Commodities Prices Firm Up, Indicating Demand Returning – Looking at global demand for commodities is a quick way to gauge current and future economic activity, particularly in the realm of global manufacturing. A good sign that demand is returning can be seen in the prices for raw materials, like oil, copper, and tin – all of which have seen strong rebounds over the last couple of weeks.5 To be fair, producers have also cut supply in response to the full-stop to global economic growth, but rising prices now appear to be spurred by increasing factory activity and the resumption of global trade.
While we have seen parts of the economy start to recover, we are not out of the woods yet. You may be wondering what can you do in the meantime to protect your retirement. You have to invest somewhere, as cash won’t do. In times like this, I would suggest considering stocks that are growing earnings and dividends and have a track record of doing so.
To learn more about how to use dividend-paying stocks in your strategy to potentially generate cash flow for retirement, check out our guide “A Look Beyond Bonds: There May Be a Better Option for Your Retirement Income.”6
If you have $500,000 or more to invest, click on the link below to get our free guide today!
Disclosure
2 Zacks Investment Management reserves the right to amend the terms or rescind the free A Look Beyond Bonds: There May Be a Better Option for Your Retirement Income offer at any time and for any reason at its discretion.
3 The Wall Street Journal, June 23, 2020. https://www.wsj.com/articles/the-coronavirus-savings-glut-11592905053
4 U.S. Bureau of Economic Analysis, Personal Saving Rate [PSAVERT], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/PSAVERT, June 25, 2020.
5 The Wall Street Journal, June 22, 2020. https://www.wsj.com/articles/rally-in-raw-materials-signals-economic-rebound-11592818201
6 Zacks Investment Management reserves the right to amend the terms or rescind the free A Look Beyond Bonds: There May Be a Better Option for Your Retirement Income offer at any time and for any reason at its discretion.
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