Private Client Group

March 29th, 2021

Gas Prices Up, Fed’s Inflation View, Housing Still Strong, Suez Canal Blocked

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In today’s Steady Investor, we take a look at key factors that we believe are currently impacting the market, such as:

Noticing Higher Gas Prices? They Could Keep Climbing – It’s not just your city or town where gas prices are inching – or perhaps even climbing – higher. Gas prices reached a national average of $2.88 a gallon last week, which reflects a 30% increase from the same time last year. Of course, looking back one year, the U.S. and global economy were on lockdown, and gasoline refiners were anticipating the impact of a major recession. An outlook of plummeting demand pushed refiners to make major cuts to output, bringing both supply and demand – and thus prices – downward. The opposite seems to be true looking ahead to this spring and summer, as vaccination rates are up and Covid-19 deaths and hospitalizations continue to trend lower. Americans are hitting the road for spring break vacations and are likely planning even more travel over the summer, which has put upward pressure on crude oil and gas prices. The winter freeze in Texas also knocked back supply just as demand was starting to trend firmly higher.1

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Build Your Ultimate Retirement Portfolio!

Events in the pandemic, such as gas prices climbing and inflation, are only a few examples of what’s causing the market to shift significantly. Vaccination rates are rising and COVID-19 cases are dropping, but what does this mean for the market and investors who are trying to build their retirement portfolio?

Today, there are many uncertainties when looking toward the future of the market. The best approach for dealing with this uncertainty is learning how to navigate these challenging times. We believe it is possible to avoid the damage of economic downturns and achieve your retirement goals. However, achieving these goals involves some work: defining your investment objectives, determining your asset allocation, managing investments over time.

To help you do this, we are offering readers our free guide that offers a step-by-step blueprint of our customized investing process to potentially help you build a sound retirement portfolio of your own.

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Get our FREE guide: 7 Secrets to Building the Ultimate DIY Retirement Portfolio2

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The Fed Chairman Talks Inflation – Federal Reserve Chairman Jerome Powell testified before lawmakers this week, and one of the main topics of interest was the elephant in 2021’s room: inflation. The financial news media has been abuzz in speculation over how the new $1.9 trillion stimulus bill – and all the stimulus that came before it – may or may not lead to high inflation in the coming quarters or years. Chairman Powell seemed to err on the side of not worrying: “[The Fed] might see some upward pressure on prices. Our best view is that the effect on inflation will be neither particularly large nor persistent.” He also added that the Fed, for now, remains strongly committed to the accommodative policy given that the economic recovery still has plenty of runway. Overall, Mr. Powell set out to make clear that he did not believe a one-time spending surge would lead to sustained inflation, particularly since the economy has been battling deflationary pressures for over a decade now. Even still, the Federal Reserve has tools to beat back inflation if it becomes an issue.3

Housing Market Strength Continues. Can It Last? – Housing market strength in the U.S. continues apace, and for the second time ever, there are more real estate agents than there are homes for sale. At the end of January, there were 1.04 million homes for sale and 1.45 million agents, which marks a 26% decline in homes for sale and a 4.8% increase in agents available to sell them. The record-low number of homes available for sale could ultimately place even more price pressure on the market, as the spring season generally tends to boost demand. Existing home sales fell 6.6% in February, which still marked a 9.1% increase from the previous year. On average nationwide, houses are selling in less than three weeks. Low-interest rates and remote-work capabilities have driven a big part of demand, which begs the question of whether a full reopening coupled with upward pressure on interest rates will abate the trend.4

Ship Gets Stuck in Suez Canal, May Lead to Even More Supply Chain Bottlenecks – Supply chains have already been compromised by the pandemic, but matters may have been made slightly worse this week when a ground container ship got stuck in the 120-mile canal connecting the Red Sea with the Mediterranean. The Suez Canal is a key route for tankers carrying oil and natural gas, as well as manufactured goods like electronics and machinery from Asia and bound for Europe. If the vessel clogs the canal for any more than one day, the implications on supply chains can become significant, adding costs and delays to a logistics industry already far behind.5

As we experience this plethora of events that are causing a volatile market, know that there are still things you can do to protect your investments. You can create a retirement portfolio that meets your financial goals. To help you do this, I recommend reading our guide, 7 Secrets to Building the Ultimate DIY Retirement Portfolio.6 It provides a step-by-step blueprint of our customized investing process to potentially help you build a sound retirement portfolio of your own and pursue long-term investing success.
 
If you have $500,000 or more to invest, get this guide to learn our ideas on the step-by-step process to building and maintaining a retirement portfolio that will potentially help you reach your goals and enjoy a secure retirement. 

Disclosure

1 Wall Street Journal. March 24, 2021. https://www.wsj.com/articles/unusual-leap-in-gas-prices-puts-3-a-gallon-in-sight-11616578202

2 ZIM may amend or rescind the “7 Secrets to Building the Ultimate DIY Retirement Portfolio” guide for any reason and at ZIM’s discretion.

3 Wall Street Journal. March 23, 2021. https://www.wsj.com/articles/powell-yellen-set-for-first-joint-appearance-in-congress-11616491801

4 Wall Street Journal. March 21, 2021. https://economics.cmail20.com/t/d-l-qyuhutl-jdhijihhuy-h/

5 Wall Street Journal. March 24, 2021. https://www.wsj.com/articles/the-suez-canal-is-blocked-by-a-giant-container-ship-11616560437?mod=article_inline

6 ZIM may amend or rescind the “7 Secrets to Building the Ultimate DIY Retirement Portfolio” guide for any reason and at ZIM’s discretion.

DISCLOSURE

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.

Zacks Investment Management, Inc. is a wholly-owned subsidiary of Zacks Investment Research. Zacks Investment Management is an independent Registered Investment Advisory firm and acts as an investment manager for individuals and institutions. Zacks Investment Research is a provider of earnings data and other financial data to institutions and to individuals.

This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. Do not act or rely upon the information and advice given in this publication without seeking the services of competent and professional legal, tax, or accounting counsel. Publication and distribution of this article is not intended to create, and the information contained herein does not constitute, an attorney-client relationship. No recommendation or advice is being given as to whether any investment or strategy is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole.

Any projections, targets, or estimates in this report are forward looking statements and are based on the firm’s research, analysis, and assumptions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. All expressions of opinions are subject to change without notice. Clients should seek financial advice regarding the appropriateness of investing in any security or investment strategy discussed in this presentation.

Certain economic and market information contained herein has been obtained from published sources prepared by other parties. Zacks Investment Management does not assume any responsibility for the accuracy or completeness of such information. Further, no third party has assumed responsibility for independently verifying the information contained herein and accordingly no such persons make any representations with respect to the accuracy, completeness or reasonableness of the information provided herein. Unless otherwise indicated, market analysis and conclusions are based upon opinions or assumptions that Zacks Investment Management considers to be reasonable.

Any investment inherently involves a high degree of risk, beyond any specific risks discussed herein.

It is not possible to invest directly in an index. Investors pursuing a strategy similar to an index may experience higher or lower returns, which will be reduced by fees and expenses.
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