Private Client Group

June 27th, 2022

Americans Buying Less Gas, Gas Tax Holiday Floated, Home Prices Hit New High

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Current news headlines indicate that we are in a bear market. So, today, we are taking a deeper dive into key factors that we believe are impacting this bear market and what’s to come, such as:

Americans are Buying Less Gasoline – The sting of higher gas prices is starting to hit U.S. consumers. As the average national price continues to hover around $5 a gallon, consumers are showing signs of shifting behavior and filling up less. In the first week of June, the energy-data provider OPIS reported that sales at U.S. gas stations were down 8.2% compared to a year ago. The Energy Information Administration also reported that by mid-June, an estimate of gas products supplied to consumers have fallen approximately 110,000 barrels a day to about 9.1 million barrels a day. That’s also down from 9.4 million barrels a day from a year ago. Consumers are rethinking road trips, utilizing carpooling and mass transit more, and this has been increasingly the case in the past couple of years, working from home more often.1

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Should You Time the Current Market?

In today’s market, rising inflation is causing recession risks to grow stronger. As are result, many investors are making decisions based on fear.

Investors often fall into the trap of trying to buy “at just the right time,” or selling stocks during a crisis when emotions are running high. To better help you avoid acting off emotions and fear, try downloading our guide, “How Market Timing Can Affect Your Retirement Plan2”. This guide explains these behavioral traps and offers potential solutions.

If you have $500,000 or more to invest and want to learn how you may be able to avoid these mistakes today, click on the link below to get your free copy:
 
Download Zacks Guide, “How Market Timing Can Affect Your Retirement Plan.”2

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Is a Federal Gas Tax Holiday Coming? – President Biden decided last week to call for a 3-month suspension of federal gasoline and diesel taxes. While this move appears on the surface as though it could provide temporary relief for higher gas prices, the economic reality is likely far less significant. By the numbers, the federal tax on gas is 18.4 cents a gallon with 24.4 cents a gallon federal tax on diesel fuel. Even if the suspension of the gas tax was fully absorbed by consumers, it would only amount to about a 3.5% discount on price – not necessarily a game-changer. But it’s also true that oil companies could benefit from the gas tax suspension, which would mean the savings are not all passed along to consumers. That would make the discount even more negligible. At the end of the day, oil and gas prices are set by supply and demand in global markets, which gives Congress and the president little power to influence prices. It may not matter anyway – the measure requires Congressional approval, and there does not appear to be enough support to pass a bill.3

Median Home Prices Hit Another Record – The month of May was yet another record-setting one for U.S. home prices. For the first time in the nation’s history, the median price for a home topped $400,000, as the supply and demand imbalance in the marketplace continues to favor homeowners and sellers. May’s median home price increase tallied at 14.8% from a year ago, a remarkable increase that has characterized the past two years. Demand has continued to push higher as millennials, who are also overwhelmingly first-time homebuyers, leave cities in favor of owning homes with space for home office setups. We do not expect this pace of price increases to last very much longer, however, as mortgage rates continue to climb and high prices discourage would-be homebuyers from entering or staying in the market. We also believe the likelihood of a 2008-like bubble in housing is low – there doesn’t appear to be enough inventory in the market for a bubble. What’s more, lending standards have tightened considerably since the housing crisis, and household finances are currently in good shape within a strong labor market.4

Should You Time This Market? If you’re questioning the right financial moves to make as you navigate through this current market, remember not to fall into the trap of trying to buy “at just the right time,” or sell stocks during a crisis out of fear.

Both of these impulses are likely to lead to more failures than successes over time. Even when emotions are running high, we recommend focusing on the long-term view and sticking to your course.
 
Before making any big decisions, check out our guide, “How Market Timing Can Affect Your Retirement Plan.”5 This guide seeks to explain emotional and behavioral traps that investors can fall prey to and offers potential solutions to common mistakes that many self-managed investors make. If you have $500,000 or more to invest and want to learn how you may be able to avoid these mistakes today, click on the link below to get your free copy:

Disclosure


1 Wall Street Journal. June 20, 2022. https://www.wsj.com/articles/as-gasoline-prices-surge-here-are-four-ways-to-save-this-summer-11655668286?mod=markets_major_pos4

2 ZIM may amend or rescind the “How Market Timing Can Affect Your Retirement Plan” guide for any reason and at ZIM’s discretion.
]
3 Wall Street Journal. June 23, 2022. https://www.wsj.com/articles/what-is-gas-tax-biden-making-federal-gas-tax-holiday-11655934436?mod=markets_lead_pos6

4 Wall Street Journal. June 21, 2022. https://www.wsj.com/articles/u-s-existing-home-sale-prices-hit-record-of-407-600-in-may-11655820516?mod=djem10point

5 ZIM may amend or rescind the “How Market Timing Can Affect Your Retirement Plan” 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.

The S&P 500 Index is a well-known, unmanaged index of the prices of 500 large-company common stocks, mainly blue-chip stocks, selected by Standard & Poor’s. The S&P 500 Index assumes reinvestment of dividends but does not reflect advisory fees. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor. An investor cannot invest directly in an index.

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