Private Client Group

July 26th, 2021

Debt Ceiling Deadline, U.S. Life Expectancy Drops, Homebuilders Can’t Keep Up

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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:

Is the U.S. Headed for Another Debt Ceiling Showdown? Back in 2019, Congress voted to suspend the debt ceiling until July 31, 2021. With that date fast approaching, the U.S. government needs to take action to either increase the debt limit or suspend the limit for a set amount of time. If Congress does not act, it is possible the federal government could run out of the cash needed to pay debt obligations, perhaps by October or November of this year. The timeframe gives Congress a bit of wiggle room to take action, but politicians appear to be posturing for a debt ceiling showdown, much like the “fiscal cliff” scare of 2013. Absent Congressional action, the U.S. Treasury would be inhibited from selling bonds (Treasuries) to raise cash for paying bills, which at worst could mean defaulting on debt payments for the first time ever. History tells us that Congress will likely wait until the 11th hour to take action, with plenty of drama and fanfare between now and then about the debt.1

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Market Volatility Can Be a Good Thing – Use it to Your Advantage!
 
Downside volatility can be a hassle for almost every investor and we understand how the ups and downs in the market can be hard to manage. Even through the feeling of discomfort, do you know that volatility may have useful, positive benefits to better navigate your investing decisions? We encourage investors to learn how to handle volatility instead of avoiding it.

If you have $500,000 or more to invest, get our free guide, “Using Market Volatility to Your Advantage,” and learn our insights, based on decades of experience, about how a volatile market may be able to help investors refine their strategies and potentially generate solid returns over time.
 
You’ll get our ideas on:

Download Our Guide, “Using Market Volatility to Your Advantage”2

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Life Expectancy Falls in the U.S. – According to the Centers for Disease Control, life expectancy in the U.S. fell by a full 1.5 years in 2020, to 77.3. The Covid-19 pandemic of course had an outsize impact on this figure, and 2021 is likely to see a bump higher. But the largest single-year decline since 1943 (World War II) has some economists and public-health experts concerned, as rising life expectancies are generally a sign of vibrant and improving socioeconomic conditions. The Covid-19 pandemic was also seen exacerbating crises in other troubled areas of American life, such as overdoses, homicides, and chronic diseases. This type of data matters for retirees and planners, as life expectancy is a key component of establishing an appropriate asset allocation for every investment portfolio.3

Homebuilders Struggle to Meet Demand – The U.S. housing market continues to exhibit supply and demand imbalances, where demand is firmly outweighing supply and putting pressure on prices nationwide. Homebuilders are responding by ramping up production, but the slack in the market is seemingly too large to overcome in a short amount of time. According to the Commerce Department, housing starts rose from May to June, 1.16 million of which were for single-family homes. This production boost is the biggest jump since March and is an early signal that home builders are actively trying to respond to sustained demand. Even as single-family housing starts to increase, they are still below the averages seen during the 1990s, when the U.S.’s population was about 20% lower than it is today. Homebuilders want to capitalize on rising demand but are also contending with higher input costs – by some estimates, the jump in softwood lumber prices have added nearly $30,000 to the price of a new single-family home over the last 15 months. Consumers are recognizing these price pressures, too. According to the University of Michigan’s consumer sentiment survey, Americans largely believe now is a bad time to buy a house. The last time consumers were this skeptical was in 1982, when the average 30-year fixed-rate mortgage was around 14%.4

There will always be times like these, where the market is very volatile and investor’s uncertainties are high. Did you know that there are positive aspects of volatility that can affect your long-term financial health? We recommend finding ways to manage volatility instead of overlooking it.

To give insight into ways to manage volatility, I am offering all readers our guide “Using Market Volatility to Your Advantage”5. This guide can help you learn about our insights, based on decades of experience, about how a volatile market may be able to help investors refine their strategies and potentially generate solid returns over time.
 
You’ll get our ideas on:

If you have $500,000 or more to invest, download this free guide today by clicking on the link below.

Disclosure

1 Wall Street Journal. July 22, 2021. https://www.wsj.com/articles/gop-senators-resist-raising-debt-limit-as-democrats-push-biden-spending-plans-11626963928

2 ZIM may amend or rescind the free guide offer, Using Market Volatility to Your Advantage, for any reason and at ZIM’s discretion.

3 Vital Statistics Rapid Release. July 2021. https://www.cdc.gov/nchs/data/vsrr/VSRR015-508.pdf?campaign_id=9&emc=edit_nn_20210722&instance_id=35950&nl=the-morning®i_id=73232473&segment_id=64106&te=1&user_id=6509608d7d654ad83dc4a4bbba63f920

4 Wall Street Journal. July 20, 2021. https://www.wsj.com/articles/home-building-booms-but-not-enough-11626799545

5 ZIM may amend or rescind the free guide offer, Using Market Volatility to Your Advantage, 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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