With all the sudden news and headlines surrounding the current state of the market, we are taking a deeper dive into key factors that we believe investors should keep an eye on, such as:
Could a Gas Tax Holiday Be Coming? All readers are aware: gas prices are on the rise. The average nominal price for regular gasoline has registered at record highs for the past two weeks, following 11 straight weeks of increases. According to the U.S. Energy Information Administration, prices reached $4.32 a gallon on March 14. The media reports often on current gas prices setting record highs, but investors should note that spending on gas as a percentage of total spending and household income has been higher before. Considering that drivers need about 25% less fuel today than they did in 1980 to travel the same distance, and also considering that gas prices as a percentage of household income and net worth is lower today than it was in 1980, gas has hit Americans’ pocketbooks harder before. Even still, the site of $4+ a gallon gas is agitating many consumers, and it’s also encouraging lawmakers across the U.S. to consider a gas tax holiday. Maryland and Georgia have already cut gas taxes temporarily, and Illinois, Maine, Michigan, Minnesota, New York, and Tennessee are among the states considering similar moves. California is exploring the idea of sending $400 debit cards to registered vehicle owners to cushion the blow. At the end of the day, cutting gas taxes will have a marginal impact on price, but ultimately it is the supply and demand of oil that will establish how prices evolve.1
How Can You Produce Retirement Income in Today’s Volatile Market?
Are you actively trying to prepare for your retirement? If so, it’s important to be able to generate income from your retirement investments and avoid risk.
It’s harder now to produce current income from investments. But a portfolio invested in stocks with a strong track record of dividends and dividend growth may give retirees the potential for a stable and predictable source of income.
To learn more about how to use dividend-paying stocks in your strategy to potentially generate cash flow for retirement, check out our guide, “Retirement’s Uphill Battle: Generating Income in a Low-Interest Rate Environment.”
If you have $500,000 or more to invest, click on the link below to get our free guide, Retirement’s Uphill Battle: Generating Income in a Low-Interest Rate Environment2, today!
The Fed Signals Willingness for More Aggressive Tightening – In the most recent Fed meeting, the fed-funds rate was increased by a quarter percentage point – a modest beginning to what is poised to be a year of rate increases. However, in remarks from Federal Reserve Chairman Jerome Powell this week, he indicated that the Fed is willing to be more aggressive in raising rates at future meetings, signaling the possibility of half-percentage point increases should inflation continue to spiral in the months and quarters ahead. The Fed faces a challenging test in setting interest rate policy this year: on the plus side, a shift to spending on services versus goods could ease inflation pressures later in the year. On the negative side, uncertainty on global supply chains fueled by the war in Ukraine – coupled with China’s recent shuttering of key factories and ports as a result of their zero Covid policy – could deal with fresh setbacks that could push up freight rates and slow deliveries. The Fed is also contending with rising wages in the U.S., which has driven concerns over the possibility of inflation pressures courtesy of a wage-price spiral. For the stock market, uncertainty over how quickly and how high the Fed will raise interest rates is likely to drive more volatility, in our view. A clear path of rate increases would allow the market to price-in the effects on the economy more quickly.3
Russia’s Economic Problems Continue to Worsen – Leading into the current war in Ukraine, Russia had been positioning to shield its economy from Western sanctions, in a move dubbed ‘Fortress Russia.’ The idea was for Russia to build and supply more goods and inputs domestically, versus relying on imports from Western countries like the U.S. and EU countries. The plan appears to have failed. Key parts of Russia’s auto industry are shutting down, due to a lack of foreign parts. Medications and household goods are disappearing from shelves, and many Western companies have taken steps to close stores and/or cease new investments. This rapid reordering of Russia’s economy – which is likely to play out over the years ahead – is almost certain to mark a painful transition. Russia relies heavily on energy exports to drive economic growth, and this sector, too is being threatened by sanctions and an investment exodus. Russian projects from the Arctic to the Pacific Ocean are being stalled, and Russia’s access to advanced technology to develop oil fields is being cut off. When Iran and Venezuela faced similar measures dealing blows to oil production, the countries struggled to recover. Russia could face similar challenges.4
Generating Income in Your Retirement in This Volatile Market – If you are looking for a solution to better manage your investments during unprecedented times, we have a suggestion! Especially for investors that are preparing to retire, we recommend 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, “Retirement’s Uphill Battle: Generating Income in a Low-Interest Rate Environment.5”
If you have $500,000 or more to invest, click on the link below to get our free guide today!
Disclosure