Private Client Group

March 29th, 2022

Gas Prices Update, Fed Signals More Aggressive Stance, Russia’s Economic Woes

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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

1 Wall Street Journal. March 22, 2022. https://www.wsj.com/articles/gasoline-prices-shoot-up-at-fastest-rate-on-record-11647957303?mod=djemRTE_h

2 Zacks Investment Management reserves the right to amend the terms or rescind the free Retirement’s Uphill Battle: Generating Income in a Low-Interest Rate Environment offer at any time and for any reason at its discretion.

3 Wall Street Journal. March 21, 2022. https://www.wsj.com/articles/powell-says-fed-will-consider-more-aggressive-interest-rate-increases-to-reduce-inflation-11647880218?mod=djemRTE_h

4 Wall Street Journal. March 20, 2022. https://www.wsj.com/articles/russias-push-for-self-sufficient-economy-fails-before-western-sanctions-11647777600?mod=djemRTE_h

5 Zacks Investment Management reserves the right to amend the terms or rescind the free Retirement’s Uphill Battle: Generating Income in a Low-Interest Rate Environment offer at any time and for any reason at its 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.

Questions posed are for demonstrative and informational purposes only and may not reflect the views of current clients or any one individual.
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