In today’s Steady Investor, we look at key questions investors are asking, and factors that we believe are currently impacting the market such as:
Stimulus Talks Collapse, Face Uncertain Future – The stock market has been showing signs of sensitivity to stimulus talks. When President Trump informed administration officials to break off talks with the House of Representatives over a stimulus plan, U.S. stocks sold off sharply. When the President indicated the next day that a more targeted, short-term deal for stimulus checks and support for airlines was on the table, the market rallied. Short-term, investors may reasonably expect volatility until a deal is done. Federal Reserve Chairman Jerome Powell has delicately but deliberately weighed in on the stimulus matter, stating in remarks this week that the “expansion is still far from complete” and failure to pass new stimulus measures could lead to a weaker recovery. Even still, the three branches of government appear to be at odds over the size of the stimulus bill and where funds should be allocated.1
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Recession Fears Rise as Market Volatility Increases
With the U.S. Economy recovering at slower rates than expected and market volatility becoming a constant, there are fears surrounding a recession. Investors are concerned that the current crisis could cause a U.S. or even a global recession.
If you’re at or near retirement, a recession may require pivoting your retirement investing strategy. The market turbulence and uncertainty are scary—but now is the time to take action and prepare yourself for the coming months.
It’s important to understand how recessions work, how long they last, and how to potentially protect yourself and your family from long-term damage to your assets and security. We can help you with our free guide, The Economy is in Recession: 5 Insights to Navigate Your Way Through It.2
If you have $500,000 or more to invest, get our free guide today. You’ll learn the most scope and impact of recessions, and get our viewpoint on the most important moves you can make to weather this one. Don’t wait—get this guide today!
Download Your Copy Today: The Economy is in Recession: 5 Insights to Navigate Your Way Through It
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Services are Expanding, But Will the Momentum Hold? Services account for a majority of the U.S. economy, so a recovery in U.S. industries like healthcare, travel, restaurants, and real estate are key to maintaining momentum for the broad economic recovery. In September, the Institute for Supply Management’s non-manufacturing index – which is the most comprehensive indicator for services activity – posted a reading of 57.8, up from 56.9 in August. Any reading above 50 indicates expansion from the previous period.3 Since services activity is coming off recession-low comparisons, expansion is generally easy to come by early in an economic recovery. The question is, will the momentum hold?
The U.S. Jobs Market is Cooling Off – The jobs market is struggling to claw its way back to pre-pandemic levels. In September, U.S. employers added 661,000 jobs, which was far below the 859,000 expected and marked a sharp slowdown from gains made over the summer. According to the jobs website Glassdoor, the number of job postings fell -0.3% in September compared to August, which may be an early indication that the ‘low hanging fruit’ job gains have already been posted. The U.S. has replaced 11.4 million of the 22 million jobs lost to the pandemic, but momentum is likely to slow until the virus comes under better control and/or a vaccine is widely distributed.4 Neither outcome seems likely for 2020, which underscores the need for more fiscal stimulus before the end of the year.
Headwinds are Building Against Big Tech – In the first week of October, a Democratic-led House panel issued a lengthy report detailing how Congress should consider forcing the biggest technology companies to break up their businesses. Republicans followed suit with their own report, which endorsed strong antitrust enforcement but stopped short of calling for breakups. While we do not believe there is a high probability of meaningful legislation this year, the odds are rising for legislation and regulation in the future. Recall that earlier in the year, the CEOs of the biggest tech companies in the U.S. – Facebook, Google, Amazon, and Apple5 – were called to testify before Congress on possible antitrust violations. Headwinds are building.
In addition to concerns surrounding stimulus debate and the job market cooling off, there are also many fears surrounding a recession. If you’re at or near retirement, a recession may require pivoting your retirement investing strategy. In order to do this, it’s important to understand how recessions work, how long they last, and how to potentially protect yourself and your family from long-term damage to your assets and security. We can help you with our free guide, The Economy is in Recession: 5 Insights to Navigate Your Way Through It.6
If you have $500,000 or more to invest, get our free guide today. You’ll learn the most scope and impact of recessions, and get our viewpoint on the most important moves you can make to weather this one. Don’t wait—get this guide today!
Disclosure