Last week we saw an attack on the world\u2019s largest oil facility, the Fed cut rates again and injected money into Repo Market. What does all this mean for the markets? Read on to get the details.<\/p>\n\n\n\n
Attack on the World\u2019s\nLargest Oil Production Facility \u2013 <\/strong>A missile attack last weekend on Saudi\nArabia\u2019s Abqaiq, the world\u2019s largest oil production facility, sent ripples\nthrough crude oil markets on the first day of trading (Monday, September 16th).\nThe global benchmark for oil, Brent Crude, shot up as much as 19%.1<\/sup>\nBut in the following days, investors were reminded that trying to trade an oil\nsupply shock in the short term is often ill-advised. With the United States\ncurrently the largest oil producer in the world \u2013 and willing to release oil\nfrom the Strategic Petroleum Reserve to stabilize markets \u2013 and given that\nwithin a day Saudi Arabia assured markets that it could be fully back online by\nthe end of the month, crude oil prices retreated. The shock was short-lived. Even\nstill, at the end of the day, investors should also take note of the current vulnerability\nof oil markets to tension in the Persian Gulf, where risk of geopolitical\nconflict is rising.<\/p>\n\n\n\n Fed Cuts Rates Again,\nEven as Economy Remains Relatively Strong \u2013 <\/strong>As expected, and for the second\ntime in two months, the Federal Reserve cut the benchmark interest rate by a\nquarter percentage point.2<\/sup>\nThis particular Fed meeting and rate cut stood distinctly apart from other\nmeetings, for two reasons. The first was dissent among Fed officials \u2013 three\nvoted against the decision to cut rates, with two of them arguing rates should\nhave been left unchanged and the third supporting a bigger cut. In a statement,\nthe Fed acknowledged the negative impact of trade policy uncertainty, but they\nalso raised expectations for GDP growth in the summary of economic projections\n\u2013 making it clear that the Fed is trying to play offense now versus defense\nlater. Meanwhile, a key economic indicator \u2013 U.S. industrial production \u2013 rose\na seasonally adjusted 0.6% in August, well above expectations and underscoring\nresilience in the economy. Output at U.S. factories rose 0.5% from July, which\nmeasures approximately 75% of the nation\u2019s total industrial output.3<\/sup>\nOn balance, there\u2019s a base case for economic growth for the balance of 2019, in\nour view, yet the Fed keeps cutting rates. \n<\/p>\n\n\n\n ______________________________________________________________________________<\/p>\n\n\n\n Get These 7 Secrets to Building the Ultimate Retirement Portfolio\u00a0<\/a><\/strong> Download Your Copy of\u00a0<\/a>7 Secrets to Building the Ultimate DIY Retirement Portfolio.<\/a>4<\/a><\/sup><\/em><\/strong><\/p>\n\n\n\n _____________________________________________________________________________<\/p>\n\n\n\n The European Central\nBank (ECB) Takes More Action \u2013 <\/strong>Monetary easing is not happening only in the\nU.S. The ECB cut its key interest rate below\nzero<\/em>, effectively penalizing customers for parking money at the bank, and\nthey also set in motion a new package of bond buying which should put pressure\non longer term rates \u2013 keeping borrowing costs and mortgage rates low for years\nto come. This new ECB policy is marketed as economic stimulus, but we believe a\nflaw in the policy logic is that lower long rates mean flatter yield curves,\nwhich actually dis-incentivize banks to initiate new loans (because loans are\nless profitable). The Bank of Japan and Bank of England are expected to hold\nrates steady as the ECB and Fed ease.5<\/sup><\/p>\n\n\n\n Fed Injects Emergency Stimulus\ninto Repo Market \u2013 <\/strong>Banks\nand large financial institutions have daily transactions where cash is traded\nfor securities (as collateral), with the borrower eventually \u2018repurchasing\u2019\n(repo) the securities with some interest tacked on. This is a basic overview of\nhow the repo market works, and the interest tacked onto a cash loan generally\ncoincides with the fed funds rate. That\u2019s why when the repo rate spiked to 5%\nlast week and then spiked again the next day, the Federal Reserve had to\nintervene with a cash injection to calm the markets. These stories matter\nbecause of the possibility that the cash crunch in this case was a sign of\nsystemic problems in the marketplace. But we noted that Monday was the deadline\nfor companies to submit quarterly tax payments, and it was also the day that\n$78 billion of cash was converted to recently auctioned Treasury securities.6<\/sup>\nThe shortage of cash in the system could have been tied to these events, in our\nview. <\/p>\n\n\n\n In the meantime, as we wait to see how this story\nand others pan out, I recommend focusing on your long-term financial goals. To\nhelp you do this we are offering our just-released free guide, 7\nSecrets to Building the Ultimate DIY Retirement Portfolio<\/em>.7<\/sup> It\nprovides a step-by-step blueprint of our customized investing process to\npotentially help you build a sound retirement portfolio of your own and pursue\nlong-term investing success. Fed lowers rates again, injects cash into repo market, Saudi facilities recovering after attack<\/p>\n","protected":false},"author":3,"featured_media":7426,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-8255","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8255","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=8255"}],"version-history":[{"count":1,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8255\/revisions"}],"predecessor-version":[{"id":10701,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8255\/revisions\/10701"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=8255"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=8255"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=8255"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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With news surrounding the oil markets to the Fed cutting rates and navigating market cycles, it is no small feat to create a retirement portfolio that meets your financial goals. To build a portfolio that can potentially reach your goals, you must put some time and effort into defining your investing objectives, determining your asset allocation, and managing your investments over time.
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If you have $500,000 or more to invest, I recommend downloading our guide\u00a07 Secrets to Building the Ultimate DIY Retirement Portfolio.<\/em>\u00a0It provides a step-by-step blueprint of our customized investing process to potentially help you build a sound retirement portfolio of your own and pursue long-term investing success.<\/p>\n\n\n\n
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\nIf you have $500,000 or more to invest, get this\nguide to learn our ideas on the step-by-step process to building and\nmaintaining a retirement portfolio that will help you reach your goals and\nenjoy a secure retirement.<\/p>\n","protected":false},"excerpt":{"rendered":"