In today\u2019s Steady Investor, we look at key\nfactors that we believe are currently impacting market volatility and what\ncould be next for the markets such as:<\/p>\n\n\n\n
Oil Price War Sends\nShockwaves \u2013 <\/strong>As the old saying goes, \u201cWhen it rains, it pours.\u201d Markets\nwere already under stress, given coronavirus fears. But then came news over the\nweekend that Saudi Arabia was engaging in an \u201coil price war\u201d with Russia after\nthe two oil-producing giants failed to come to an agreement over supply cuts.\nThe oil industry was already hurting from soft demand made softer by the\ncoronavirus\u2019s effect on travel. The Saudis originally wanted supply cuts to\nhelp offset softening demand and provide price support, but when the Russians\nwouldn\u2019t cooperate, the Saudis made the bold choice of flooding the market with\nmore supply \u2013 hoping to punish Russia and gain some of its market share. Saudi\nAramco (Saudi Arabia\u2019s oil behemoth) announced this week that it had received\ndirect orders to raise output capacity to 13 million barrels a day, a\nsignificant increase from the 10 million barrels a day currently in production.\nThis supply shock is bad news for US shale producers and the US energy sector\nat-large, which has been struggling to make a profit for years. We might reasonably\nexpect a wave of bankruptcies and debt defaults for small shale companies like\nwe saw in 2016, bringing further woes to the Energy sector. The upshot to the\noil price war is that US consumers are likely to benefit from cheaper gasoline,\nwith some estimates showing that lower oil prices could add up to $125 billion\nof new disposable income.1<\/sup> <\/p>\n\n\n\n _____________________________________________________________________________<\/p>\n\n\n\n Trading Your Retirement Could Wipe Out Your Nest Egg<\/a><\/strong><\/p>\n\n\n\n In\ntimes like this, when the market is volatile, many investors let their emotions\nand fear drive their investments. Even if you\u2019re a seasoned and smart investor,\ntrying to self-direct your retirement investments poses an extremely high risk\n\u2013 not because you aren\u2019t competent, but because you are human. Instead of\nletting your emotions take control, it is essential to focus on the long-term\noutlook and the hard data.<\/p>\n\n\n\n If you\nhave $500,000 or more to invest, get our free guide, \u201cWhy Trading Your\nOwn Retirement Can Be Hazardous to Your Financial Health\u201d<\/em><\/strong>\u2014it offers\nsome compelling reasons\u2014backed by facts and research\u2014why trading your\nretirement assets can be hazardous to your financial health.<\/p>\n\n\n\n This guide explores some of\nthe key differences between trading and investing for retirement:<\/p>\n\n\n\n Download Your Copy of \u201cWhy Trading Your Own Retirement Can Be Hazardous to Your Financial Health.\u201d<\/a>2<\/a><\/sup><\/strong><\/p>\n\n\n\n _____________________________________________________________________________<\/p>\n\n\n\n Markets Price In More\nEconomic Fallout from Coronavirus \u2013 <\/strong>US and global stocks extended their\nvolatile streak in a big way, with wild swings throughout the week rattling\ninvestor\u2019s nerves. As news poured in of event cancellations, canceled flights,\nnew travel restrictions, school closings, and bans on large gatherings, the\nstock market appeared to quickly price in the worst-case scenario of economic\nimpact. The S&P 500 posted its worst single-day drop since 2008, 3<\/sup>\nand talks of economic recession picked up with every day that passed. Investors\neverywhere are wondering, is the US\neconomy heading for a recession? <\/em>It is too early to know today, but it\nlooks as though the economic impact is no longer a supply-related issue only,\nwhere supply chains are disrupted and production levels drop sharply. With consumers\nand businesses holding back from spending and investment, and consumers in\ngeneral avoiding active engagement in the economy, we\u2019re now seeing a palpable\ndemand shock to the economy \u2013 which could make a short and shallow recession a\nself-fulfilling prophecy. That being said, from the moment the coronavirus\noutbreak and fear of the outbreak fades from the center of public discourse \u2013\nwhich we are confident will happen sooner than later \u2013 these supply and demand\nshocks could see a sharp swing back to the positive. The market is likely to\nanticipate this change before the media and public consciousness does. <\/p>\n\n\n\n Will the Federal\nReserve Come to the Rescue? <\/strong><\/p>\n\n\n\n In response to the economic risks posed by the spread of the\ncoronavirus, the Federal Reserve held an emergency meeting last week to cut\nrates by a half percentage point. The Fed basically never makes emergency cuts\n\u2013 the last time they did was during the 2008 global financial crisis. In a move\nthat surprised many, equity markets sold off sharply following the Fed\u2019s\ndecision. We know why <\/em>the Fed decided\nto cut rates: 1) lower rates mean lower borrowing costs to potentially shield\nthe US economy against a reduction in global growth, and 2) lower rates give\nthe market confidence the Fed is prepared to step in and take action. These are\nworthy causes on paper, but will the Fed\u2019s actions actually make much of a\ndifference? The short answer, in our view, is no. <\/em>On the supply side, cutting interest rates by a half percentage\npoint cannot restart factories, get people back to work, or remove travel\nrestrictions. On the demand side, rate cuts won\u2019t inspire people to go out to\ndinner and the movies, spend money in shopping malls, or travel for tourism.4<\/sup>\nWhat\u2019s needed now more than rate cuts is confidence that public health\nofficials and governments are slowing the spread of the virus. Until that\nhappens, the rate cuts aren\u2019t likely to make much of a difference, in our view.\n<\/p>\n\n\n\n All the negative news surrounding the market probably has\nyou wondering how you can protect your investments and your retirement against\nvolatility. But if you are currently managing your own retirement assets, you\ncould be jeopardizing your financial security. And it\u2019s not because you don\u2019t\nhave investing skills\u2014it\u2019s because trading for short-term profits and investing\nfor long-term goals are two very different things. And fear has a way of making\neven the most qualified investor make emotional knee-jerk reactions instead of\nfocusing on long-term goals. <\/p>\n\n\n\n If you have $500,000 or more to invest, get our free guide, \u201cWhy Trading Your Own Retirement Can Be Hazardous to Your Financial Health\u201d<\/a><\/em><\/strong>4<\/a><\/sup>\u2014it offers some compelling reasons\u2014backed by facts and research\u2014why trading your retirement assets can be hazardous to your financial health.<\/p>\n\n\n\n This guide explores some of\nthe key differences between trading and investing for retirement:<\/p>\n\n\n\n <\/p>\n","protected":false},"excerpt":{"rendered":" Saudis boost production to punish Russians, more virus fallout priced into market, Fed response. <\/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":[71,73],"tags":[],"class_list":["post-8556","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-private-client-group","category-steady-investors-week"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8556","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=8556"}],"version-history":[{"count":1,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8556\/revisions"}],"predecessor-version":[{"id":10626,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8556\/revisions\/10626"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=8556"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=8556"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=8556"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}