In today\u2019s Steady\nInvestor, we look at what is going on in the markets and our key takeaways and\nquestions for investors to consider, such as:<\/p>\n\n\n\n
The U.S. Consumer, Back\nin Action \u2013 <\/strong>Consumer spending is the foundation of the U.S. economy,\naccounting for nearly two-thirds of annual GDP. In March and April, the\nCovid-19 pandemic was a literal cliff for retail spending \u2013 job losses and the\ninability to leave home led to sharp declines across nearly all categories of\nspending, except for groceries and essential home goods. May saw the consumer\nspring back to action, with the Commerce Department reporting a +17.7% increase\nin retail sales from a month earlier. The push higher was driven by apparel,\nfurniture, home improvement, entertainment, restaurants, and spending on autos\n(which makes up about 20% of total retail sales). In February, when there were\nno restrictions in the U.S., retail sales hit $527 billion. In May, retail\nsales totaled $485 billion \u2013 not too far behind pre-pandemic levels. Consumer spending\nhas been boosted by loosening restrictions across all 50 states, as well as\ngovernment stimulus such as IRS checks and unemployment benefits.1<\/sup> Key\ndata will come in July when the extra unemployment benefits are set to end. <\/p>\n\n\n\n __________________________________________________________________________<\/p>\n\n\n\n Will the Markets Bounce Back…or is This Time Different?<\/a><\/strong><\/p>\n\n\n\n Even with consumer spending bouncing back, many investors\nare still skeptical as to when and if the markets will recover. The volatile\nstock market, record unemployment, and uncertainty about the future are all\ndriving investor fear and panic. And although most investors know that markets\nand portfolios have always recovered, as the bad news piles up, it\u2019s natural to\nthink, \u201cmaybe this time it\u2019s different.\u201d<\/em><\/p>\n\n\n\n While it is difficult to remain calm in this environment, in\nour opinion, it\u2019s the actions you take right now that have the greatest\npotential to define your financial future.<\/p>\n\n\n\n That\u2019s why we have put together a free investing playbook\nwith insights and guidance to help you seek success when investing through\nthese unprecedented times. If you have $500,000 or more to invest, get our free\ninvesting playbook today.<\/p>\n\n\n\n Download – <\/a>The Black Swan Investing Playbook<\/a>2<\/a><\/sup><\/em><\/strong><\/p>\n\n\n\n __________________________________________________________________________<\/p>\n\n\n\n Fed Chairman Warns of\n\u201cLong-Term Risks\u201d to the U.S. Economy \u2013 <\/strong>Federal Reserve Chairman Jerome Powell\nappeared (virtually) before Congress this week, and his message was far from\nrosy. The Fed Chairman said the U.S. economy could potentially suffer\nsignificant long-term damage from sustained high unemployment and small\nbusiness failures. He added that \u201cuntil the public is confident that the\ndisease is contained, a full recovery is unlikely.\u201d Mr. Powell also urged\nCongress to consider more spending with regards to helping unemployed workers,\nsupporting fiscal budgets for states and municipalities, and taking steps to\nboost consumer confidence with health measures like virus testing and contact\ntracing. Mr. Powell\u2019s testimony painted a rather bleak outlook for the U.S.\neconomy, which in our view actually helps stocks in the medium-to-long term.\nWith the bar set fairly low on long-term economic growth, there is a higher possibility\nof the actual outcome being better than expectations \u2013 a positive outcome for\nequities, in our view. On a similar note, many economists are scrambling to\nre-state expectations for the \u201cshape\u201d of the economic recovery in the U.S. With\nstrong retail sales in May and economic activity continuing to tick higher in\nJune, the possibility of an \u201cL-shaped\u201d recovery \u2013 where economic activity\nremains depressed at pandemic levels \u2013 is pretty much out of play.3<\/sup><\/p>\n\n\n\n The Fed Steps Up\nParticipation in Corporate Bond Markets \u2013 <\/strong>The Federal Reserve has taken\nunprecedented measures to provide liquidity, credit, and confidence in the\ncapital markets since February. In its latest installment of monetary\naccommodation, the central bank announced this week an additional $250 billion\nlending program to buy corporate bonds \u2013 providing additional stability and\nliquidity to credit markets. The Fed plans to build a diversified portfolio of\ncorporate bonds, focused only on companies that were investment grade on March\n22 and with a duration of no greater than five years. The Fed\u2019s role here is\nessentially as another major institutional player in the corporate bond\nmarkets, to keep demand steady and to provide financing to corporations with\nthe potential to earn returns on the back end. The Fed\u2019s debt-purchase program\nis being backed by $25 billion from the U.S. Treasury.4<\/sup> <\/p>\n\n\n\n Guidelines to Seeking Investing Success in This Market\nDownturn<\/strong> – We\u2019re living through extreme times. Aside from health fears\nduring this pandemic, most retirement investors are concerned about their\nassets, and with good reason. The volatile stock market, record unemployment,\nand uncertainty about the future are all driving investor fear and panic. While\nit is difficult to remain calm in this environment, in our opinion, it\u2019s the\nactions you take right now that have the greatest potential to define your\nfinancial future.<\/p>\n\n\n\n That\u2019s why we have put together a free investing playbook5<\/sup>\nwith insights and guidance to help you seek success when investing through\nthese unprecedented times. If you have $500,000 or more to invest, get our free\ninvesting playbook today. You\u2019ll learn about seven time-tested guidelines to\nhelp you seek investing success through this historic \u201cBlack Swan\u201d market\ndownturn.<\/p>\n","protected":false},"excerpt":{"rendered":" Fed buys $250 billion in corporate bonds, Powell warns of long-term risk, consumers back to spending <\/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-8703","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\/8703","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=8703"}],"version-history":[{"count":1,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8703\/revisions"}],"predecessor-version":[{"id":10590,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8703\/revisions\/10590"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=8703"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=8703"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=8703"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}