Investors' Insights and Market Updates

In this educational episode, Trey Booth discusses interest paid to investors from money market accounts and explains how those funds could be used to stimulate the economy.   Trey Booth, CFA®, AIF® Chief Investment Officer Wealth Consultant Email Trey Booth here Fi Plan Partners is an independent investment firm in Birmingham, AL, with a team of professionals serving clients across the nation through financial planning, wealth management and business consulting. The team at Fi Plan Partners creates strategies in the best interest of their clients using fee based investing. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Economic forecasts set forth in this presentation may not develop as predicted. No strategy can ensure success or protect against a loss. Stock investing involves risk including potential loss of principal. Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a registered investment advisor. An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although a money market fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund.The post Money Market Stimulus first appeared on Fi Plan Partners.

Looking for a Break The Fed will be looking at a lot of data this week, which will be used to drive their interest rate decision. Many market participants expect the Fed to raise rates by 0.25 taking the Fed funds rate from 5.25% to 5.5%. This is widely anticipated and likely already priced in the markets. What is important is what the Federal Reserve Chairman says after that decision. Many people feel inflation is coming down, so why does the Fed have to continue raising interest rates? The Fed traditionally hikes rates until something breaks. The Fed wants the price of everything to come down, such as stocks, bonds, cars, houses, etc., and they’re not necessarily seeing that. This is why the Fed typically raises rates until something cracks or breaks. The economy is continuing to muddle along, and nothing has really broken. The Fed’s largest direct impact is typically on leverage-driven parts of the economy, such as housing. The estimated monthly mortgage payment hit a recent high after taking a dip as interest rates started to fall and some of the housing prices started to roll over. Since then, housing prices have spiked back up along with interest rates, causing the monthly mortgage payment to increase to extremely high levels compared to recent history. This is primarily due to higher interest rates but also supply and demand. Existing homes available for sale are at a new all-time seasonal low, with almost no inventory available. This limited availability keeps housing prices high, which is a considerable input into core inflation. Core inflation is what’s challenging the Fed. The spread between core inflation and headline inflation is vast. We explained this in last week’s vlog. We’ve seen headline inflation come down, but core inflation remains sticky, which causes the Fed to want to continue to hike rates to try and break the back of this housing market or some part of the economy where they have direct influence. We aren’t seeing this; therefore, the Fed will likely continue to hike rates until we see something break. This is somewhat concerning for market participants due to not knowing when this will happen until, in hindsight, it’s already happened.   Leading Economic Indicators We wanted to take a detailed look at the current economy to see what the leading indicators are saying about the economy. We continue to get many questions from clients wondering if economists are on track with their call for a recession. We wanted to share a heatmap that we continuously look at weekly that shows ten leading economic indicators. In this episode, you will see a historical recession data chart. The blue boxes on this chart show where each indicator historically has been near recession, and the grey box shows where the indicator currently is. Payrolls and the unemployment rate are strong indicators that say we’re not close to a recession based on history. However, industrial production is one indicator that is showing weakness. Other indicators showing weakness are capacity utilization, a measure of output, and two indicators connected to manufacturing. The two indicators we are focused on are retail auto sales and housing starts; both are well above where they have been in previous recessions. It’s important to note that recessions are a contagion. With five primary indicators still well above recessionary levels, we are inclined to say the economy is still growing strong. We would need to see most of these indicators showing weakness to say that a recession is probable, and we are not seeing that right now. This week’s question will be what the Fed says about future rate hikes, which could cause some of these indicators to turn lower. We will continue to keep an eye on this data in the upcoming weeks to see what impact it could have on future markets and the economy.   Bobby Norman, CFP®, AIF®, CEPA® Managing Director Wealth Consultant Email Bobby Norman here Trey Booth, CFA®, AIF® Chief Investment Officer Wealth Consultant Email Trey Booth here Fi Plan Partners is an independent investment firm in Birmingham, AL, with a team of professionals serving clients across the nation through financial planning, wealth management and business consulting. The team at Fi Plan Partners creates strategies in the best interest of their clients using fee based investing. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Economic forecasts set forth in this presentation may not develop as predicted. No strategy can ensure success or protect against a loss. Stock investing involves risk including potential loss of principal. Securities and advisory services offered through LPL Financial, Member FINRA/SIP

Inflation The top-line inflation number came in better than expected and going in the right direction. This is the one-year anniversary of when inflation peaked last year at 9%. This is a year-over-year number, which means inflation is 3% off of 9%. With inflation moving from 9% to 3%, that’s still a fast move in 12 months. This shows that whatever the Fed is doing seems to be having a positive impact on inflation. The challenge is that when you dig into the numbers, core inflation is stubbornly still near 5%. The main difference between core and top-line inflation in this report is energy. Energy year-over-year transportation costs are down 4.67%. That’s the big driver in the top line number is lower. If you look forward, the risk there is that, more recently, energy prices have started to increase. The month-over-month energy is actually a boost to recent inflation. This may be a discount not being considered going forward, which could explain another phenomenon we noticed. If you look at yields, the CPI has come down. A chart shown in this episode shows that CPI has come down from nine to three percent over the last two years. The 10-year treasury rose with CPI and has stayed stubbornly flat around the four percent range. It doesn’t look like the bond market is pricing in this continued drop in inflation, and in fact, it may be pricing in future higher inflation, which is concerning. Looking back to the 1970s, CPI went up and came down but then went back up again. At the same time, the 10-year yield never came back down and continually increased through that, predicting future hikes and inflation. The market right now is positive on this low print, but it’s concerning to see that the bond market is not expecting that low print to stay. We may see higher inflation from here, which is a bit concerning. Even though these numbers are coming in well below expectations, the market still expects the Fed to raise interest rates at the next meeting in late July. This could be concerning to equity markets if that does come to fruition. Another interesting topic we’ve noticed is that import prices have decreased, which has also helped lower costs. We may be importing deflation from China, which is a surprise and something we haven’t seen in many years. There are a lot of global connections to these numbers and data that we are watching closely.   International Stimulus As investment managers, we look at a lot of data and potential market-moving events. It’s no secret that it’s a global economy and global markets, so we look at domestic and international events that could affect the global markets. One we’ve never discussed on our vlog is the credit impulse indicator from China. The credit impulse indicator measures the change in new credit issued or, better put, a stimulus as a percentage of GDP in China. We’re watching this indicator closely because while the U.S. Federal Reserve is tightening liquidity, which is lowering inflation, we’re starting to see China increase liquidity. Why does this matter, and why are we watching this indicator? Historically, U.S. equity markets have benefited when China has increased liquidity through stimulus. Our analysis shows that if China does stimulate and Chinese credit begins to expand, U.S. equities would likely benefit. During periods where the credit impulse measure indicator expanded in the past, the S&P 500’s median advance was 12.5%, with five of the six periods showing positive returns. More importantly, we look at this to see what sectors would benefit the most, and in this case, Energy and Materials have historically benefited the most. We use this analysis in building our portfolio strategies, so we’ll continue to follow this.   The U.S. Dollar We’ve had many inquiries from clients this year about the U.S. dollar. Some are fearful that the U.S. dollar won’t become the reserve currency. We don’t share those fears, but we plan to continue monitoring them. There are not a lot of alternatives out there that would be good right now to replace the dollar, even if the dollar does come down. On a chart shown in this episode, we will see data that indicates that there is a possibility for the dollar to continue to come down. According to research, the dollar has consolidated and appears to be in a continuation pattern to the downside. We want you to remember the 2022 and 2021 U.S. dollar reports while thinking about this. We aren’t near the 2021 levels yet, and there weren’t nearly as many concerns about the dollar then as they’re on now. There is plenty of room for the dollar to fall. But you might be wondering how this could impact portfolios. This is explained in a chart shown in this episode where the S&P 500 and the dollar are almost perfectly negatively correlated to the opposite of each other. When the dollar goes up, the S&P 500 typically falls. When the dollar goes down, the

Watch this week’s educational episode to hear Ty Miller go over the different types of annuities and explain the importance of each one.   Ty Miller Associate Vice President Wealth Consultant Email Ty Miller here Fi Plan Partners is an independent investment firm in Birmingham, AL, with a team of professionals serving clients across the nation through financial planning, wealth management and business consulting. The team at Fi Plan Partners creates strategies in the best interest of their clients using fee based investing. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Economic forecasts set forth in this presentation may not develop as predicted. No strategy can ensure success or protect against a loss. Stock investing involves risk including potential loss of principal. Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a registered investment advisor.The post Annuity Basics first appeared on Fi Plan Partners.

Rolling Recession The phrase rolling recession is relatively new in economics, but it’s gaining popularity. The U.S. has been experiencing a rolling recession over the last few years that could continue but not an economy-wide one. If you think back to last year, some parts of the economy were in a very deep recession, but it didn’t spread economically. Areas like San Francisco and New York have had a deep real estate recession, and sectors like the technology sector experienced a recession last year. These areas may be coming out of it, but we’re seeing a rolling recession, and new parts of the economy seem to be weakening. Last year, housing was weak, but new housing construction, so far this year, has been very strong. However, commercial real estate is weakening, so it’s not an economic-wide slowdown. It appears to be rolling across the country, where there’s much strength. In areas like Florida and Texas, real estate prices and commercial real estate are strong, but if you look at places like New York, where 40% of the central business district office buildings are, it’s very weak. This is an interestingly new concept where we may not see an economic-wide slowdown, which is more challenging for economists to factor in and project, but we may see it in specific sectors. A good way to look at that and what calls for the discussion is that earning season is coming up. Earnings look backward to where things were last quarter. What fascinated us that you can see in a chart shown in this episode is that revenues are expected to decline by 0.8%. Earnings are expected to climb by 6.4%. The fact that revenue is declining is more interesting to us because, in an inflationary environment, you would expect prices to go up with inflation and earnings to be harmed as prices don’t outpace cost expansion. However, in this scenario, revenues are declining, but it’s not economic-wide. Specific sectors, like financials and consumer discretionary, are growing in revenue. Certain sectors like energy and materials, which were booming last year, are seeing revenue decline. These may be areas of weakness, which we saw in prices for the first half of the year, and could be up like last year’s for the second half. This shows a picture of possible rolling weakness. Many people might be surprised to see financials on the list, but again, this is the S&P 500, the largest 500 stocks. The financials may be misleading because many regional banks aren’t included. A point that we brought up on a previous vlog is that JP Morgan, at that point, was larger than all the regional banks combined, so this is the biggest of the bigs and something to keep in mind. Another point to make when looking at S&P 500 earnings is the size impact. What’s fascinating is that the top ten companies make up 30% of the index and 20% of the earnings. It’s been a narrowly focused stock market rally this year. In some particular companies, those rallies may have outrun their earnings. We’ve seen prices move much quicker than earnings, so there may be some pullback, and it is something we’re watching. We will be using this data to look backward to help us make decisions going forward.   Historical Market Data The second half of the year is starting relatively slowly as the market battles overbought conditions. A rise in interest rates and economic resiliency, especially the tight labor market, has kept the Federal Reserve rate hikes on the table. This has led to more uncertainty in the market for the second half of the year. We want to look at what history says about the second half of a year that started well. It was great to see the market up in the first half, but the breadth of the overall market could have been stronger. Only a few stocks contributed to much of the market’s upside. We did some correlation analysis, comparing the first half of prior years to 2023, and found that history is on the market’s side. The ten highest correlated first half to 2023, going back to 1950, the S&P 500 generated average and median gains of around 12% in the second half. Nine out of ten periods produced positive returns. 1995 stands out with a high correlation to 2023 and a relatively similar macroeconomic backdrop to now. We saw market volatility in 1994, especially in the bond market, as we did in 2022. The following year, 1995, was also a pre-election year when the Fed paused an aggressive rate hiking cycle. The soft landing helped drive the S&P 500 up 13.1% in the year’s second half. Of course, no guarantees, but this observational data comes from a lot of historical data and has a major asterisk by it. The correlation does not always apply causation, and the same returns. Still, we continue to look at historical trends to see if similar market setups can contribute to our investment strategy for our clients.   The Bond Market The bond market m

In this educational episode, Mark Hume goes over several vital things you need to know about your estate plan, no matter what stage of life you’re in.   Watch or listen to this episode to learn where to get started with choosing the executor of your estate and more.   Mark Hume, CFP® Senior Vice President Wealth Consultant Email Mark Hume here Fi Plan Partners is an independent investment firm in Birmingham, AL, with a team of professionals serving clients across the nation through financial planning, wealth management and business consulting. The team at Fi Plan Partners creates strategies in the best interest of their clients using fee based investing. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. This information is not intended to be a substitute for individualized legal advice. Please consult your legal advisor regarding your specific situation. Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a registered investment advisor.The post Major Decisions for Your Estate Plan first appeared on Fi Plan Partners.

Student Loan Forgiveness vs. Inflation There has been a lot of news coverage of the Supreme Court’s decision to strike down the Biden Administration’s plan to forgive student loan debt. However, there hasn’t been much coverage on how that will impact inflation. Inflation occurs when demand is up, and the amount of supply is down. That mismatch of demand being higher than supply pushes prices higher. The secondary cause of inflation is the creation of more dollars through debt financing or pulling forward demand from the future by borrowing and spending today. The rejection of the student loan forgiveness plan hits inflation in both spots. Since 2020, the average student loan borrower hasn’t had to pay a dollar back in student loans. These payments will start in October, making student loan borrowers owe $383 monthly. That will reduce demand by $383 a month. Secondarily, writing off this policy immediately eliminates a projected $400 billion additional debt. Bringing demand down and reducing debt should hit inflation in the short term, starting in October. The positive impact could be deflationary pressure, bringing prices down as spending is diverted from goods and services into these loan repayments. It will be stressful for the borrower but should also put pressure on prices, which should be a net benefit economy-wide. This is something we will continue to watch closely.   Banking Liquidity We received good headline numbers last week as Consumer Sentiment and Consumer Confidence were at their highest since early 2022. Consumers are starting to get more confident even with student loan repayments coming. The Fed announced last week that all 23 banks they tested this year passed their stress test. The stress test included a 10% unemployment rate, a 38% decline in home prices, and a 40% drop in the value of commercial real estate. Even though all those banks passed the stress test, it’s important to point out that before the Silicon Valley Bank collapsed, it also passed a stress test. One thing that’s missing in the stress test is the liquidity crunch. That is what happened to the Silicon Valley Bank, which we see possibly becoming an issue with other banks. This test was only run on 23 banks, so that’s not the entire United States worth of banks. There are a lot of regional banks that were left out of this test. With the Fed still having quantitative tightening and half of the Treasury’s new debt issuance being funded by bank reserves. We’re seeing this liquidity crunch on the weekly change of bank reserves. They have fallen $130 billion in two weeks, and we expect a larger drain this week with the Fed balance sheet runoff continuing. We need to keep an eye on that in this liquidity crunch. While it’s great that they passed the stress under these specific scenarios, we want to see how they do with liquidity. Bank reserves and liquidity correlate strongly and are something we will keep an eye on going forward.     Greg Powell, CIMA® President and CEO Wealth Consultant Email Greg Powell here Trey Booth, CFA®, AIF® Chief Investment Officer Wealth Consultant Email Trey Booth here Ty Miller Associate Vice President Wealth Consultant Email Ty Miller here Fi Plan Partners is an independent investment firm in Birmingham, AL, with a team of professionals serving clients across the nation through financial planning, wealth management and business consulting. The team at Fi Plan Partners creates strategies in the best interest of their clients using fee based investing. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Economic forecasts set forth in this presentation may not develop as predicted. No strategy can ensure success or protect against a loss. Stock investing involves risk including potential loss of principal. Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a registered investment advisor.The post Stress Test first appeared on Fi Plan Partners.

In this educational episode, Trey Booth and Ty Miller provide a comprehensive guide to understanding the different stock market indexes. They delve into the nuances of the indexes, discussing the differences between them and how they are calculated. By the end of the episode, listeners will have a clear understanding of the major indexes, including the Dow Jones Industrial Average and the S&P 500.   Trey Booth, CFA®, AIF® Chief Investment Officer Wealth Consultant Email Trey Booth here Ty Miller Associate Vice President Wealth Consultant Email Ty Miller here Fi Plan Partners is an independent investment firm in Birmingham, AL, with a team of professionals serving clients across the nation through financial planning, wealth management and business consulting. The team at Fi Plan Partners creates strategies in the best interest of their clients using fee based investing. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Economic forecasts set forth in this presentation may not develop as predicted. No strategy can ensure success or protect against a loss. Stock investing involves risk including potential loss of principal. Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a registered investment advisor.The post Exploring Stock Market Indexes first appeared on Fi Plan Partners.

Unrest in Russia There was an effective attempted coup in Russia over the weekend with the Wagner group. At one point, they were marching on Moscow. However, when the markets opened today, this topic seemed quelled entirely. What it did, however, was create more questions. This war between Russia and Ukraine has been in a stalemate for over a year now, and much of the uncertainty around it seems to have been removed. The markets don’t react to any news one way or the other, but one question this raises is if there was unrest in Russia, how would that impact our markets here in the U.S.? In February 2022, when the war in Ukraine started, our U.S. oil market spiked to nearly $120 a barrel. That’s the market’s perceived risk if Russian oil were ever taken off the market. We thought, at that time, that Russian oil would be removed, so we limited oil export to Europe and the U.S. through sanctions, but we didn’t stop it. It’s just moved to where it’s going, so Russian oil is still pumping. If you ever wanted to produce unrest within Russia, that’s precisely where you’d want to go. The power base is in the money being driven from all production oil sales globally. If we were to see any continued unrest, it would likely happen in the oil market exclusively first. That’s where the protection is and where the prices will be hit. Russia as an economy is extremely small and has almost no impact on us. It’s a large energy country, so there will be no hit market-wide; only in the energy sector could it make an impact.   Historical Rate Hikes With the Fed pausing its rate hiking in June, we wanted to review what that historically means for the stock market and interest rates. Looking back in history, over the last 35 years, there have been five monetary policy periods when the Fed paused after a major rate hiking cycle like we’re currently in. During these periods, it took four to fifteen months before the Fed started to cut rates, with the average pause lasting just shy of seven months. As expected, the Fed paused its rate hiking cycle after fifteen consecutive months of tightening. What happens to the market and interest rates? While the number of occurrences is limited, stocks have done relatively well after a Fed pause following a major rate hiking cycle. The S&P 500 traded higher over the following twelve months after four of the last five pauses. The average twelve-month index return for all five periods was 16.4%. The outlier year was the pause in May of 2000. Interest rates have historically declined after a Fed pause, which is good news. The ten-year treasury yield also declined after all five Fed pauses, falling by an average of 13.7% over the following twelve months. So, history says a Fed pause is good for the markets and can be good for interest rates falling. We’ll see what happens here, but history says it’s a good thing.   Student Loans We expect to see a Supreme Court decision that will impact student loans in the upcoming weeks. No matter this court decision, student loans are set to start picking up interest again in September, with the first payments beginning in October. This would be the first time people have been forced to pay their student loans since March 2020. Some college kids are two years out of college and have never paid student loans. This is going to have a significant impact on consumer discretionary spending. On average, student loan payments are $383 a month. For people between the ages of 18 and 29, student loans account for nearly a third of their total debt. Out of all of the debt someone might have, including auto loans, mortgages, credit cards, and more, student loans were a third of it all. The U.S. Supreme Court must decide if they want to uphold the plan to forgive $10,000-$20,000 of the student loan forgiveness, depending on your income. If they choose to enforce that, it will result in a $400 billion expense because about 40 million people will be eligible for this program. Sixteen million people had already applied when it became big news and was approved. We expect that to go into effect quickly if the Supreme Court rules to go that way. However, suppose they say that’s not how they want to go. In that case, we expect President Biden to roll out a new income-driven plan immediately after that decision. On this plan, based on your income, you will pay 5-10% back on your student loans each year. After 20 years, the balance that is left will be forgiven. This could result in higher costs because if you pay off $10,000-$20,000 and still have $100,000, you still have that big bill. If you’re paying interest back every year and you still have a large balance at the end of 20 years, all that’s left will be forgiven. That could be a more significant expense. When the Supreme Court announces its ruling, we can go more in-depth on which route that’ll take. The importa

Watch this week’s educational episode to hear Greg Powell and Mark Hume discuss artificial intelligence and how it could play a future role in the finance industry.       Greg Powell, CIMA® President and CEO Wealth Consultant Email Greg Powell here Mark Hume, CFP® Senior Vice President Wealth Consultant Email Mark Hume here Fi Plan Partners is an independent investment firm in Birmingham, AL, with a team of professionals serving clients across the nation through financial planning, wealth management and business consulting. The team at Fi Plan Partners creates strategies in the best interest of their clients using fee based investing. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Economic forecasts set forth in this presentation may not develop as predicted. No strategy can ensure success or protect against a loss. Stock investing involves risk including potential loss of principal. Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a registered investment advisor.The post Will AI Replace Human Advisors? first appeared on Fi Plan Partners.

Inflation and The Fed Coming into the Fed’s interest rate decision, most market participants expected the Fed not to raise rates, and those expectations were met. What made this meeting so important, and why did the market react the way it did? It’s because there’s still the unknown of whether or not this is a skip in terms of they didn’t do it now, but they just skipped one meeting they plan to raise in the future. Or is this a pause in rate policy where we will stay here for a while? The market before the meeting was pricing for a pause. The Fed was done, and 5-5.25% was the high point of the Fed Fund rate. What the Fed showed, though, is that they anticipate as many as three more hikes this year, which completely goes against the market. Many market participants were pricing in a cut by the end of the year, so the fact that the Fed is now putting out there that not only are they not done, but they could raise rates up to three more times within the year, is entirely off-side from what the market was saying. Chairperson Jerome Powell said they wanted to pause right now because they wanted to see data come in before deciding on hiking rates. Why did they say they would push rates out now but hike rates in the future? The reason is that the Fed wants to avoid getting into a situation where they have a stop-and-go Fed policy like the one that got us into trouble in the 1970s. They would raise rates, inflation would come down, and then inflation would pick back up. On a chart shown in this episode, you will see the inflation rates of the seventies, and the blue line on this chart is the current inflation rate pattern. You can see that while inflation is coming down, many more participants are asking since we’re now below 5%, potentially getting below 4% in the next few months, why consider hiking rates again? It appears as though we have beat inflation but in the seventies, inflation came down just as fast as now. However, it went back up because the Fed took its eye off the ball. That’s why Mr. Powell is using his words carefully and trying to guide the market into a future where we’re not cutting rates. Plus, we are still fighting inflation. The average US consumer goes to the store and doesn’t feel like the inflation flight has been won, but the market was pricing as if it were.     Pain in Corporate America The Fed’s actions have had a negative impact on two areas of concern: our mortgage availability and an increase in corporate bankruptcy. Mortgage availability has fallen significantly, and mortgage credit availability has decreased for the third consecutive month. The industry continues to see more consolidation and reduced capacity due to lenders pulling back on loan offerings due to high rates. The Mortgage Credit Availability Index is now at its lowest since January 2013. We’re also seeing a spike in corporate bankruptcy. Higher rates matter. It’s clear that when the Fed started raising rates, bankruptcy followed. It’s not just the banks struggling with high rates; we also see the pain in corporate America.     Consumer Stress Indicator Our Consumer Stress Indicator is down as we’ve seen inflation come down. It’s moved lower to 16.3%. Gas prices and food are stabilized and down from a year ago. By no means is the consumer out of the woods yet, but this inflation is a welcome sign of relief, with the likelihood of student debt payments restarting in the months ahead. It’s not all bad, but we are watching for economic and market cracks.       Bobby Norman, CFP®, AIF®, CEPA® Managing Director Wealth Consultant Email Bobby Norman here Trey Booth, CFA®, AIF® Chief Investment Officer Wealth Consultant Email Trey Booth here Fi Plan Partners is an independent investment firm in Birmingham, AL, with a team of professionals serving clients across the nation through financial planning, wealth management and business consulting. The team at Fi Plan Partners creates strategies in the best interest of their clients using fee based investing. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Economic forecasts set forth in this presentation may not develop as predicted. No strategy can ensure success or protect against a loss. Stock investing involves risk including potential loss of principal. Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a registered investment advisor.The post Skip or Pause first appeared on Fi Plan Partners.

Watch this week’s educational episode to hear the Operations Team discuss Required Minimum Distributions and how the team at Fi Plan Partners will educate you about RMD changes and ensure the process to satisfy your RMD is streamlined and effortless for you.     Adam Vansant, AIF®, BFA™ Senior Vice President of Operations & Advisory Services Wealth Consultant Email Adam Vansant here Sonja McGittigan Operations Specialist Email Sonja McGittigan here Makenzie Phillips Operations Specialist Email Makenzie Phillips here Fi Plan Partners is an independent investment firm in Birmingham, AL, with a team of professionals serving clients across the nation through financial planning, wealth management and business consulting. The team at Fi Plan Partners creates strategies in the best interest of their clients using fee based investing. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Economic forecasts set forth in this presentation may not develop as predicted. No strategy can ensure success or protect against a loss. Stock investing involves risk including potential loss of principal. Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a registered investment advisor.The post How to Satisfy Your RMD first appeared on Fi Plan Partners.

Global Central Banks A lot is happening this week, but the market-moving event will be the Federal Reserve meeting on Wednesday. For the first time in 15 months, the Fed is expected to skip, not pause, but skip raising interest rates. Even though inflation remains higher than what the Fed wants, and after a big beat on the recent jobs number, a surprise hike on Wednesday is unexpected and would possibly spook markets. We’ve already seen surprise hikes from Australia and Canada last week. Our central bank is one of many central bank meetings this week. The European Central Bank is expected to raise rates on Thursday, as are Norway and Sweden. We’re also watching several African nations where central banks have been tightening. The US and Bank of Japan are the only central banks expected not to raise rates this week. We’re observing global central markets as we’ve already seen signs of economic slowdowns across the globe. Last week we got confirmation that Germany has slipped into a recession, as Europe’s largest economy has dropped its output since last year. Central bank actions have consequences, and that’s why we’re talking about it in this episode, and it is something we’re focused on today.   What Will the Fed Do? Inflation in the United States remains elevated but is falling. We expect the inflation report that comes out on Tuesday to show a year-over-year increase in prices of 4.2%. That’s down from last month’s number of 4.9%. That’s important because, even though 4% is still high, it’s well below recent history and below the current Federal funds rate of 5.25%. If we get an inflation print of 4.2%, that puts over a percentage gap between inflation and the Fed funds rate. The Fed funds rate is the money that the Fed is lending overnight to banks and what you see in the money market. That means that investors can outpace inflation with cash. That’s a very important distinction between our current Fed funds trade and the global interest rates. However, we also see a weakness with Germany in a recession, and China recently reported that its global exports are downs by over 6%. China is the exporter to the world, so when their exports are down, that’s likely an indication of slower economic growth. Something the Fed will be looking at very closely is the US vs. the globe and that rate pause. A rate hike skip is what many market participants expect. The next Fed meeting isn’t months out; it’s next month on July 26. They get to pause and don’t have to sit there for long. Instead, they get to adjust and see where things are. Another important indicator is what the Fed will say about their quantitative tightening. During Covid, the Fed expanded its balance sheets to nearly 9 trillion dollars, providing needed liquidity for the market, in the economy. Since the beginning of 2022, they have been reducing that liquidity. We expect they will continue that to 80 billion dollars a month. However, year to date, that liquidity drain has been offset by the Treasury Department pumping liquidity into the market. Now that we’ve seen the debt ceiling raised and the Fed potentially pausing, that liquidity drain may restart. It is essential to hear what they say because the last time we had a major debt ceiling debate, in 2012, the Fed came in and provided easing. So, there’s a lot to talk about, even though the market has priced in a hundred percent of a pause. There’s still a lot for the Fed to digest. This is a big week with big news on what the Fed will do.       Bobby Norman, CFP®, AIF®, CEPA® Managing Director Wealth Consultant Email Bobby Norman here Trey Booth, CFA®, AIF® Chief Investment Officer Wealth Consultant Email Trey Booth here Fi Plan Partners is an independent investment firm in Birmingham, AL, with a team of professionals serving clients across the nation through financial planning, wealth management and business consulting. The team at Fi Plan Partners creates strategies in the best interest of their clients using fee based investing. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Economic forecasts set forth in this presentation may not develop as predicted. No strategy can ensure success or protect against a loss. Stock investing involves risk including potential loss of principal. Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a registered investment advisor.The post Fed Surprise? first appeared on Fi Plan Partners.

Mortgage rates have spiked since last year, but how does that impact buyers and their monthly payments? Watch this week’s educational episode to hear Bobby Norman review current mortgage rates and compare them to the highs and lows from 1971 to now.   Bobby Norman, CFP®, AIF®, CEPA® Managing Director Wealth Consultant Email Bobby Norman here Fi Plan Partners is an independent investment firm in Birmingham, AL, with a team of professionals serving clients across the nation through financial planning, wealth management and business consulting. The team at Fi Plan Partners creates strategies in the best interest of their clients using fee based investing. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Economic forecasts set forth in this presentation may not develop as predicted. No strategy can ensure success or protect against a loss. Stock investing involves risk including potential loss of principal. Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a registered investment advisor.  The post Mortgage Rates first appeared on Fi Plan Partners.

Economic Tug of War As investment managers, we look at the good and the bad. Last week in our Memorial Day vlog, we discussed the positives we’re seeing, such as positive leading economic indicators and an improving consumer stress indicator. We also saw a great jobs report as the economy continues to show incredible resiliency. We look at everything as we manage market volatility, and right now, there is a tug-of-war going on. We’re seeing new year-to-date highs when we look at the current technical setup of the S&P 500. That’s great news, but what concerns us about the current rally is that it’s been very concentrated. Only 44% of S&P 500 stocks exceed their 200-day moving average. This says the market breadth could be stronger. Chipmaker stocks, technology, and the S&P 500 were positive in May, but there are several different asset classes and sectors that were in the red, which shows the underlying weakness of the overall market. Another concern that we have is that debt charge-offs on credit cards are increasing. What’s concerning is that we have begun to see a rise in charge-offs before the unemployment rate increases. Charge-offs are headed towards the Covid highs in short order. The next area of concern is with banks. We’ve seen a slight increase in the number of problem banks, which increased to 43. We’re observing banking pressure as past-due real estate loans secured by nonfarm nonresidential properties jumped by 20% to 16.9 billion dollars during the first quarter, which is the highest since the height of the pandemic. So, there is a tug-of-war between the positives of a resilient economy and certain areas’ underlying weaknesses.   The Debt Ceiling The debt ceiling was passed and has been something we’ve talked about all year. We were right when we said it would come down on the wire. All the necessary steps have been taken and look to be going into effect, which is overall good news. This would be a debt ceiling suspension until 2025 and let the parties of the following year’s presidential election handle it from there. That’s an important step the government was looking at as opposed to just a temporary suspension. This is a full-time raise, but it will give us at least through the next two years and roughly a trillion dollars of spending cuts over the next ten years. About $200 billion of that will come in the next two years. Student loan repayments will start again in September. This will be a hit to GDP because there is less discretionary spending. The defense did not get cut; that was a big thing fought over, and life science tools did not get cut. The net result of this is, we’re thinking, a bit slower of an economy with less liquidity. Things will be less liquid as the government issues about a trillion dollars of bonds from the economy. How the Treasury General Account and the S&P 500 line up performance-wise will be a little different of an environment moving forward with how the spending cuts are enacted. Overall, this is good news that we got something passed. We will continue to watch how the market adjusts to this news. Bobby Norman, CFP®, AIF®, CEPA® Managing Director Wealth Consultant Email Bobby Norman here Ty Miller Associate Vice President Wealth Consultant Email Ty Miller here Fi Plan Partners is an independent investment firm in Birmingham, AL, with a team of professionals serving clients across the nation through financial planning, wealth management and business consulting. The team at Fi Plan Partners creates strategies in the best interest of their clients using fee based investing. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Economic forecasts set forth in this presentation may not develop as predicted. No strategy can ensure success or protect against a loss. Stock investing involves risk including potential loss of principal. Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a registered investment advisor.The post Headline Market Strength vs. Underlying Weakness first appeared on Fi Plan Partners.

Watch this week’s educational episode to hear Greg Powell and Jason Hatley review the recent law changes to college saving plans and how they might affect you moving forward.       Greg Powell, CIMA® President and CEO Wealth Consultant Email Greg Powell here Jason Hatley, CFP®, CPA, PFS Senior Vice President Financial Planning Manager Email Jason Hatley here Fi Plan Partners is an independent investment firm in Birmingham, AL, with a team of professionals serving clients across the nation through financial planning, wealth management and business consulting. The team at Fi Plan Partners creates strategies in the best interest of their clients using fee based investing. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Economic forecasts set forth in this presentation may not develop as predicted. No strategy can ensure success or protect against a loss. Stock investing involves risk including potential loss of principal. Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a registered investment advisor. Prior to investing in a 529 Plan, investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state’s qualified tuition program. Withdrawals used for qualified expenses are federally tax-free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing. A Roth IRA offers tax deferral on any earnings in the account. Qualified withdrawals of earnings from the account are tax-free. Withdrawals of earnings prior to age 59 ½ or prior to the account being opened for five years, whichever is later, may result in a 10% IRS penalty tax. Limitations and restrictions may apply.The post Secure Act 2.0: New Laws for 529 Plans first appeared on Fi Plan Partners.

Economic Growth There’s been a lot of recent talk about a pending recession or an economic slowdown, so we wanted to go over a recent report showing economic activity in the US. The report indicates that the economy is growing at the fastest pace in 13 months. The Purchasing Managers Index deposit outlook is a weighted average of the Manufacturing Output Index and the Services Business Activity Index. We follow this report because it is an important leading economic indicator that provides valuable insight into the state of the US economy, specifically the manufacturing sector. This indicator hit 54.5% in May, which came in better than expected and was the highest in 13 months. Any reading above 50% on this indicator represents expansion, and it currently being over that is great news and shows economic growth. However, for investors hoping for the Federal Reserve to pause rate hikes, this report might pose a problem because of how a growing economy could lead to higher inflation. We will continue to watch this and how positive economic reports might impact the market.   Consumer Stress Indicator We’ve been tracking the Consumer Stress Indicator that was created by our research friends at Strategas. It takes food, inflation, mortgage rates, and gasoline inflation and compiles a common indicator to show how much stress the consumers are under. The bad news is that we’ve been over 10% for 20 consecutive months. That’s the longest stretch going back to 1970. The good news is while we’re still elevated, we are way off the low of 23.6% from earlier this year. We’re currently sitting right around 17%. That’s partially due to lower mortgage rates and largely due to falling gasoline prices as well as a little reduction in food inflation. This is a great sign for the consumer as we head into the summer driving season. We don’t want to be overconfident in this because, as we’ve mentioned before, there is a risk of potentially higher gas prices due to cuts in OPEC production. There will be an increase in demand and a cut in supply which typically leads to higher prices. This current environment may not be a permanent relief of consumer stress. On the other hand, mortgage rates have started to pick back up with a risk of higher interest rates. There’s a chance that they may not be cutting rates because the economy is doing so well. That pushes interest rates back up. You want a good economy, but that good economy comes with higher interest rates which then can cause consumer stress. It’s a delicate balance we’re dealing with right now, but something to be thankful for while we get it. We’ll take low prices now. It just may not be permanent.   The Debt Ceiling Debate The debt ceiling decision is expected to be made in early June. They’re shooting for June first, but our research partners are telling us that it may be June seventh or eighth. June first is an encouraging sign that they’re coming to the negotiating table early. Hopefully, we can get something passed soon. Once it is raised, it’ll be a big change. Right now, we have the Fed doing quantitative tightening. They paused that for the time being, and we expect them to pick back up. The Treasury general account, where Janet Yellen operates, is pumping liquidity into the system. However, the balance in their account is down to roughly $68 billion. That’s a level where the June date comes into play and the point where the government will look into issuing one trillion dollars’ worth of treasuries. What that is going to do to rates is unsure, but what it is going to do is take the liquidity out of the system. When they issue bonds, people must pay for those bonds with money which they’re collecting at that point. That’s going to change the market attitude and something we’re going to look at going forward to try to navigate. As the debt ceiling comes across, they’re going to have to up the treasury general account from $68 billion to at least $500 billion, if not more.   Treasury General Account We run a deficit in the US. It’s like the saying that you borrow money from Peter to pay Paul. That’s how the government works. When we hit the debt ceiling, we can no longer borrow from Peter to pay Paul, but we’re still paying Paul. The Treasury is just putting money into Paul’s bank account without taking money out of Peter’s bank account. When they raise the debt ceiling, the Treasury goes back and tells Paul they need all the money they’ve given him. They then take the money they would have taken from Paul out of his bank account to refund the money they gave to Peter. For the last six months, we’ve had nothing but treasury money going into the banking system and the economy without a counterbalance. Once we raise the debt ceiling, it comes back into balance. What happens in the market is un

The term Gross Domestic Product (GDP) frequently appears in our vlogs and in news reports. In this educational episode, Ty Miller provides an in-depth explanation of what GDP represents and explores its crucial role in the economy.       Ty Miller Associate Vice President Wealth Consultant Email Ty Miller here Fi Plan Partners is an independent investment firm in Birmingham, AL, with a team of professionals serving clients across the nation through financial planning, wealth management and business consulting. The team at Fi Plan Partners creates strategies in the best interest of their clients using fee based investing. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Economic forecasts set forth in this presentation may not develop as predicted. No strategy can ensure success or protect against a loss. Stock investing involves risk including potential loss of principal. Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a registered investment advisor.The post What is GDP? first appeared on Fi Plan Partners.

Inflation Impact on Yields We continue conversing with investors interested in current bonds and savings account yields. Because of that, we wanted to give an update on where yields stand and also talk about real rates of return, including looking at inflation. Bonds have always been an essential part of a diversified strategy. Still, we want to point out that when looking at bond returns and, more specifically, yields, investors need to look at real rates of return that include taking current yields and subtracting the current inflation rate. The main point is that while having a better return on yield-oriented investments like bonds and other fixed income is excellent, we, as investment managers, look at the total return. Inflation is causing some current real rates on government bonds to be negative. This is why keeping exposure to stocks is important to longer-term investors. Over the past 30 years, the average real rate of return on ten-year treasury bonds is 1.4%, while the average return of the S&P 500 stock index is 9.8% in the same 30-year period. Therefore, it’s important to look at total real rates of return. Unfortunately, for treasury bond investors, higher interest rates have been unable to overcome the impact of inflation on real yields over the past several years. While yields are not the only return aspect of bonds, they are important. The real yield on the 10-year treasury bond has been negative at the end of the last four consecutive years and remains negative today. However, there were eight observations since 2008 where inflation was two percent, or lower and real yields were positive in seven of those eight year-end snapshots.   Money Market We’ve all seen the news about the regional banking crisis, and we’ve talked about how yields and the rapid rise in rates have affected the regional banks. In addition, there has been a rise in money market funds, which has taken deposits away from banks. Since the rate hike cycle started last March, bank deposits have seen about one trillion dollars of outflows. An estimated $750 billion has gone to money market funds because they yield just under 5%. The savings rates at banks are about one percent or lower. There are CD options, but money market accounts give you more liquidity and allow you to be flexible to take advantage of opportunities in the market. Of course, their rates do go up and down where a CD is locked in. However, if you see those rates going low, the flexibility to jump into the market is beneficial.   Wrapping Up Earnings Season Around 94% of companies have reported earnings, and 77% have beaten expectations. This is an excellent sign of strength and is something we like to see. In Q3 of last year, we saw earnings top out, and we are just under what Q3 of last year was. However, while these expectations have been lowered, a 77% beat rate on earnings is encouraging and isn’t in the news right now due to the talk about the debt ceiling and rates. This topic ultimately matters to stocks and where the market goes from here.     Greg Powell, CIMA® President and CEO Wealth Consultant Email Greg Powell here Bobby Norman, CFP®, AIF®, CEPA® Managing Director Wealth Consultant Email Bobby Norman here Ty Miller Associate Vice President Wealth Consultant Email Ty Miller here Fi Plan Partners is an independent investment firm in Birmingham, AL, with a team of professionals serving clients across the nation through financial planning, wealth management and business consulting. The team at Fi Plan Partners creates strategies in the best interest of their clients using fee based investing. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Economic forecasts set forth in this presentation may not develop as predicted. No strategy can ensure success or protect against a loss. Money Market Fund – An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk. Bond yields are subject to change. Certain call or special redemption features may exist, which could impact yield. Certificates of Deposit are FDIC insured and offer a fixed rate of return if held to maturity. Brokered CDs sold prior to maturity in the secondary market may result in a loss of principal due to fluctuations in the interest rate or lack of liquidity. Brokered CDs are registered with the Depository Tru

There has been a lot of talk about moving manufacturing jobs back to the US. Watch or listen to this week’s educational episode to hear Trey Booth give an update on that situation and how it impacts the economy.   Trey Booth, CFA®, AIF® Chief Investment Officer Wealth Consultant Email Trey Booth here   Fi Plan Partners is an independent investment firm in Birmingham, AL, with a team of professionals serving clients across the nation through financial planning, wealth management and business consulting. The team at Fi Plan Partners creates strategies in the best interest of their clients using fee based investing. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Economic forecasts set forth in this presentation may not develop as predicted. No strategy can ensure success or protect against a loss. Stock investing involves risk including potential loss of principal. Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a registered investment advisor.The post Reshoring of US Manufacturing Jobs first appeared on Fi Plan Partners.

Will History Repeat Itself? There has been a lot of negative headline news about the slowing economy, high but falling inflation, as well as the fight about the debt ceiling fight. Today, we are pointing out something we discussed last year: market performance 12 months after a midterm election. In this episode, you will see the chart we showed on our vlogs numerous times last year. Here is an update on where the market stands relative to history and this chart. Keep in mind, the average one-year gain for the S&P 500 following a midterm election is 14.5%, with the index up 18 out of 18 such periods going back to 1950. The positive news is that stocks are right on track. As we passed the halfway point, The S&P 500 is up just over 7% since November 8, 2022. Another gain of just under 7% over the next six months would put the index at its average post-midterm election gain of 14.5% and secure its 19th consecutive gain in the 12 months after midterm. As always, no guarantees, but we like historical relevance. As we get closer to the 2024 election, it is possible for the policy to be less unfriendly than it is today, which explains why this market pattern has historically worked so well after the midterm elections. The current administration doesn’t want to campaign on a weak economy or a bear market. Keep that in mind as we watch to see if history repeats itself.   Consumer Impacts We got some good news from the Consumer Price Index report last week: inflation was up only 4.96% year-over-year. To the consumers buying the goods that make up this number, a 5% growth rate in cost year-over-year doesn’t feel good. The good thing is that it’s on a downward trajectory. Transport, the cost of moving things, has the best year-over-year number in the report, at only 0.30%. However, what is concerning as we look under the hood, is that the month-over-month, Transport is the highest at 1.15%. This is the time of year when transport costs are most noticed by the US consumer due to it being travel season. It hits the consumer’s pocketbooks because they are spending more money on fuel. The money you must spend on fuel takes away from what you could have spent money on during your vacation, such as dining, hotels, and other things that make the trip worth taking. It’s usually not the traveling that’s the fun part. It’s the time you spend once you get there. In May, June, July, and August of 2022, the US consumer consumed 48 billion gallons of gas. That is a staggering number when you think about it. When you hear about just a one-penny move up or down, the average price of a gallon of gas hits the US consumer to the tune of $480 million. That’s $480 million just for a one-penny move. If you look at a dollar move, that’s $48 billion that the US consumer can’t spend once they get to where they’re going as opposed to spending once they get there. That’s a real negative stimulus to the economy if gas prices go up. However, if they go down, that’s a huge stimulus for the travel, leisure, and restaurant industries, spreading out across the economy. We will be watching throughout these upcoming travel months to see if we can keep fuel prices at least flat, year-over-year. Right now, it’s looking challenging with the recent OPEC cut.   The S&P 500 The market is up year-to-date, with the top ten largest companies in the S&P 500 responsible for 81% of that gain. A lot of times, if this number is over 100%, it is because the market is down. It’s a flight to quality. It’s not over 100% right now, but we still see that flight to quality. This week’s headline was about how Apple is now bigger than UK’s GDP. The UK has one of the largest stock markets in the world, and Apple has surpassed it, meaning that just Apple alone is bigger than the United Kingdom. Apple and Microsoft together make up about 14.5% of our stock market index. That’s more than energy and materials combined. With the current situation with regional banks, JP Morgan is now bigger than every regional bank in the country combined. These are not recommendations, only facts that interest us as companies get bigger. This is something for us to keep an eye on as we see this flight to quality.   The Legacy of Mr. JP Morgan In 1908, we had a significant financial crisis where JP Morgan and his bank manhandled the economy. During that time, we did not have a Federal Reserve. In 1912, JP Morgan died, and because of his death, newspapers asked what the country would do without him. Only after he died in 1913 did the United States implement the Federal income tax to help support a downturn as they had seen in 1908 and 1909. They also started the Federal Reserve because JP Morgan wasn’t around. Over 100 years later, the ghost of JP Morgan still lives as the bank is now bigger than all the other regional banks combined.     Gre

Watch this week’s educational episode to hear Ashley Page talk about the four main factors the Federal Reserve always considers when establishing interest rates.   Click the link above to learn more about this highly requested topic.   Ashley Page, JD, MBA Senior Vice President Wealth Consultant Email Ashley Page here Fi Plan Partners is an independent investment firm in Birmingham, AL, with a team of professionals serving clients across the nation through financial planning, wealth management and business consulting. The team at Fi Plan Partners creates strategies in the best interest of their clients using fee based investing. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Economic forecasts set forth in this presentation may not develop as predicted. No strategy can ensure success or protect against a loss. Stock investing involves risk including potential loss of principal. Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a registered investment advisor.The post The Federal Reserve and Interest Rates first appeared on Fi Plan Partners.

Interest Rates and The Fed As expected, the Fed has announced its tenth rate hike in thirteen months. The numbers weren’t surprising, but the words they used were. Before, they were saying that they anticipated further tightening would be necessary, but now they’re saying that they are determining whether or not further rate hikes will be necessary. The market took that as the Fed is done raising rates, but what does that mean for returns? The data shows that there’s no longer an expectation for higher rates but a possibility of future rate cuts. Many historical reports show that when the Fed pauses or pivots, it’s positive. On average, returns after the last Fed rate hike and to the first rate cut, the market is higher by five percent. However, average is a loaded word in this case. The chart shown in this episode shows the market’s returns after the last Fed rate hike and before the first rate cut. One thing that stands out is that there is not a single data point that is anywhere close to where the average is. The average is in the middle at five percent. In 2006-2007, there was a 20% increase, but in 1974, 1980, 1981, and 1984, the market fell. This is a situation where average is like having one hand in the oven and the other hand in the freezer; on average, you feel great, but average isn’t what anyone’s experiencing. You’re either doing great with markets up, or markets are down; there is no in-between on these data points. What’s concerning is that our research indicates that the current environment is a lot more like 1974, 1980, and 1984. The difference is that back then when the Fed paused, they were still dealing with inflation due to external factors. Even though we are working towards correcting inflation, enemies have the ability to shock our economy and cause inflation to rise just like they have historically. We analyze historical and current data, not only looking at the numbers but also watching the words. How things are worded is significant, and all of these factors are why we’ve stayed defensive until some of this pans out.   The Debt Ceiling One upcoming event that we are keeping an eye on is the conversation around the debt ceiling. We started watching this a couple of weeks ago when the House Republicans tried to pass something to get the negotiating started. With only a 50/50 shot of getting anything through, they were able to pass something by a mineral majority to start negotiations, which was an essential first step. Tomorrow, President Biden is meeting with House and Senate members to discuss the debt ceiling further. There will likely not be a deal for a few weeks; however, due to the recent tax revenue numbers, this debt ceiling date, originally expected to be August or September, is being pushed up into June. This gives them only a couple of weeks to discuss this. If the debt ceiling isn’t raised by the time the due date hits, there is no reason to panic. We have enough cash flow to pay interest payments on important things. You could see the volatility pick up as talks go on and as the due date approaches. One question that keeps coming up is how this be funded. The Treasury General Account program supports some markets with liquidity from their reserves. That liquidity must be replenished when the debt ceiling rises, but how will they do that? Typically, they take from bank reserves, but that is not an option because banks need to be in better standing to do that. Therefore, they will have to find other funding methods. It will be important to watch and see what words they use when they announce how and when they will do this. It will be imperative because it will lead us to what happens next for the market.     Greg Powell, CIMA® President and CEO Wealth Consultant Email Greg Powell here Trey Booth, CFA®, AIF® Chief Investment Officer Wealth Consultant Email Trey Booth here Ty Miller Associate Vice President Wealth Consultant Email Ty Miller here Fi Plan Partners is an independent investment firm in Birmingham, AL, with a team of professionals serving clients across the nation through financial planning, wealth management and business consulting. The team at Fi Plan Partners creates strategies in the best interest of their clients using fee based investing. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Economic forecasts set forth in this presentation may not develop as predicted. No strategy can ensure success or protect against a loss. Stock investing involves risk including potential loss of principal. Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a registered investment advisor.The post It’s All In

In this week’s educational episode, you will learn about the newly enacted age delay rules for Required Minimum Distributions set forth by the Secure 2.0 Act. Watch as Mark Hume explains how these changes might affect you and your retirement accounts.   Mark Hume, CFP® Senior Vice President Wealth Consultant Email Mark Hume here Fi Plan Partners is an independent investment firm in Birmingham, AL, with a team of professionals serving clients across the nation through financial planning, wealth management and business consulting. The team at Fi Plan Partners creates strategies in the best interest of their clients using fee based investing. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Economic forecasts set forth in this presentation may not develop as predicted. No strategy can ensure success or protect against a loss. Stock investing involves risk including potential loss of principal. Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a registered investment advisor.The post New RMD Rules for 2023 first appeared on Fi Plan Partners.

Banking and The Fed The Federal Reserve’s Open Market Committee will be meeting this week and announcing their decision on interest rates. The market expects they will raise rates by 25 base points, with that being the last. They will be moving the Federal Funds Rate from a high end of five to five and a quarter, putting it above the current inflation rate of five. This is something we’ve been anticipating since the Fed started hiking rates. They needed to get the Fed Fund Rate above the inflation rate before they could pause. Now that the market has priced that in, it won’t be what the Fed does that is important; it will be what they say they’re going to do. Do they pause for a while and see where this goes? The way they’re trying to reduce inflation is with two tools. One is what they’re doing, which is raising interest rates. The other tool is their balance sheet. They expanded their balance sheet and bought around nine trillion dollars in assets during the pandemic, which was highly inflationary. They did that to try and stop the potential collapse of the financial system during that time. They had to start reducing that balance sheet and had been doing so throughout 2022. However, once again, they had to reverse course and put money back into the system when the Silicon Valley Bank failed in March. The Federal Reserve’s balance sheet went from roughly $8.3 trillion to $8.7 trillion in the weeks following the failure of the Silicon Valley Bank. Why is that important right now? It supports the banking system, but putting liquidity back into the system is inflationary. Over the weekend, we got the news that another California bank, First Republic Bank, is going into receivership by the FDIC, and JP Morgan will take them over. This is not a recommendation of either bank. The news of another large West Coast bank failing will muddy the waters on what the Fed can do. The Fed would like to have its balance sheet drop, but it couldn’t do it last time because it had to come in and save the banking system. Are they going to have to do that again? With this happening so close to the Fed meeting, they’re most likely going to get a lot of questions about this. It will be very telling what the Fed Chairperson says they’re looking at now that they have another West Coast Bank in receivership. This is interesting timing and much to review for the Federal Reserve. Of course, the all-important press conference will be where we get all the information.   Market History With the Federal Reserve expected to raise rates another quarter of a percent this week, the question is, will they announce this is the last rate hike? We decided to look back at how the market has historically performed after the Fed paused rate hikes. We found that the S&P 500 has been up an average of 13%, six out of the eight past times, one year after the Fed paused its rate hiking. While this might give investors a lot to look forward to, it is essential to know the details. Unfortunately, the two negative years, 1974 and 2000, are similar to what the market and economy are experiencing today with higher inflation. So, while buying stocks has worked in most years after the Fed pauses, we are more cautious this year because of the higher inflationary environment that has led to lower returns in previous cycles. We will be watching the Fed closely as things unfold.   Income Migration On Thursday, we got the official income migration numbers for the Great COVID Migration that occurred during the pandemic, and it was bigger than we thought. This shows the number of people moving from high-tax states with big cities, such as New York and California, into low- or no-income tax states like Florida and Texas. Florida added $63 billion worth of income during this time. Palm Beach County alone added $11.4 billion, more than every state other than Florida and Texas. Meanwhile, on the other side, California lost $47 billion, and $44 billion left New York, with Manhattan alone losing $31 billion. Alabama was a net gainer on these reports. During this time, the ten lowest-income tax states added about $100 billion of income, and the ten highest-income tax states lost about $100 billion, making it basically a direct trade-off. That pace doubled the pre-COVID pace. This becomes a bigger deal when this migration includes high-net-worth individuals. In fact, the average tax return for moving to Florida was $80,000 more than the return for a person leaving. This could change the landscape of schools, employment, company headquarters, etc. Will California, New York, and other high-income tax states decide to lower taxes, or will they continue to try to fight the battle? This also makes the Fed’s job harder because California and New York are much slower-growing economies than Florida and Texas right now. How does the Federal Reserve treat one state differently? You would think they would want to

Inflation has caused many Americans to adjust their budget and spending habits, but how has it impacted investment returns? In this week’s educational episode, Bobby Norman goes over the risk of inflation in investing and how it might affect you.   Bobby Norman, CFP®, AIF®, CEPA® Managing Director Wealth Consultant Email Bobby Norman here Fi Plan Partners is an independent investment firm in Birmingham, AL, with a team of professionals serving clients across the nation through financial planning, wealth management and business consulting. The team at Fi Plan Partners creates strategies in the best interest of their clients using fee based investing. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Economic forecasts set forth in this presentation may not develop as predicted. No strategy can ensure success or protect against a loss. Stock investing involves risk including potential loss of principal. Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a registered investment advisor. Government bonds and Treasury bills are guaranteed by the US government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.The post Inflation and Investment Returns first appeared on Fi Plan Partners.

Market History This will be one of the busiest weeks for the first quarter earnings season, and we want to address the concerns around expectations for earnings growth to be negative for the second quarter in a row. We follow corporate earnings very closely as earnings are an important long-term driver of stock prices. However, the S&P 500 has held up in the short term after two consecutive quarters of negative profit declines. Going back to 1948, the S&P 500 average price performance following a second straight quarter of year-over-year earnings decline, the market is up three, six, and twelve months after. Six months after two consecutive quarters of profit declines, history shows the market was up on average by 5.9%. It was up 7.4% in periods when you take out economic recessions. History says that as long as investors have balanced and diversified allocations, they shouldn’t get caught up in the doom and gloom around earnings season. Another interesting historical fact about the market is that when the S&P 500 gained more than 7% in the first quarter of a year like it did this year, the S&P 500 has never had a negative full-year return. In fact, it had an average gain of 23%. As always, there are no guarantees, but this historical data on the market says that investors should remain calm regarding mixed earnings results and other concerning headlines.   Spending Cuts Politics always cause some emotion in the markets, and this week will be no different as it’s a big week for earnings and the House of Republicans. The House Republicans unveiled their plan to try and pass a bill to vote on for $4 trillion worth of spending cuts while raising the debt ceiling. If this bill passes the House, it is unlikely to be fully enacted. There will likely be some changes; however, this is an essential first step in these discussions. If they cannot pass it, the leverage will shift to the Senate, where they’ll have their chance to look it over and make changes. With tax revenue numbers being a little lower this year, the debt ceiling day might move up into June, and because of that, it’s important to get this first step through. The House is pushing for it to go through this week, as they see this June day becoming a possibility. There is no concern for default now, but this would be an essential first step to make that scenario even less likely. These situations are always emotional for the markets; however, we will continue to look at the facts and update you as we navigate them.   Greg Powell, CIMA® President and CEO Wealth Consultant Email Greg Powell here Bobby Norman, CFP®, AIF®, CEPA® Managing Director Wealth Consultant Email Bobby Norman here Ty Miller Associate Vice President Wealth Consultant Email Ty Miller here Fi Plan Partners is an independent investment firm in Birmingham, AL, with a team of professionals serving clients across the nation through financial planning, wealth management and business consulting. The team at Fi Plan Partners creates strategies in the best interest of their clients using fee based investing. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Economic forecasts set forth in this presentation may not develop as predicted. No strategy can ensure success or protect against a loss. Stock investing involves risk including potential loss of principal. Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a registered investment advisor.The post Seven Percent Gauge first appeared on Fi Plan Partners.

Listen to this week’s educational episode to hear Ty Miller talk about what correlation means and how it relates to portfolio diversification.   Ty Miller Associate Vice President Wealth Consultant Email Ty Miller here Fi Plan Partners is an independent investment firm in Birmingham, AL, with a team of professionals serving clients across the nation through financial planning, wealth management and business consulting. The team at Fi Plan Partners creates strategies in the best interest of their clients using fee based investing. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Economic forecasts set forth in this presentation may not develop as predicted. No strategy can ensure success or protect against a loss. Stock investing involves risk including potential loss of principal. Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a registered investment advisor.The post What is Correlation? first appeared on Fi Plan Partners.

The Debt Ceiling This week’s market-moving event is around the debt ceiling debate. Investors will watch carefully as the House Speaker gives his speech at the New York Stock Exchange. We expect him to call for a spending cut as part of the debt ceiling conversation. When we have these types of events, we like to see how the market has historically reacted to similar events. We looked back to 2011 when the House Speaker spoke to the New York Economic Club. What’sInterestingly, the price action of the S&P 500 this year seems almost identical to the pattern we saw in 2011. At this exact point in 2011, we understood that we had a bigger problem. The same became true in conversations today around the debt ceiling. Now that the policymakers are starting to focus on the matter, the debt ceiling debate will likely cause uncertainty in the markets and is something we will be observing over the next few months. We will continue to keep the viewers updated on the markets because, as always, politics do matter, and it’s getting close to that time, with the debt ceiling will be more of a conversation.   Inflation Data In last Monday’s episode, we were looking forward to the inflation report because that has been the data point that the market has moved off for the previous twelve-plus months. That report came out with results better than expected. Year-over-year, the Consumer Price Index grew by 5% to beat expectations of 5.4%. More importantly, this reading puts CPI right in line with where the Fed Funds Rate is, which is 5%. We’ve been looking forward to that point since late last year. We were surprised that the markets didn’t rally after seeing that data point. We had to look under the hood to see what would cause the market to not take this as a positive. We found out that it’s likely because the volatile food and energy sectors, along with used car prices, drove CPI down. We are happy that motor oil is down 17% year-over-year, which is a significant drop. However, OPEC’s announcement about major cuts in oil production starting in May could have been what the market is looking through too. The market may see oil prices down now, but the reality is that prices won’t stay down. Used vehicle prices were down 11%, which is phenomenal, but new vehicles were up 6%. Those weren’t consistent indicators, so that may be why the market took a very positive inflation number, saw it flat line with the Fed Funds Rate at 5%, and took it in stride. Regardless, it’s positive to see inflation come down symmetrically, as we predicted late last year. This is something we’re watching and taking as a positive sign for what we hope to be long-term growth.   Market History “Sell in May and go away” is a popular saying, but it hasn’t held up very well over the last 20 years. In the previous 20 years, there have been only three instances where the market was negative from May to October. The average return was about 4% from different sectors, not one outperformer. So, the saying to sell in May might not have as much relevance. One interesting tidbit we saw was that this saying came about when the US was more industrialized, and factories would shut down for a month over the summer to allow people to go on vacation while kids were out of school. The difference now is that society is more digitalized, and people aren’t taking the summer months off. Earnings won’t be affected because companies aren’t shutting down. This is probably why we don’t see that dip anymore. This is historical data regarding past performance, so there is no guarantee, but we plan on watching to see what happens this year as we approach May.     Greg Powell, CIMA® President and CEO Wealth Consultant Email Greg Powell here Bobby Norman, CFP®, AIF®, CEPA® Managing Director Wealth Consultant Email Bobby Norman here Trey Booth, CFA®, AIF® Chief Investment Officer Wealth Consultant Email Trey Booth here Ty Miller Associate Vice President Email Ty Miller here Fi Plan Partners is an independent investment firm in Birmingham, AL, with a team of professionals serving clients across the nation through financial planning, wealth management and business consulting. The team at Fi Plan Partners creates strategies in the best interest of their clients using fee based investing. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Economic forecasts set forth in this presentation may not develop as predicted. No strategy can ensure success or protect against a loss. Stock investing involves risk including potential loss of principal. Securities and advisory services offered through LPL Financial, Member

Join us for this week’s educational episode, where Greg Powell sits down with our newest team member, Makenzie Phillips, to discuss her role as Operations Specialist and what she enjoys the most about working with clients as they pursue a life that is Better, Richer, Fuller.     Greg Powell, CIMA® President and CEO Wealth Consultant Email Greg Powell here Makenzie Phillips Operations Specialist Email Makenzie Phillips here Fi Plan Partners is an independent investment firm in Birmingham, AL, with a team of professionals serving clients across the nation through financial planning, wealth management and business consulting. The team at Fi Plan Partners creates strategies in the best interest of their clients using fee based investing. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Economic forecasts set forth in this presentation may not develop as predicted. No strategy can ensure success or protect against a loss. Stock investing involves risk including potential loss of principal. Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a registered investment advisor.The post The Client Experience first appeared on Fi Plan Partners.

Jobs The jobs report on Friday showed that 236,000 jobs were added to the workforce. The unemployment rate fell to 3.5% from the previous 3.6%, and the labor participation rate increased to 62.6%. Labor force participation is the number of people working or actively looking for work. This is an important number because an economy can only grow by increasing output and efficiencies or having a larger working base. We’re finally starting to see our labor force come back from being depressed due to the pandemic. From January to now, two million people have been added to the labor force, and the number of job openings has fallen by roughly half a million. Back in January, there were around 1.75 job openings to unemployed people. Now it’s down to approximately 1.65 job openings to unemployed people. The lower it is, the better. Another point regarding the jobs report is that average hourly earnings growth was 4.2% year-over-year. A 4% increase in your pay is excellent; however, inflation has increased to around 6%. Taking 6% inflation and adding 3.5% unemployment gives you a Misery Index of about 9.5%. We’re watching that closely because it shows the amount of pain that people may be experiencing in their jobs and their lifestyles within this economy. It’s a great gauge and allows us to see if the consumer will move forward with spending money or if they will retreat, as well as other things taking place in the economy.   Inflation Inflation has been a headline that the US consumer has felt. You can see it when you drive by gas stations and go to the grocery store, and we see it in consumer spending. The way the market looks at inflation, though, is how it relates to what the Federal Reserve will do. Will the Fed have to continue to raise interest rates, or will they pause? Historically, the Federal Reserve has stopped raising interest rates when the Fed Funds Rate is higher than the inflation rate. Today, the Fed Funds Rate is at 5%, and the last inflation reading was 6%. The next Fed meeting will be May 3rd, but we will see updated inflation data on Wednesday. Expectations are for the Consumer Price Index to drop to 5.2%, close to 5%. If that number aligns with expectations or is better, the Fed might pause raising interest rates. If it stays higher, the Fed may continue to be aggressive. Wages are up over 4%, which is an excellent raise, but if prices are going higher than that, that’s where you get the risk of stagflation. Stagflation is when prices are higher than the economy can grow. It’s not a positive sign overall, but it could be a positive for corporate America. If prices are rising at 5%, but employment is rising at 4%, there is a chance that companies are pocketing that 1.5% spread. These are the most significant data points we will see before the Fed meets on May 3rd. We must watch the data closely to see if we can bring the Misery Index down with these two data points.   Corporate America With current concerns in the market being around bank strength and some companies announcing layoffs, we are analyzing the current balance sheet of corporations to see if the concerns are legitimate. One number we like to look at is the current cash equivalent holdings of the companies that compromise the S&P 500. On a chart shown in this episode, you will see a quarterly snapshot of the total cash and cash equivalent holdings of the companies comprising the S&P 500, a barometer of financial strength. Seeing the S&P 500 Index cash holdings suggests that America’s largest companies appear to be on solid footing, in our opinion. Total cash and cash equivalents fell from $1.89 trillion in Q4 2020 to $1.58 trillion in Q4 2022. Still, the decline may be related to share repurchases and dividend distributions, in our view. Stock buybacks and dividend distributions for companies in the S&P 500 Index set record highs in 2022, coming in at $922.7 billion and $564.6 billion, respectively. Furthermore, companies will often utilize cash as they engage in M&A and invest in property, plant, and equipment, among other capital expenditures. The record-setting pace of recent stock buybacks and dividend payments could be viewed as a vote of confidence by corporations in their ability to weather current economic headwinds. Time will tell, but broadly speaking, companies in the S&P 500 seem well-capitalized and gives us hope that the market can remain stabilized through the current noise in the economy.     Greg Powell, CIMA® President and CEO Wealth Consultant Email Greg Powell here Bobby Norman, CFP®, AIF®, CEPA® Managing Director Wealth Consultant Email Bobby Norman here Trey Booth, CFA®, AIF® Chief Investment Officer Wealth Consultant Email Trey Booth here Ty Miller Associate Vice President Email Ty Miller here Fi Plan Partners is an independent investment firm in Birmingham, AL, with a team of professionals serving clients across the nation th

In this educational episode, Trey Booth, Chief Investment Officer at Fi Plan Partners, explains the key differences between the Federal Deposit Insurance Corporation (FDIC) and the Securities Investor Protection Corporation (SIPC). While both organizations serve to protect assets, the FDIC covers bank deposits in case of bank failure, while the SIPC covers securities and cash in case of broker-dealer failure. Watch to learn more about the SIPC and how it safeguards your assets at securities firms. Trey Booth, CFA®, AIF® Chief Investment Officer Wealth Consultant Email Trey Booth here Fi Plan Partners is an independent investment firm in Birmingham, AL, with a team of professionals serving clients across the nation through financial planning, wealth management and business consulting. The team at Fi Plan Partners creates strategies in the best interest of their clients using fee based investing. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Economic forecasts set forth in this presentation may not develop as predicted. No strategy can ensure success or protect against a loss. Stock investing involves risk including potential loss of principal. Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a registered investment advisor.The post Understanding SIPC Asset Protection first appeared on Fi Plan Partners.

Historical April March was volatile, but seasonality patterns prevailed, as stocks performed well in the last half of the month. As you can see in a chart shown in this episode, historical April seasonality trends suggest that last week’s positive momentum could continue. Since 1950, the S&P 500 has posted an average of 1.5% growth in April and has finished positive during the month 71% of the time. The first half of April is usually strong, with the first 12 trading days historically climbing 1.4%. While there are still concerns about the Federal Reserve slowing the economy down and the continued fallout from the banking crisis, the market is showing strength in a historically strong period of the year. Of course, there are no guarantees, but this positive development gives us hope that the strength seen last week can continue.   Gas Prices In a surprise announcement, OPEC recently said they were cutting oil production to nearly 1.2 million barrels daily. That’s in addition to the two million barrels they announced they were cutting back in October, along with the 500,000 barrels a day Russia announced that they are taking offline. Altogether, around 3% of the world’s oil production is coming offline. Saudi Arabia announced that the cut would go into effect in May, just in time for driving season here in the US. The summer driving season is when we use a large percentage of our annual gasoline usage, so oil prices immediately reacted this morning, reaching as high as $81 a barrel. Barrels were as low as $66 earlier in March, so oil markets responded quickly to this news. So, why would Saudi Arabia cut oil production and make a surprise announcement? Our research partners at Strategus put out a chart that helps explain what Saudi Arabia was looking at. It shows that each country in OPEC has a specific barrel price that they need to balance their budget. When we hear of oil prices, we think of companies and their cost per barrel and relate it to how much it is to get it out of the ground. Well, most of these OPEC countries run their entire country on oil, so this is what their beak-even is. This price is not on production but to balance their entire economy. Saudi Arabia, the largest producer, needs $67 a barrel to balance their budget. That’s in line with where we were in mid-March. So, this cut is more of a point of survival for them. They have to get their budget in line, so they must reduce their production to get prices back up. This is a significant change from 2014 to 2015, when the US was the swing producer, and Saudi Arabia was trying to cut oil production to boost prices. This didn’t have the same effect back then as it does now since the US is no longer the swing producer. We’re returning to an oil shock environment like the seventies, where when the OPEC countries speak, the market reacts immediately. It’s not set in stone, but we could see a rise in gas prices around May or June. This could be an early indicator that inflation may not be on the downward trajectory like we hoped and is something that we are internalizing here to project where interest rates, inflation, and the Fed may be going from here.   Inflation and The Fed March marked the one-year anniversary of the start of the Fed’s tightening cycle. This rapid tightening cycle has been the fastest since the 1980s. Coincidentally, since the early 1980s, this is the first time stocks haven’t been up in a 12-month period since the first rate hike was announced. So looking forward, what can we expect? In a chart shown in this episode, you will see that before the OPEC news, inflation was projected to come down enough to where the Fed could raise rates without actually raising rates. How do they do that? The Fed Funds Rate is expected to be 5%, but their next meeting isn’t scheduled until May. According to this chart, we are looking for a pause in rate hikes thanks to inflation coming down. Historically, we’ve seen a pause when the Fed Funds Rate is above the inflation number, not a rate cut, but at least a pause. We could see that as early as this month as long as the OPEC news doesn’t swing too much. It will be interesting to see how we move forward and if we can get inflation down enough. If rates plateau, that’ll help the consumer with mortgage payments, car payments, and other things.     Greg Powell, CIMA® President and CEO Wealth Consultant Email Greg Powell here Bobby Norman, CFP®, AIF®, CEPA® Managing Director Wealth Consultant Email Bobby Norman here Trey Booth, CFA®, AIF® Chief Investment Officer Wealth Consultant Email Trey Booth here Ty Miller Associate Vice President Email Ty Miller here Fi Plan Partners is an independent investment firm in Birmingham, AL, with a team of professionals serving clients across the nation through financial planning, wealth management and business consulting. The team at Fi Plan Partners creates stra

Watch or listen to this episode to hear Ashley Page talk about the banking system and how it can have an impact on the overall economy.   Ashley Page, JD, MBA Senior Vice President Wealth Consultant Email Ashley Page here Fi Plan Partners is an independent investment firm in Birmingham, AL, with a team of professionals serving clients across the nation through financial planning, wealth management and business consulting. The team at Fi Plan Partners creates strategies in the best interest of their clients using fee based investing. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Economic forecasts set forth in this presentation may not develop as predicted. No strategy can ensure success or protect against a loss. Stock investing involves risk including potential loss of principal. Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a registered investment advisor.The post Banking and the Economy first appeared on Fi Plan Partners.

Never Ending Volatility Recently, we’ve been getting questions from clients regarding what seems like never-ending volatility in the market. Because of this, we wanted to share a chart with you, which you can see in the video for this episode, that shows fourteen of the past fifteen calendar years. From 2008 to 2022, the S&P 500 index endured no less than two negative total return months and as many as eight negative months in 2008. From 2008 through February 2023, the S&P 500 index endured a loss in 61 of the 182 months. The unique year was 2017, when at least one negative month didn’t occur. This data is important because even with the volatility seen since 2008, the S&P 500 has an annualized total return of 8.95%. Historically, volatility is the norm, and given the recent news around the banking sector and stubbornly high inflation, we could easily see further volatility. That said, stock prices don’t rise in a straight line, and investors will encounter turbulent times along the way.   Long Term Impact All eyes were on the Fed Wednesday as they announced their decision to increase interest rates by 0.25 percentage points. As we discussed in our episode last week, this was widely expected. A few weeks ago, market participants expected a 0.50 percentage point hike. However, with the news about the banking sector, many expected that the Fed would pause rate hikes. Some participants believe that if the Fed had paused rate hikes, it would have been good for stocks, bonds, and the banking sector. So, why didn’t they pause, and what are they looking at that the rest of the market isn’t? The Fed appears to be more focused on inflation and avoiding stop-and-go monetary policy. They want to avoid this because that was the policy of the 1970s when inflation was rampant for almost a decade. On a chart shown in the video for this episode, you will see a blue line showing today’s Consumer Price Index and a red line showing the Consumer Price Index in the 1970s. These lines show that we are kind of tracking with the early seventies. The Fed doesn’t want to let up on inflation and allow it to go back up. If that happens, we’ll be fighting the same battle a few years down the road, and that is the risk of stop-and-go. It would be positive in the short term but harmful in the long term. The Fed is between a good rock and a hard place, being too aggressive and hurting the economy and the bank sector or too soft, allowing for a 1970-style multi-year inflation fight. On another chart in the video for this episode, you can see where the Fed Funds Rate currently sits. We are just now getting to the higher-end area where that was needed back in the late seventies and early eighties to finally beat inflation. There is a lot for the Fed to digest in the short term, and even though the markets might want the Fed to pause interest rate hikes, there’s a lot of risk in the long run. The long-term impact is likely what Chairman Powell is looking at. We will keep an eye on this moving forward.   Stocks and Bonds A chart in this episode shows the correlation between the Nasdaq 100, the 100 biggest tech stocks, and the 10-year treasury. If stocks and bonds are directly correlated, they are closer to +1 and moving in the same direction. When they are closer to -1, they are inversely correlated and move in the opposite direction, which is more typical for stocks and bonds and what we like to see. As you see in the chart shown in the video for this episode, for much of 2022, stocks and bonds were directly correlated. While being correlated is excellent when the market is moving up, it is not good when it is moving down, like last year. Since stocks are down, people are asking how their fixed income is doing, but unfortunately, that also took a hit in 2022. Things change, and the norm is that stocks and bonds will be inversely correlated and working oppositely. Since SVB Bank announced its capital raise on March 8th, stock prices and bond yields have decreased, while bond prices have increased. In short, bond prices go up when stock prices go down, which is more typical in the market and something we like to see. We believe diversification is important and is great when working properly. Last year, stocks and bonds were both down, so seeing the market return to normal and hopefully sustain it for the long term is excellent.     Bobby Norman, CFP®, AIF®, CEPA® Managing Director Wealth Consultant Email Bobby Norman here Trey Booth, CFA®, AIF® Chief Investment Officer Wealth Consultant Email Trey Booth here Ty Miller Associate Vice President Email Ty Miller here Fi Plan Partners is an independent investment firm in Birmingham, AL, with a team of professionals serving clients across the nation through financial planning, wealth management and business consulting. The team at Fi Plan Partners creates strategies in the best interest of their clients using fee based investing. The

If you are a homeowner, it’s important to be aware of the key financial planning topics that can help you make informed decisions about your home and your future. In this educational episode, Mark Hume goes over some of the most important dos and don’ts regarding home insurance and decisions surrounding your deed and mortgage. With these tips, you can ensure you’re prepared for whatever comes your way as a homeowner.   Mark Hume, CFP® Senior Vice President Wealth Consultant Email Mark Hume here Fi Plan Partners is an independent investment firm in Birmingham, AL, with a team of professionals serving clients across the nation through financial planning, wealth management and business consulting. The team at Fi Plan Partners creates strategies in the best interest of their clients using fee based investing. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Economic forecasts set forth in this presentation may not develop as predicted. No strategy can ensure success or protect against a loss. Stock investing involves risk including potential loss of principal. Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a registered investment advisor. Fi Plan Partners and LPL Financial do not offer tax or legal advice or services. We suggest speaking to a tax or legal professional regarding your specific situation.  The post Financial Planning Tips for Homeowners first appeared on Fi Plan Partners.

All Eyes on The Fed Market participants have wished for the Federal Reserve to pause on rate hikes for many months, and we may see that happen after their meeting this week. This is the least clear the market has been on where the Fed will go with only two days away from their meeting. Typically, the market is fully priced on what rate expectations will be. There is much debate on where rates will be because of the concern around the banking system over the last few weeks. Even though the Fed pausing rate hikes is what people have wished for, it may have come at the expense of the banking system. This give-and-take surrounding the market is something we are going to continue watching. Over the weekend, there was a shotgun marriage between two Swiss banking giants, Credit Suites and UBS. UBS will buy its smaller competitor, Credit Suites, with the support of the Swiss banking system. This is news that the market is taking as a positive and shows that we’re doing all the right things and firming up our banking system and capital worldwide. What will be important is what the Fed says after their meeting. Will there be a 25-bais point rate hike, or will there be no hike at all? What the Fed says as the reason behind their decision could reassure markets. The Fed sees data that we don’t see, so if the Fed is confident in our banking system and the strength of our economy, then that’ll likely boost market expectations. In addition, inflation came out last week at 6%, which was in line with expectations. So, the Federal Reserve is getting what it wanted, which is a slow decrease in inflation.   The Bond Market In a chart shown in this episode, you will see that we’ve had a lot of volatility in the bond markets. It has almost traded like the stock market, in a sense. The chart shows that the curve has flattened, and rates have decreased. The 2-year dropped from around 5% to 3.86% in the span of a week. The 10-year dropped from 4% to around 3.43%. We went from a 100-basis point difference between the 2-year and the 10-year to roughly a 40-point basis differential. Traditionally, once the 2-year goes below the Fed fund rate, that is typically when the Fed looks to pause or to start cutting rates. The 2-year is down about fifty 50-basis points below the current Fed fund rate, so it will be interesting to see what the Fed does with this news and the current situation with the banking system. On another chart in this episode, over the span of one day, you will see what the Fed funds rate looked like before and after the situation with Silicon Valley Bank. It has dramatically changed from having steady rate hikes throughout the year to maybe one rate cut or a pause to pricing and cuts coming along as soon as the middle of the year. All eyes will be watching to see what direction the Fed goes.   Direct Impact What the Fed does has historically affected the stock market. In the past, the Fed has pushed rates higher than necessary to stop market falls. This time, we need to see a more accommodated Fed to see the market start to rally. Over the last year, we have seen mortgage rates rise. We watched the 30-year mortgage rate go from mid-twos to above seven. That directly impacts individuals looking for homes. As interest rates fall, you should expect to see stocks stabilize and potentially rise. You should see mortgage rates fall, which could help the housing economy and people looking for houses. A great deal of news is coming out this week that will significantly impact where the markets, inflation, and interest rates go from here, and we are watching it closely.   Trey Booth, CFA®, AIF® Chief Investment Officer Wealth Consultant Email Trey Booth here Ty Miller Associate Vice President Email Ty Miller here Fi Plan Partners is an independent investment firm in Birmingham, AL, with a team of professionals serving clients across the nation through financial planning, wealth management and business consulting. The team at Fi Plan Partners creates strategies in the best interest of their clients using fee based investing. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Economic forecasts set forth in this presentation may not develop as predicted. No strategy can ensure success or protect against a loss. Stock investing involves risk including potential loss of principal. Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a registered investment advisor.The post Be Careful What You Wish For first appeared on Fi Plan Partners.

Watch this week’s educational episode to hear Adam Vansant walk you through how to access tax documents on Account View.   Adam Vansant, AIF®, BFA™ Senior Vice President of Operations & Advisory Services Wealth Consultant Email Adam Vansant here Fi Plan Partners is an independent investment firm in Birmingham, AL, with a team of professionals serving clients across the nation through financial planning, wealth management and business consulting. The team at Fi Plan Partners creates strategies in the best interest of their clients using fee based investing. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Economic forecasts set forth in this presentation may not develop as predicted. No strategy can ensure success or protect against a loss. Stock investing involves risk including potential loss of principal. Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a registered investment advisor.The post Finding Tax Documents on Account View first appeared on Fi Plan Partners.

The Banking Industry We want to address what happened last week in the banking industry and explain why the market had such a tough week. Last week the S&P 500 was down 4.5%. Mid-caps were down 7.4%, and small-cap stocks were down 8.1%. The sharp pullback in the market was due to earlier in the week when the Federal Reserve said they still had work to do and expected further rate hikes. After that, later in the week, the news came out about the failure of Silicon Valley bank. Why did the market react negatively to the Silicon Valley Bank news? The best explanation is that Silicon Valley Bank was uniquely at risk because of its unusually low percentage of individual depositors and its unusually high portfolio of loans and securities backing up their deposits. Another problem is that the bank’s clientele was mostly startup companies in the technology and healthcare sectors. On Thursday, the bank had $42 billion worth of withdrawals which left the bank with a negative cash balance. This was immediately followed by regulators stepping in to take over the bank. Silicon Valley Bank was the 16th largest bank in the nation by total assets, so it wasn’t surprising that the market was concerned by its failure. This was the second largest bank failure in U.S. history, so the fears of a 2008 run on the banks scenario were running through investors’ minds. Silicon Valley Bank’s situation is unique, and the news of its failure was initially such a worry because 97% of the deposits at the bank exceed the FDIC’s insurance cap. Silicon Valley Bank was in a class of its own because it had a bad combination of the lowest percent of retail depositors and the highest percent of loans and securities backing up their deposits among all similarly-sized banks in the country. The second worst bank by these measurements, Signature Bank, was suddenly forced into receivership by regulators on Sunday, March 12, 2023. The two banks that regulators took over are the two banks that had the highest risk. It’s important to note that a large majority of U.S. banks are in much better financial shape than the two mentioned; however, this is something that we will continue to watch.   Inflation and The Fed One of our research partners, Strategas, once said, “Traditionally, the Fed raises rates until something breaks.” A break can be something minor, like in 1998 when the break was long-term capital management. At that time, it was the largest hedge fund in the world, and the Fed came in and had to save it. It could be something significant like the housing market crash in 2008. We’ve already seen parts of the economy break; for example, we saw crypto nearly collapse, we saw the collapse in the tech industry, and the IPO market dried up to near 0, and now we’ve had a bank failure. It will be interesting to see if this failure of Silicon Valley bank is an extension of what we already knew was the broken tech market or if this is a new break in the economy where it may be a weakening the banking system. Only time will answer that, but we do have a short-term indicator of that, which is market expectations for Fed rate hikes. What does the market think the Fed is going to do? Jerome Powell spoke to Congress last week for two days. Over those two days, interest rates spiked as he made it clear that the Fed’s number one goal is to fight inflation, and how they’re fighting inflation is by raising interest rates. On Friday, the news about the banking concerns pulled rates back down. However, tomorrow we will get a new inflation report, and it will be huge to see how market expectations react to that inflation report. We expect a 6% CPI, so depending on whether that CPI number comes in above or below 6% will be telling on a year-over-year basis. It will be more telling to see how the market reacts. Will the market say that the Fed is back focused on inflation, so the expectation is for interest rates to increase, or will the market say that the Fed is focused on the banking sector, at which point interest rate expectations come down? There’s a lot of conflicting data and some tug of war between who will win. Has the Fed done enough to break what they feel is reasonable to bring down inflation, or is there more to go? This is a significant week for data. The inflation data coming out tomorrow is good because we no longer have to wait. We’ve been waiting for this inflation report since the last Fed meeting beginning of February. The next Fed meeting will be on March 22, so we will also keep an eye on that.   Jobs According to the recent jobs reports, 311,000 jobs were added. The report also showed that unemployment rose from 3.4% to 3.6%. The unemployment rate rose because there are more people in the workforce. This is proven because the labor force participation rate rose the same amount as the unemployment rate. This is a significant data point because an increase in people looking for jobs i

Interest Rates and Market Performance With the treasury yields spiking higher the past few weeks, we’ve had some questions about higher interest rates and market performance. We looked back from a historical perspective on how the S&P 500 index had performed in calendar years when the yield on the benchmark 10-year treasury note finished the year higher than it began. From 2000-2022 there were ten such years where the S&P 500 posted a positive total return in eight of those ten years. One of the outlier years was last year in 2022, which saw a record jump in the 10-year yield, with the S&P 500 having a tough year. So, even though rates are rising this year, history says that’s not necessarily bad for the markets and is something we’re observing. Economic Data When we talk about holding the line, we’re usually referencing a technical line and trying to see if the market can stay above it. A chart in this episode displays the S&P 500, the 500 largest stocks publicly traded in the US. The S&P 500 is the most important equity index in the world. The chart shows how all of last year, the market would rally and then fall repeatedly. That started the term where we had a higher, low beginning this year. The market rallied, and then the market fell and then held at that rising line. Can the market hold this line going forward? Will it be able to continue a new pattern of higher highs and higher lows? Technical data like this tell us what’s happening now, and fundamentals are good for looking at the past. Another chart in this episode shows market performance during earnings season. The last three rallies in the S&P 500 were during earnings season. The micro data core company earnings alone have been very positive. The market had rallied on that positive news only to fizzle when the macro data took center stage. The Macro data we’re talking about is inflation. Everyone knows that inflation has been an issue and that the Fed has been pushing prices down. We’ve passed through another earnings season, and recently the market rallied again just in time for us to receive the macro data. Can this current market line hold as we move from the micro data positivity to the macro, which has been negative over the last 12 months? We will get the jobs data on Friday, inflation data next week, and the week after that, we will have the important Fed decision regarding interest rates. As you can see, we have a lot of macro market data coming at us. It will be very important to see if the market can hold the line and get a good rally to start off the year. Sector Realignment The global industry classification standard oversees realigning the S&P 500 and is scheduled to do a realignment on March 17th. Over a trillion dollars’ worth of money will be realigned within the 11 sectors of the S&P 500. The money is not coming or going; it’s just being realigned within the same 500 companies, but how does that work? Some credit card companies currently in the tech sector are moving to the financial sector. These kinds of moves make more sense because credit card companies deal mainly with financials. Some companies are moving from the tech sector to the industrial sector, and some big box and discount retailers are going from the consumer discretionary sector to the consumer staple sector. These moves will align the US more with the rest of the world. The tech sector is going to lose about 3%, making up 22% of the overall sector for the S&P. Financials are going to get a 3% bump, moving up to around 15% overall. Compared to the rest of the world, in the most tech-heavy places like Japan, their tech sector only makes up about 18% of their total. In places like Europe and China, their tech sectors comprise around seven and eight percent. It is interesting that we were so tech-heavy before this realignment. Forced Trading The sector realignments won’t change anything but will create hundreds of billions of dollars worth of forced trades. We have a lot of rules-based investing in this world. It’s not as much as one person picking one stock and buying them. They may want to own Visa, but if Visa is no longer in the tech sector, they must sell it. If you own a financial sector, you have to buy it. There’s no human decision behind that. That’s just hundreds of billions of dollars worth of forced trading that will happen in the next couple of weeks, likely around March 16th. It will make the market look a lot more volatile and look like there’s a lot more activity. There will more than probably be a lot of press around the record volume that will take place. It’s an important event for those companies going from one sector to another. It is equally as important for the sector managers who own these companies today but won’t own them a week from now. There are a lot of moving parts that will most likely create friction fo

Have you ever wondered what distinguishes ETFs from mutual funds? Our latest educational episode has got you covered! Join Ty Miller in this week’s educational episode as he breaks down the key differences between the two investment vehicles and how they can impact your portfolio. Watch the full episode to learn more.     Ty Miller Associate Vice President Email Ty Miller here Fi Plan Partners is an independent investment firm in Birmingham, AL, with a team of professionals serving clients across the nation through financial planning, wealth management and business consulting. The team at Fi Plan Partners creates strategies in the best interest of their clients using fee based investing. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Economic forecasts set forth in this presentation may not develop as predicted. No strategy can ensure success or protect against a loss. Stock investing involves risk including potential loss of principal. Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a registered investment advisor. ETFs trade like stocks, are subject to investment risk, fluctuate in market value, and may trade at prices above or below the ETF’s net asset value (NAV). Upon redemption, the value of fund shares may be worth more or less than their original cost. ETFs carry additional risks such as not being diversified, possible trading halts, and index tracking errors. Investing in mutual funds involves risk, including possible loss of principal. Fund value will fluctuate with market conditions and it may not achieve its investment objective.The post ETFs Vs. Mutual Funds first appeared on Fi Plan Partners.

The Economy and The Fed   The Fed’s “preferred” inflation gauge, the Personal Consumption Expenditures or PCE, not only came in worse than expected, but the prior three months were all revised higher. The whole thing throws cold water on the ‘disinflation’ buzz and the rally we’ve seen so far this year. On a year-over-year basis, the PCE Price Index for services spiked by 5.6%, the worst since 1984. This matters because services is where inflation is running hot and makes up almost two-thirds of consumer spending. This higher reading is not what the Fed wanted to see, so we expect further rate hikes, which will lead to a more volatile market than what investors were hoping for coming into this year. This makes the Fed’s job extremely difficult in bringing down inflation without significantly hurting the economy. We will continue to watch this closely.   Inflation Data   The chart shown in this episode shows the most recent year-over-year changes in the cost of selected items in the Consumer Price Index. The chart shows that services have been the most inflationary. Airfare costs are up, along with hotels, food, and others. However, gasoline is down 1.53%, and used car prices are down nearly 9%. During the pandemic, there was an increase in electronic purchases, such as TVs. However, last year the data shows that television prices dropped 14.40%. Another chart in this episode shows how price changes in consumer goods and wages have developed since 2000. It shows that anything technology related has been deflationary. In 2000, technology items, such as TVs, toys, and computer software, were more expensive and have continued to decrease in price over the years. On the opposite side of that, hospital services, college tuition, medical services, housing, food, childcare, and hourly wages have continued to get more expensive.   Technical Analysis   As long as inflation remains elevated, we will continue to see increased market volatility. After the third week of a declining market, we’re analyzing our technical research closely. We would like to see the S&P 500 stay above the 200-day moving average of 3942. Numerous Federal Reserve officials are speaking this week, and several important economic reports are coming out. For those viewers who like to track the markets throughout the week, keep an eye on the 3942 level on the S&P 500. The market must hold this level as we continue to deal with higher inflation.     Bobby Norman, CFP®, AIF®, CEPA® Managing Director Wealth Consultant Email Bobby Norman here Ty Miller Associate Vice President Email Ty Miller here Fi Plan Partners is an independent investment firm in Birmingham, AL, with a team of professionals serving clients across the nation through financial planning, wealth management and business consulting. The team at Fi Plan Partners creates strategies in the best interest of their clients using fee based investing. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Economic forecasts set forth in this presentation may not develop as predicted. No strategy can ensure success or protect against a loss. Stock investing involves risk including potential loss of principal. Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a registered investment advisor.The post Inflation and Market Volatility first appeared on Fi Plan Partners.

You don’t want to miss this week’s special episode of Investors’ Insights, where Greg Powell and Trey Booth answer a popular question that we often hear, “What is the purpose of the many screens in Trey’s office?”   Click the link to watch this informative video where Greg and Trey discuss how the Portfolio Team at Fi Plan Partners uses the screens to follow market performance and track data.   Greg Powell, CIMA® President and CEO Wealth Consultant Email Greg Powell here Trey Booth, CFA®, AIF® Chief Investment Officer Wealth Consultant Email Trey Booth here Fi Plan Partners is an independent investment firm in Birmingham, AL, with a team of professionals serving clients across the nation through financial planning, wealth management and business consulting. The team at Fi Plan Partners creates strategies in the best interest of their clients using fee based investing. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Economic forecasts set forth in this presentation may not develop as predicted. No strategy can ensure success or protect against a loss. Stock investing involves risk including potential loss of principal. Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a registered investment advisor.The post Behind the Screens first appeared on Fi Plan Partners.

As we celebrate the 18th anniversary of Fi Plan Partners, we wanted to share a special message from our fearless leader, Greg Powell, to thank you for an incredible 18-year journey with phenomenal relationships like you.     Greg Powell, CIMA® President and CEO Wealth Consultant Email Greg Powell here Fi Plan Partners is an independent investment firm in Birmingham, AL, with a team of professionals serving clients across the nation through financial planning, wealth management and business consulting. The team at Fi Plan Partners creates strategies in the best interest of their clients using fee based investing. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Economic forecasts set forth in this presentation may not develop as predicted. No strategy can ensure success or protect against a loss. Stock investing involves risk including potential loss of principal. Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a registered investment advisor.The post An 18th Anniversary Celebration first appeared on Fi Plan Partners.

  Core CPI   This week’s market-moving event could be when the consumer price index report comes out on Tuesday. Expectations are that the annual price growth decelerated to 6.2% in January. The core CPI, which takes out the more volatile food and energy numbers, is often seen as a better measure and is projected to rise 0.4% month-over-month, which is different from what the market or Federal Reserve wants to see. The core CPI number had started to come down at the end of last year, especially the inflation of core goods. The market started the year strong on the thought that inflation was coming down, so a hotter inflation number could reverse the trend in the market. We’re concerned about Tuesday’s report because we’re seeing a rise in gas and used car prices. Used car prices have surprisingly risen in recent weeks, which was unexpected. They remain above historical prices going back to 2008. So, Tuesday’s inflation report is significant because trading sessions and market trends were negatively impacted throughout last year on days when CPI was reported. With the much stronger-than-expected jobs report seen two weeks ago, a higher inflation number could damage the market for a few weeks.   Market Moving Data   When the Congressional Budget Office updates its official budget baseline, it’s typically a non-event. This report comes out on February 15th and is expected to be a market mover. Why does this budget baseline matter? It is the number that congress uses when considering bills or changes to the deficit and spending. They use the Congressional budget baseline to guide where things are going. This number hasn’t been updated since May, and a lot has happened since then. The current Congressional budget baseline uses a 1% Fed funds rate. Currently, the Fed funds rate is 4.75%. That’s an additional $300 billion in interest payments that must be built into the future budget. That’s also $300 billion that congress, when dealing with the debt ceiling debate, must take off the table for spending and use for interest. In addition, spending overall is up $570 billion above the baseline estimate. Again, another dollar figure means that congress must pull that spending off because it’s already been accounted for. Tax revenues are relatively flat, so a big tax windfall is not expected. What does all this add up to? It means that the deal over the debt ceiling, originally expected to last until July, will be pulled forward by as many as 2-3 months. Congress initially thought they had as many as five months to do this; however, they may only have as little as 6-8 weeks. That’s a much shorter timeline to get a bill passed, which could pull the market volatility forward. In 2011, the S&P 500 was down 15% during a similar situation. The market has ignored it more this time than it did then because markets typically don’t react until reality hits. With the possibility of market volatility coming sooner than later, we will dig into the baseline data that comes out on the 15th and plan to react accordingly.   Short-Term Volatility   We wanted to share a Super Bowl fun fact with you this week. According to Carson Investment Research, there have been eight instances since 1910 of a Philadelphia team winning the Super Bowl or World Series. Each win was followed by adverse events such as the Great Depression, the Great Recession, etc. Obviously, that’s coincidental and not something we trade off of. However, it helps us to feel better when talking about the Chiefs winning Super Bowl LVII instead of the Eagles. On a more serious note, sticking with technicals but focusing on seasonality, February is typically the second worst month of the year aside from September. In February, weakness traditionally occurs in the second half of the month, starting around the 15th. However, it has been historically followed by a strong March. We are also amid the strongest quarter of the 4-year presidential cycle. So don’t let this short-term volatility get you down.     Greg Powell, CIMA® President and CEO Wealth Consultant Email Greg Powell here Bobby Norman, CFP®, AIF®, CEPA® Managing Director Wealth Consultant Email Bobby Norman here Trey Booth, CFA®, AIF® Chief Investment Officer Wealth Consultant Email Trey Booth here Ty Miller Associate Vice President Email Ty Miller here Fi Plan Partners is an independent investment firm in Birmingham, AL, with a team of professionals serving clients across the nation through financial planning, wealth management and business consulting. The team at Fi Plan Partners creates strategies in the best interest of their clients using fee based investing. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future re

In this week’s educational episode, Ashley Page talks about preferred stocks and explains how they are different from bonds and common stocks.   Fi Plan Partners is an independent investment firm in Birmingham, AL, with a team of professionals serving clients across the nation through financial planning, wealth management and business consulting. The team at Fi Plan Partners creates strategies in the best interest of their clients using fee based investing. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Economic forecasts set forth in this presentation may not develop as predicted. No strategy can ensure success or protect against a loss. Stock investing involves risk including potential loss of principal. Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a registered investment advisor. Preferred stock dividends are paid at the discretion of the issuing company. Preferred stocks are subject to interest rate and credit risk.The post The Pros and Cons of Preferred Stocks first appeared on Fi Plan Partners.

Technical Analysis   After a strong January for the markets, the question is, can the rally continue? Fortunately, technical analysis helps us answer this question. One bullish market development that happened last Thursday for the first time in two years, a golden cross occurred in the S&P 500. A golden cross is a bullish signal when the 50-day moving average crosses above the 200-day moving average. Historically, a golden cross means a positive market. The S&P 500 has historically generated positive returns over the 12 months following each golden cross. Of the previous 36 golden cross signals, the index produced forward for an average return over the following 12 months of 10.5%. What’s more interesting is when the 200-day moving average is declining, such as the recent occurrence, the average return for the S&P 500 jumped to 16.8% over the following 12 months. We’re able to analyze technical analysis for confirmation that there is a trend change for the market and further raises the probabilities that the bear market low that we saw back in October and the current direction of the market appears durable, just probably not at the pace seen in January, but still a positive sign for the market going forward.   The Fed   The Federal Reserve met last week and announced its interest rate policy. As expected, they raised rates from 4.5% to 4.75%. That was in line with expectations and not nearly as aggressive as when they closed the year by raising rates by 50 and 75 basis points at a time. The Fed appears to be slowing down, and the market has taken that positively. However, in the Fed’s official statement, one sentence was missed initially that the market may be taking more aggressively now. Jerome Powell said, “The committee anticipates that ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2% over time.” That 2% number is important because many market participants have been looking for the federal funds rate to get above the current inflation rate. The current rate of inflation is 6.5% and the federal funds rate at 4.75%. That’s not nearly as far to go, especially with two inflation numbers coming out between now and their next meeting in March. You could easily see how inflation could fall down to where the federal funds rate is currently. However, with inflation at 6.5%, that’s a long way from 2%. Is the Fed moving its target of getting the federal funds rate above the current inflation rate, or are they trying to get inflation all the way down the 2%? That’s a much more aggressive stance if the Fed remains aggressive until inflation is at 2%. They sent some mixed signals with their statement and if you don’t want to fight the Fed, it’s hard to see where they’re going. There’s a lot of data left to come out but the next most important data point we’re watching for is the inflation report, which comes out on the 14th of this month.   Earnings   So far this quarter, half of the companies in the S&P 500 have reported their earnings. Sales growth is up 4.6%, beating expectations, but earnings growth is short at -2.7%, with energy still being the outperformer. What’s interesting is that these numbers show us what is going on right now and looking back. Looking at the projections for 2023, those numbers have started to come down. Every time each company reports its earnings it puts out a projected earnings estimate. So far, these have been coming down. We started last year with earnings per share of around $245 for the entire S&P 500. This year EPS took a steep decline down to $224. Job cuts are not factored in these earnings reports but we’ve seen a lot of them. While they are never good for the employees, job cuts help companies expand their margins. They have fewer costs, which factors into earnings costs, cost of goods sold, and things of that nature, so it’ll be something to keep an eye on going forward.     Greg Powell, CIMA® President and CEO Wealth Consultant Email Greg Powell here Bobby Norman, CFP®, AIF®, CEPA® Managing Director Wealth Consultant Email Bobby Norman here Trey Booth, CFA®, AIF® Chief Investment Officer Wealth Consultant Email Trey Booth here Ty Miller Associate Vice President Email Ty Miller here Fi Plan Partners is an independent investment firm in Birmingham, AL, with a team of professionals serving clients across the nation through financial planning, wealth management and business consulting. The team at Fi Plan Partners creates strategies in the best interest of their clients using fee based investing. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanage

Interest Rate Hikes   For the last few years, the market has been 100% focused on what the Federal Reserve was going to do. During Covid, it was very stimulative, but in 2022 that flipped to being very restrictive, where the Federal Reserve was trying to get the market and prices to drop. Going into 2023, the story is the same. What we’re watching for this year is when will the Fed feel comfortable with pivoting from restrictive hiking to maybe pausing or turning around. This week’s meeting is very important and will be the first meeting of 2023. They’ll announce on Wednesday what their rate policy is and expectations are that they will go from 4.5% where the Fed Funds Rate is up just 25 basis points to 4.75%. That’s a big move considering we had 75 basis point hikes many times through last year. The Fed will not stop hiking its Fed funds rate until it is above CPI. History is a good guide to this and that’s where the Fed thinks they have finally beaten inflation. The Fed funds rate is currently at 4.5% and is likely going to 4.75%. Inflation most recently was at 6.5% so there’s still a lot of work to do. The Fed’s guidance on how they view potential inflation between now and when they meet next in March is going to be huge. Hopefully, by then, inflation has come down to a point where the Fed can at least pause. In a chart shown in this episode, you can see why the market thinks that a pause is good. The chart shows that historically the Fed doesn’t sit idle for very long. As soon as they get to that peak level, they usually make some sort of policy mistake where they chase inflation up. Similarly, they didn’t chase the market and the economy down on the other side because they typically hike rates, so they must immediately start cutting rates. Cutting rates is very stimulating for the stock market and we may start seeing what could be a sustainable rally which we haven’t had in many months. That’s why this decision is so important. It’s not really what they do, we all pretty much know what they’re going to do, it’s what they say. There’s so much teetering on when they can pause and then likely reverse course, which will help the market.   Positivity   Last week, the Core PCE report came out and was up 0.3% month-over-month and 4.4% year-over-year. The Core Personal Consumer Expenditures report focuses on businesses and is a key part of the Consumer Price Index report. With that being said, over the past three months, Core PCE is only up 2.9%, with the Fed funds rate possibly going up to 4.75%. We’re looking at the first time in a long time when we might have some real positive rates. It was just a short time ago when we were talking about negative nominal rates, not even including inflation. Now we’re looking at positive real rates, which would be the Fed funds rate minus inflation. It’s very interesting and gives consumers a lot of different options as opposed to the negative interest rate environment that we have been in for quite some time.   Misleading Headlines   As we head into another big week of corporate earnings reports, one of the big stories so far this earning season is the layoffs being announced by some of the big technology firms. Some might think that the Federal Reserve will be happy with the layoff announcements but looking deeper into the situation, the headlines might be misleading. Looking at a chart shown in this episode of recent layoffs announced by technology firms gives a better picture of what’s really going on. On the chart, the blue lines represent the percent growth in the workforce during the pandemic and the orange lines on the left of the chart represent recent layoffs. Amazon increased employees by 93% and Spotify increased by 122%. Some of these companies had record hiring sprees, so the recent layoff announcements seen in the orange lines are not too surprising. META increased its workforce by 94% and just announced layoffs of over 12% of the workforce. It’s not that big of a deal considering the size of hirings in recent years. Also, we’re hearing that those in technology losing their jobs are being rehired quickly, even with some being hired within a few days. If we hear of more layoffs this week from technology companies, it might not be as negative for the stocks and future guidance as some think. As always, it’s important to look at the full picture.     Bobby Norman, CFP®, AIF®, CEPA® Managing Director Wealth Consultant Email Bobby Norman here Trey Booth, CFA®, AIF® Chief Investment Officer Wealth Consultant Email Trey Booth here Ty Miller Associate Vice President Email Ty Miller here Fi Plan Partners is an independent investment firm in Birmingham, AL, with a team of professionals serving clients across the nation through financial planning, wealth management and business consulting. The team at Fi Plan Partners creates strategies in

Watch or listen to this week’s educational episode to hear Trey Booth and Ty Miller talk about the possible benefits of a down market when it comes to taxes.   Trey Booth, CFA®, AIF® Chief Investment Officer Wealth Consultant Email Trey Booth here Ty Miller Associate Vice President Email Ty Miller here   Fi Plan Partners is an independent investment firm in Birmingham, AL, with a team of professionals serving clients across the nation through financial planning, wealth management and business consulting. The team at Fi Plan Partners creates strategies in the best interest of their clients using fee based investing. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Economic forecasts set forth in this presentation may not develop as predicted. No strategy can ensure success or protect against a loss. Stock investing involves risk including potential loss of principal. Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a registered investment advisor.The post Tax Loss Harvesting first appeared on Fi Plan Partners.

Market Update   We want to give a quick update on where the market stands as we head into a very important week of corporate earnings. The S&P 500 has kicked off 2023 with a solid start, rising 4% before giving up some gains last week. In this episode, we show a few charts that highlight the technical macro backdrop of the S&P 500, which should help the index finally break its downtrend in 2023. One chart goes back to last January when the S&P 500’s previous rally attempts failed to break through the 200-day moving average. Today, the 200-day moving average is at 3971. These failed rallies last year in March, April, July, and December were due to sharply rising interest rates and a big US dollar rally. The good news is that the headwinds we saw last year have largely subsided. On another chart, you can see that the 10-year treasury yield has fallen to 3.5% and is in a pronounced downturn. On the third chart, you will see that the US Dollar index is also in a pronounced downturn. The backdrop for inflation has also improved over the last year. Another chart shows that the recent peak in year-over-year inflation estimates for 2023 is coming down. With yields, the US Dollar, and inflation all trending down, we’re watching carefully to see if the market can finally break through and hold at the very important 200-day moving average number. We are watching and hoping for what should be a less volatile year as we move forward.   Technical Strength   We seem to be having some technical strength in the market where we’ve created a bottoming process. Last year it was all about inflation, the Fed’s response to inflation, and rising interest rates. Since the last Fed meeting, the market has seemed to be looking at earnings. Something we thought was important to look at was where our earning season could be going and where the market expects it to be. A chart shown in this episode shows the change in earnings expectations to start the year off. Only 10% of the S&P 500 earnings have been reported and we will get a third of the S&P report this week, which should show some market-moving data. While the market seems to be bottoming, earnings are coming out a little bit weaker than expected. Since the beginning of this year, expectations have dropped by over 2%, showing negative earnings growth for the fourth quarter at -2.9%. That kind of conflicts with the revenue expectations of +4.1%. That means inflation is hitting a company’s earnings and the market directly. Prices are higher and there are more sales, but you also have higher costs so that’s bringing earnings down. If you strip it down and look at the specific sectors, you can see that the bulk of the earnings positivity comes from two sectors. Energy had 61% earnings growth, and industrial had over 40% earnings growth. Those two sectors are pulling up the market and that is where you saw a lot of strength last year. We need to see a broadening of that strength for this market to find a sustainable bottom and then move past this inflation and Fed-led market into an earnings-led market. At the end of the day, companies make money and they give that money to shareholders. That’s what calls the price to go up sustainably. We’re going to need to see those earnings improve. We will get a lot of data this week and we hope we’re going to see some positivity, which could cause the market to rally.   Record Dividends   Last year we saw a record $563 billion in dividends being paid to shareholders. That is a great sign because, during the pandemic, a lot of companies had to cut dividends or pause them. We were glad to see companies get back on track with rising dividends. It’s only January, but we’re on pace to see another record year for dividends. If the dividend yield stays the same, there’s a chance that numbers will surpass those from 2022, which is a great sign. Historically, dividends have accounted for about 60% of the S&P 500’s total return. As you can see in a chart shown in this episode, one factor is from 2010 to about 2021, known as the QE era, we saw dividends only make up 26% of the S&P 500’s total return. As we transition from QE to QT, it’s going to be interesting to see if dividends start making near that 60% range or at least find a nice middle between 26% and 60%. Right now, companies are paying out 33.4% of their payouts, which is historically low. Typically, they pay out around 48%. Last year was a record year, but it seems like 2023 is well on track to surpass that. We are hoping to see dividends become more of a factor going forward.     Greg Powell, CIMA® President and CEO Wealth Consultant Email Greg Powell here Bobby Norman, CFP®, AIF®, CEPA® Managing Director Wealth Consultant Email Bobby Norman here Trey Booth, CFA®, AIF® Chief Investment Officer Wealth Consultant Email Trey Booth here Adam Vansant, AIF®, BFA™ Senior Vice President o