As a financial planner, I like to be as prepared as possible for the unknowns in life. This allows me to have peace-of-mind knowing that major issues have already been addressed. As life evolves, no one can be certain about the future, but one aspect you can control is your legacy through a comprehensive estate plan. A comprehensive estate plan can be comprised of a variety of documents, but the base estate plan should include a last will and testament, durable power of attorney, and medical power of attorney and directive. These documents guide your appointed agent(s) to ensure your medical and financial wishes are taken care of and your financial legacy passes in accordance with the guidelines laid out as smoothly as possible. Having an estate plan in place prior to a life changing event, cognitive issues, or death can help ensure that the decisions made by the individual are honored.
The attacks on Saudi Arabian state-owned oil facilities that sent oil prices surging were the story for financial markets for the first half of last week, until the Fed announced it was once again cutting interest rates.
On Saturday, September 14, coordinated drone strikes on two Saudi Arabian state-owned oil facilities disrupted more than half of the country’s oil production, or 5.7 million barrels a day. Saudi Arabia’s Interior Ministry confirmed the drone strikes on the oil-processing facility in Abqaiq and an oil field in Khurais, which are both owned by state-owned Saudi Aramco. The facility in Abqaiq is both Saudi Aramco’s largest oil processing facility and the largest crude oil stabilization plant in the world.
Inflation has been a popular topic of late.
In his press conference to announce the Fed’s decision to cut interest rates following its July meeting, Fed Chair Powell cited “muted inflation pressures” as justification for action.
However, retaliatory tariffs between the U.S. and China have raised concerns this could spark inflationary pressures as consumers are forced to pay higher prices.
When Congress passed the Federal Reserve Act in 1913, it established the Federal Reserve System with the initial objective of supporting a fragile banking system. In the over 100 years since it was first established, the responsibilities of the Federal Reserve System (or the Fed for short) have expanded to include several broader responsibilities, such as fostering a sound banking system and a healthy economy. One thing that hasn’t changed is the Fed is an independent government agency that is accountable to the public and Congress to act as the Central Bank of the United States.
The Free Application for Federal Student Aid (FAFSA) collects demographic, income, and asset information from student applicants and their families. This information is used to calculate a student’s eligibility to receive any financial aid for college expenses based on the Expected Family Contribution (EFC). The EFC is calculated according to a formula that is established by the federal government and is a measure of a family’s financial strength. Schools consider the EFC as one of several factors to determine the amount, if any, a student may be awarded for that school year. Simply put, students are eligible to receive need-based student aid if the sum of their EFC and other estimated financial assistance is less than the total cost of attendance.
I am always hesitant when writing about large market drops. It’s a delicate line to walk. In writing something that will calm your nerves and add perspective to what’s happening in the markets, am I calling attention to something that you may not have been aware of? Now that a few days have passed and the markets have rebounded a little, I think it’s safe to address the events that unfolded last week.
Earlier this month, President Trump announced the United States will impose a new 10% tariff on $300 billion worth of goods imported from China. The new tariffs, which are set to take effect on September 1st, could have a more direct impact on U.S. consumers because the list of target goods include clothes, toys, cell phones, electronics, and other retail items. Up until this point, tariffs levied by the U.S. against Chinese imports have targeted goods that are used mainly as inputs in the manufacturing process, such as steel and aluminum. Those tariffs affected the costs for U.S. companies, but those increases were not necessarily passed through to the consumer. These newest tariffs could hurt consumer’s wallets.
In a widely anticipated, yet highly debated, move, the Federal Reserve (Fed) announced this past Wednesday it is cutting interest rates. The Fed lowered the federal funds target rate range by 0.25%, from 2.25%-2.50% to 2.25%-2.00%. This marks the first time the Fed has cut interest rates since 2008. So, why was the Fed’s decision so controversial?
With the fall semester fast approaching, there are many last-minute decisions and preparations being made for the next wave of freshman students. However, one decision that may have fallen to the wayside is health insurance for the incoming student. An important question to ask is “will my child be covered under my medical insurance once they go off to college?”
It’s often said there are two things that are guaranteed in life: death and taxes. While there have been many who have expanded this list to include other certainties life has to offer, one that often doesn’t make the list is recessions. As much as we hope and plead that economic expansions will last forever, we know the inevitable truth. The economy is cyclical. It goes through periods of expansion and contraction. Recessions happen as a result.
Markets had a great first half of the year. Major stock indexes, including the S&P 500, reached new highs. However, global economic growth is slowing. Investor concerns about a recession have increased and unresolved trade negotiations with China have created even more uncertainty. Slowing economic growth, rising recession risk, and tariff uncertainty doesn’t sound like a recipe for a stock and bond rally, does it? So, what has spurred stocks and bonds higher?
Things can change quickly. If I was writing this post one month ago, it would be a completely different topic with a much different tone.
Following four straight months of positive performance to start the year, the S&P 500 posted a -6.35% return in May. This was the third time in eight months the S&P 500 had a monthly loss of more than 6%. Fears of a full-blown trade war were reemerging as trade negotiations with China soured and it looked like fresh tariffs would be imposed against Mexico. The trade wars would put downward pressure on an already slowing global economy, putting even more pressure on central banks to ease monetary policy.