Money Wise Davidson Capital

In this week's episode of Money Wise, the Money Wise Guys discuss the recent performance of major stock indices, noting a mixed week with the Dow Jones Industrial Average remaining flat, while the S&P 500 and NASDAQ experienced significant corrections, dropping by 3% and 5.5% respectively. Year-to-date, the indices show modest gains, but the NASDAQ is notably close to zero growth for the year. The conversation highlights the sharp downturns, particularly in the NASDAQ, which had its worst week in a long time. Jeff speculates whether the Dow has completed its correction or if more downturns lie ahead, noting that the market's focus is primarily on the NASDAQ and S&P 500 due to their broader tech and AI-focused companies. The discussion also covers rising interest rates with the 10-year Treasury yield hitting 4.623%, sparking market nervousness. The Money Wise guys reflect on the Federal Reserve's current stance, indicating no imminent rate cuts due to ongoing inflation concerns, which appears to have not yet been fully controlled. Additionally, the housing market is spotlighted for showing significant stress, with housing starts and existing home sales both declining.

The episode also touches on rising living costs under the current administration, potentially influencing voter sentiment in the upcoming November elections. They also take time to disucss the broader market sentiment, with some analysts initially expecting several rate cuts this year, and how the market is now adjusting to a "higher for longer" interest rate scenario, aligning with fewer expected rate reductions.

A Stressed Housing Market
The housing market is currently facing significant stress, evidenced by declining trends in both housing starts and home sales. In March, housing starts plummeted by 14.7%, indicating a substantial slowdown in new residential construction, which can be a key driver of economic activity and consumer confidence. Concurrently, existing home sales also fell by 3.7%, reflecting a reticence among buyers, possibly due to high mortgage rates, elevated home prices, and economic uncertainty. These downturns in critical housing market indicators suggest a broader cooling off in the real estate sector, which could have ripple effects across the economy. As the housing market is often a bellwether for economic health, these declines are particularly concerning, signaling potential challenges ahead for both the real estate market and the broader financial landscape.

In the second hour today, the Money Wise guys discuss Investor Psychology. You don’t want to miss the details! Tune in for the full discussion on your favorite podcast provider or at davidsoncap.com, where you can also learn more about the Money Wise guys or take advantage of a portfolio review and analysis with Davidson Capital Management.

In this week's episode, the Money Wise guys discuss the recent downturns in major stock market indices, with the Dow Jones Industrial Average, S&P 500, and NASDAQ all experiencing declines. Despite these drops, the year-to-date figures remain slightly positive. The conversation then shifts to a technical analysis of the markets, noting that the S&P 500 was close to dropping below its fifty-day moving average but managed a slight recovery by the close of trading on Friday. The guys emphasize that trading volumes have been lower than average, suggesting a lack of strong buying or selling conviction, which they attribute to traders being in a holding pattern awaiting more data. A significant portion of the discussion focuses on the latest Consumer Price Index (CPI) numbers released on Wednesday, which showed inflation hotter than expected. This has stirred discussions among financial pundits about the possibility of further interest rate hikes rather than cuts. This shift in narrative reflects a cautious sentiment among portfolio managers about adjusting asset allocations in response to evolving economic indicators. The episode also touches on political influences on economic policies and market reactions, particularly criticisms of the Biden administration's handling of various issues, including energy policies and their impact on inflation. The Money Wise guys criticize the administration's decisions and speculate on the potential political motivations behind economic statements and policies, especially as they relate to interest rate decisions in an election year. They conclude with concerns about the Federal Reserve using outdated data to make policy decisions, which could impact the accuracy of their economic forecasting.

The Consumer Price Index (CPI)
The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them. Changes in the CPI are used to assess price changes associated with the cost of living. For investors, a CPI that is hotter than expected indicates higher inflation, which can erode purchasing power and reduce the real returns on investments. This can lead to higher interest rates as central banks may raise rates to curb inflation. Higher interest rates typically result in higher borrowing costs and can dampen economic growth, influencing stock markets negatively as companies face higher costs of financing and consumers reduce spending.

In the second hour today, the Money Wise guys discuss 5 Things Every Retirement Portfolio Should Have. You don’t want to miss the details! Tune in for the full discussion on your favorite podcast provider or at davidsoncap.com, where you can also learn more about the Money Wise guys or take advantage of a portfolio review and analysis with Davidson Capital Management.

As they kick off every Money Wise program, the show starts with a discussion of recent market performances, noting a downturn in the major indices over the past week, with the Dow Jones Industrial Average down by 2.3%, the S&P 500 by 1%, and the NASDAQ by 0.8%. Despite this, all year-to-date figures remain positive. A significant focus of the episode is on the impact of Federal Reserve officials' statements on market movements. Specifically, they discuss a comment made by Fed Governor Neel Kashkari, suggesting that interest rates might not need to be cut at all this year, which led to a sharp market decline. This incident highlights the broader theme that words from Federal Reserve officials have significant consequences for the markets. The Money Wise guys express surprise that the market has adjusted to lower expectations of rate cuts without a significant negative reaction, indicating a resilient market. However, they caution about the volatility and sensitivity of the market to Fed officials' remarks. They also preview upcoming economic data releases, such as consumer and producer prices, which could influence market expectations and Fed policy regarding interest rates.

Consequences for the Markets
Several factors beyond Federal Reserve comments can significantly impact the financial markets, either positively or negatively. Economic indicators such as employment rates, GDP growth, and inflation figures play a crucial role in shaping investor sentiment and market dynamics. Corporate earnings reports and forecasts can also influence market movements, as they provide insight into a company's financial health and future prospects. Geopolitical events, such as elections, trade negotiations, or conflicts, can introduce uncertainty, affecting global markets. Additionally, technological advancements and regulatory changes within key industries can lead to shifts in investment trends and market valuations. Lastly, global economic conditions, including the economic performance of major economies like China and the European Union, can have far-reaching effects on international markets, influencing commodity prices, currency exchange rates, and global trade flows. Together, these factors create a complex web of influences that can drive market volatility and trends.

In the second hour today, the Money Wise guys share their Retiree Spending Rules. You don’t want to miss the details! Tune in for the full discussion on your favorite podcast provider or at davidsoncap.com, where you can also learn more about the Money Wise guys or take advantage of a portfolio review and analysis with Davidson Capital Management.

In this week’s episode of Money Wise, the Money Wise guys discuss the financial market's performance, highlighting weekly, monthly, and year-to-date figures. For the past week, the Dow Jones Industrial Average saw an increase of 0.8%, the S&P 500 grew by 0.4%, whereas the NASDAQ fell by 0.3%. Reflecting on March's performance, the Dow Jones experienced a 2.1% increase, the S&P 500 rose by 3.1%, and the NASDAQ was up by 1.8%. Year-to-date figures reveal the Dow up by 5.6%, the S&P 500 by 10.2%, and the NASDAQ by 9.1%, marking the best start in five years and the best first quarter for the S&P since 2019. The Money Wise guys also touch upon the anticipation around the Personal Consumption Expenditures (PCE) index release, contrasting economic indicators such as PMI numbers indicating contraction and high consumer sentiment reflecting confidence. Additionally, positive economic news included an 8% increase in new home sales, a 1.4% rise in durable goods orders, and an upward revision of Q4 2023 GDP to 3.4%. The discussion includes a conversation surrounding their thoughts on if an imminent recession is going to happen, with analysts speculating about interest rate cuts, suggesting a range of zero to three cuts for the year, amidst adjusting market expectations.

The Personal Consumption Expenditures Index
The Personal Consumption Expenditures (PCE) index is a measure of the average increase in prices for all domestic personal consumption. It tracks the price changes in consumer goods and services, including healthcare, education, and food, among others. As the Federal Reserve's preferred gauge of inflation, the PCE index provides a broad overview of the inflationary pressures within the economy, helping the Fed in making informed decisions regarding monetary policy. Unlike the Consumer Price Index (CPI), the PCE index accounts for changes in consumer behavior and preferences, such as switching to alternative goods in response to price changes, making it a more comprehensive measure of inflation. This index is crucial because it influences the Federal Reserve's decisions on interest rates, which in turn affect economic growth, employment rates, and the overall financial well-being of individuals and businesses. Its significance lies in its role as an economic indicator that helps policymakers, economists, and investors understand the health of the economy and the potential for inflation or deflation.

In the second hour today, the Money Wise guys discuss Equity Index Annuities. You don’t want to miss the details! Tune in for the full discussion on your favorite podcast provider or at davidsoncap.com, where you can also learn more about the Money Wise guys or take advantage of a portfolio review and analysis with Davidson Capital Management.

Jeff and Kyle are back in the studio and kick off this week’s episode of Money Wise by taking some time to get into the numbers of the markets this week before discussing how these current trends can influence your future retirement plans. This past week the Dow was up 2%, the S&P 500 was up 2.3%, and the NASDAQ was up 2.9%. For the YTD, the Dow was up 4.7%, the S&P 500 was up 9.7%, and the NASDAQ was up 9.4%. The Money Wise guys discuss the remarkable performance of the stock market, noting that indices like the NASDAQ and the Dow have hit all-time highs, signifying a prosperous period for investors, particularly those with a significant portion of their assets in stocks. They highlight their successful stock picks, which have outperformed the S&P year-to-date, and note the satisfactory performance of the fixed-income segment of portfolios despite rising interest rates throughout the year. The discussion also covers market momentum as the first quarter of 2024 nears its end, with Good Friday market closures ahead. The conversation shifts to portfolio strategy debates, market resilience in the face of potential downturn catalysts, and reactions to Federal Reserve policies. Specifically, they debunk the earlier market consensus of numerous interest rate cuts in 2024, with the Fed signaling a more dovish stance than expected, indicating that rate cuts could occur even before inflation targets are met. This nuanced Federal Reserve outlook, coupled with a dismissal of immediate rate hikes, points to a cautiously optimistic market sentiment. 

Federal Reserve Forecasts
The Money Wise guys reveal that the Federal Reserve's unexpected dovish stance signals potential interest rate cuts before meeting inflation targets, has buoyed the stock market. This shift suggests a prioritization of economic growth over strict inflation control, lowering borrowing costs for companies and making equities more attractive compared to fixed-income securities. Such policies are designed to stimulate investment and consumer spending, thereby supporting corporate profits, and increasing investors' risk appetite. The market's positive reaction reflects confidence in continued economic expansion and higher stock valuations, underscoring the Fed's commitment to sustaining the recovery even if it means tolerating higher inflation levels in the short term.

In the second hour today, the Money Wise guys share the Best Investment Advice Ever. You don’t want to miss the details! Tune in for the full discussion on your favorite podcast provider or at davidsoncap.com, where you can also learn more about the Money Wise guys or take advantage of a portfolio review and analysis with Davidson Capital Management.

It’s another information-packed episode with the Money Wise guys and they begin with a rapid-fire market recap for last week. The Dow was down 365 points, the S&P 500 was down 13.5 points, and the NASDAQ was down 1.2%. YTD the Dow is up 2.7%, the S&P 500 is up 7.4%, and the NASDAQ is up 7.2%. Although we’re seeing drops across the board, each market reached an all-time high throughout the week but Fridays seem to be hitting us especially hard this month. The Money Wise guys discuss their thoughts on why we’re seeing so much fluctuation in the markets as well as other headlines. They also discuss the interest rate cuts we’re expecting to see this summer and how they think those cuts will be rolled out. The Money Wise guys seem to caution listeners on believing the rumors, doubting that they’ll give cuts too early before the presidential election. The guys also discuss the latest employment report and how they think those results may play into the Fed’s decision. 

Will the Federal Reserve Announce Interest Rate Cuts This Year?
If the Federal Reserve were to announce interest rate cuts this year, it would likely be in response to signs of economic slowing, to stimulate economic growth. By lowering interest rates, borrowing costs decrease, encouraging both consumers and businesses to spend and invest more. The goal is that this will lead to increased economic activity, potentially boosting job creation and consumer spending. For the investment landscape, interest rate cuts can have mixed effects. On one hand, lower rates tend to make bonds less attractive relative to stocks, potentially driving up stock prices as investors search for higher returns. On the other hand, if the rate cuts are seen as a response to significant economic downturn risks, it could lead to increased market volatility. Overall, while interest rate cuts can provide short-term economic stimulation and potentially buoy the stock market, they also reflect concerns about underlying economic health and can lead to increased inflationary pressures over the longer term.

In the second hour today, the Money Wise guys share the 10 Myths of Retirement Planning. You don’t want to miss the details! Tune in for the full discussion on your favorite podcast provider or at davidsoncap.com, where you can also learn more about the Money Wise guys or take advantage of a portfolio review and analysis with Davidson Capital Management.