Announcer:
It is time now on KROS for Financial Focus, brought to you by NelsonCorp Wealth Management. The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. Any indices mentioned are unmanaged and cannot be invested into directly. Registered representative securities offered through Cambridge Investment Research Incorporated, a broker dealer, member FINRA SIPC. Investment advisor representative, Cambridge Investment Research Advisors Incorporated. A registered investment advisor, Cambridge and NelsonCorp Wealth Management are not affiliated. Cambridge does not offer tax advice. Now here’s today’s Financial Focus program.
Nate Kreinbrink:
Good morning and welcome to this week’s Financial Focus brought to you each and every Wednesday morning right here on KROS. Well, this is Nate. I got James joining me today. Hard to believe we are flying right through July. Last week was 4th of July weekend. Hopefully everybody had a happy and safe weekend, but it seems like we get through that 4th of July weekend every summer, and then it just speeds up even faster. Not that it was going slow before that, but it just speeds up. And next thing you know, we are August and then back to school.
James Nelson:
Yeah, totally. That’s not too far off. And some of the sports have been wrapping up softball, baseball, although you guys are still playing, Nate, out at Northeast and have another game tonight. But yeah, it’s flying by already, the summer, huh?
Nate Kreinbrink:
It’s gone by quick. And I always say goes faster every year, but it just seems that this year in particular, even up until this point, it’s just been boom, boom, boom. And it goes by quick. So enjoy it. So again, you mentioned a lot of Iowa schools are heading into tournament times, softball, baseball teams. Those teams still in it, want to wish them the best of luck as they head down that journey trail. Hopefully we can get some representation from this area and this side of the state, making some noise as they make their journey hopefully to that ultimate prize.
So again, today’s program, I know it’s been a little while since you’ve been on. A lot has happened. Talked taxes last week with Andy Ferguson. And again, with him talking about him going to an IRS conference and all the changes that go onto that. It all impacts as far as again, what is going on in the actual economy, what is going on with the actual markets. Interest rates continue to remain a hot topic. In the news, what is the Fed going to do? Are they going to keep rates stable? Are they ever going to cut rates, indicating what they’re going to do with all that. It all goes into, again, investment markets and where they’re going. At the end of the day, again, you need to have a plan. You need to be disciplined.
James Nelson:
No doubt. And now we’re to a point where the feds kind of get in their way. They’ve been raising interest rates for a couple years now, trying to slow the economy down, get inflation under control and that comes at a cost. And the cost is jobs. And we’re seeing it here locally with a few big employers in the quad cities laying people off. And there’s probably more to come.
And again, that’s unfortunately the byproduct of what’s going on in the interest rate environment. Like you said, Nate, we’ve been jacking up interest rates quickly, trying to get things under control, and it seems like inflation is slowing, but it’s challenging when you’re the person on the other side of that losing their job. And again, that’s kind of what happens when we’re in a period of time like this. So from a market perspective, it’s also important to know, kind of again, what you own. What type of positions are going to do well in this period of time, which positions may struggle. And again, that’s generally where we come in and point out what people may own in a 401k versus what they maybe should own. So definitely a volatile period of time. Markets have cooperated for the most part, but it does feel like things are slowing down a little bit here, and we’ll see what the rest of the year has in store for us.
Nate Kreinbrink:
Right. And I think that is a key point. I mean, interest rates and when is the Fed going to cut them? It’s really been a hot topic basically for the past 12 months as far as when are they going to cut them, when are they going to cut them. As we headed into the end of 23 into 24, March was kind of that first target date that they were looking at to say, hey, we’re going to cut rates in March. As we got closer to that deadline, obviously inflation, jobs reports, and those things remained a little bit elevated, more so than what they wanted to, so they pushed it off. Maybe June is going to be the next one.
Again, inflation, jobs reports remaining a little bit more elevated. The Fed would like to get inflation down around 2%. It’s being stubborn right around that 4% range, and they can’t get that down there, which is what has made them a little hesitant as far as lowering them. But again, with Fed Powell coming out yesterday, talking a little bit more about the impacts of elevated interest rates for a prolonged period of time, and some of the impacts that’s going to have kind of on economy, on interest rates, on borrowing, on lending, on jobs, on business, on mortgages on… It trickles down right there. And again, with interest rates remaining where they are, that is kind of an issue from where things are at, which has put a little bit of damper on, again, the average consumer with what they’re looking at doing.
James Nelson:
Totally. And I think it’s important for people to recognize too, inflation doesn’t go up overnight and it’s not going to come down overnight.
Nate Kreinbrink:
Exactly.
James Nelson:
It takes a while. Even with the Fed intervention as far as raising interest rate, that takes a while to work its way through the economy and have any noticeable impact. So again, we’re just kind of in that period of time and they don’t want to be in a position, the Fed doesn’t want to be in a position where they start cutting maybe a little bit too early and then have to bring them back up later on. They don’t want to be going back and forth here. So they want to make sure the economy’s in a position, inflation’s in a position where, okay, we feel comfortable where we can cut. We don’t want to have to go back on this and reverse course, six months, a year, two years down the road. They want to make sure that’s under control. So yes, probably a lot of people out there were expecting a rate cut to happen maybe already this year, but that seems less and less likely. And we’ll see if any rate cut comes this year.
Nate Kreinbrink:
Right. And again, as you go continuing on, it’s putting a lot of pressure on the end of the year, and we all know it’s an election year and what that brings, and again, now you’re putting this on that. Again, it is kind of a wait and see thing again. But again, I wouldn’t rush into where things are at if it hasn’t happened to this point, it’s likely that we may get into 2025 before we see that first-rate cut. And as you said, even if they do, it’s probably going to be very minimal at a quarter percent like they were doing when they were raising rates there towards the end of it anyway. So again, be disciplined, be with all of that. Again, now we start looking at= markets, and you look at where markets are currently at, whether it’s the S&P, whether it’s the Dow, whether it’s the NASDAQ, there’s been a lot of record levels that have been kind of set recently.
And you see, okay, the S&P hit a new record yesterday. Okay, they touched it. Okay, are we able to sustain that? It seems like even intraday where you see a great start to the day and then all of a sudden by the end of the day, we’re back floating around our flat lines or we end start the day in the red, things kind of trickle itself out. By the end of the day, we’re kind of there. It just seems like it is struggling to gain traction. And again, if you lift up the hood of the economy, that should be no surprise as there’s not a lot of stability that’s kind of pushing things at the moment.
James Nelson:
Yeah. Well, and it’s always makes for a good headline too. We could set record highs by one point, and it’s a new record high, although that doesn’t mean a whole lot. And that feels like where we’ve been the last couple weeks where we’re setting a new record high, but not by much. And like you said, Nate, it’s kind of floating around that flat line. One day we’re up a little bit, next day we’re down a little bit. The market hasn’t seemed to really go anywhere here in recent times. And that’s not all bad. I mean, we don’t expect markets to go straight up forever. We know that volatility is part of the deal. We know that there’s going to be good quarters and bad quarters, but having that volatility and kind of flatlining here recently anyway isn’t necessarily a bad thing either.
Nate Kreinbrink:
And I think too, it’s important to understand that not everything moves in unison as well. So I mean, you look at the S&P, you look at the major indexes that people kind of recognize the names on it. But again, that’s not assuming that all equities move in the same course. And again, looking at bonds, looking at fixed income, looking at where interest rates are, there are some opportunities out there. Again, it just may not be that quick hitter that people, I thinkm like obviously, but again, looking at it from a prolonged, a disciplined approach, and I know we talk planning, we talk having a plan, sticking to your plan, being able to adapt to any kind of environment and right now is no different. And again, whether it’s your just investment accounts, whether it’s your retirement accounts at work, again, understanding how different investments react in different environments will allow you to be positioned in possibly the best possible spot in any given situation.
James Nelson:
And you’re right, I think the bond market, that might be the most interesting thing to watch here, the rest of this year and going into next year, is if the Fed does start changing course and maybe start cutting interest rates, the bond market I think is going to get… It already is interesting, but it’s going to get more interesting to see where that goes. So yeah, there’s a lot of things to consider, and it’s not just buy a position and hold onto it forever. We’ve got to know, especially in this day and age of things moving as quickly as they do, the investment approach has to match that.
Nate Kreinbrink:
Exactly. And I think, again, when people look at that, I talk a lot as far as it’s not what you have, it’s what you keep. And again, you can say you’re up, whatever, but if you give it all back are you really up at one point. It’s the same adage, okay, the S&P was up by one point, we hit a record level, but now all of a sudden we’re down 10 point. Were we really ever there? And I think that’s when you look at your allocations, when you look at your investments, again, being disciplined with that and looking at saving, whether you’ve just started putting your first dollar in or you’re a year away from retirement, again, looking at it from a longer term perspective and really what you’re trying to accomplish with your investments.
James Nelson:
Yeah, definitely. So if anybody’s got questions out there, they’re wondering about how they’re allocated or what their investment mix looks like, and they’d like a second opinion, feel free to give us a holler.
Nate Kreinbrink:
All great stuff. I did want to mention here before we run out of time that every Friday, Nelson Corp Wealth Management and Nelson Corp Tax Solutions are wearing jeans for charity. Money raised in the month of June will be donated to the Clinton Humane Society. Thanks again for tuning in on this Wednesday afternoon. Again, this is James. This is Nate bringing you this week’s Financial Focus. Thanks for tuning in and have a great rest of your week.
Announcer:
Financial Focus is a production of NelsonCorp Wealth Management in Clinton and Davenport. The opinions voiced in the show are for general information only and are not intended to provide specific advice or recommendations for any individual. Any indices mentioned are unmanaged and cannot be invested into directly. Registered representative securities offered through Cambridge Investment Research Incorporated, a broker dealer member FINRA SIPC. Investment advisor representative, Cambridge Investment Research Advisors Incorporated, a registered investment advisor. Cambridge and NelsonCorp Wealth Management are not affiliated. Cambridge does not offer tax advice. For more information, visit our website at www.nelsoncorp.com.