Announcer:
It’s 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. 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. This is Nate James joining me today almost mid-March. I know my kids are getting excited. They’re on spring break next week, and it puts us to that time. And then obviously the big news of the weekend of pushing clocks ahead. So hopefully it’ll be a little bit lighter out a little bit longer, being able to enjoy some of that. Hopefully weather continues to improve. We kind of got spoiled a little bit this past weekend with mid 60’s, upper 60 temperatures. So we’re getting to that point in time of the year where things are starting to turn and we can hopefully it to that point where we can put winter behind us.
James Nelson:
Yeah. We all start getting anxious here and can’t wait for the nice weather here.
Nate Kreinbrink:
I know a lot of the clients that I have coming too are getting anxious. Obviously spring training should be going on at this point in time, but hopefully that can be worked out and the major league baseballs and the powers that be can get together and have that back into the normal again, as far as seeing it on TV.
James Nelson:
Yeah, spring training’s been delayed.
Nate Kreinbrink:
Games have been delayed now for a couple weeks.
James Nelson:
We don’t need any more of that. Let’s play baseball one of these days.
Nate Kreinbrink:
Cub fans need to get out there and get something to get excited about, right?
James Nelson:
Yeah. I don’t know if there’s going to be much to be excited about this year.
Nate Kreinbrink:
So looking at today’s topic, I know James and I threw around a bunch of things, but there’s been obviously some key headlines that have been driving a lot of our conversation. A lot of the news top headlines as far as obviously the conflict between Russia and Ukraine, interest rates, and what the fed announced, what they’re going to do. Inflation can continuing to be at extremely high levels. How those all play into everything. And, and obviously each one of those sections could be a topic each of its own. However, we’re going to kind of dive into a couple of those today and just touch on some of the key topics.
Nate Kreinbrink:
And obviously the conflict between Russia and Ukraine, and not taking light the casualties and in some of the dire situations that a lot of people are in, but it does have an impact on us over here in the U.S., and in today’s world where the geopolitical concerns, I mean, they wash up on our shores a lot faster in today’s environment, but maybe talk a little bit as far as some of the impacts that we’re seeing here and what people should maybe be looking at.
James Nelson:
Yeah. It is a sense situation. Yeah. The thing that’s changed, I guess, the last probably 20 years or so is just how quickly news travels, and what a global economy we’ve turned into. So, people sometimes ask, this conflict over there is that really going to have a much of an impact on our economy? Europe’s economy? China’s economy? And the answer is yes, because we’re so intertwined that we really are a global economy.
James Nelson:
So when we look at events like this, whether it’s a geopolitical event like this, or a war, or a terrorist attack, we look back and try to have history be a little bit of a guide, although that hasn’t been very consistent, I guess, it’s kind of a mixed bag there. So, whenever we have these big events, markets usually react pretty quickly and it’s usually on the downside, but as time goes by things generally kind of smooth over and markets respond a little bit more favorably the further out you get. But definitely there’s always, almost always a knee jerk reaction, and I think we’ve seen that this go round too.
James Nelson:
Now, who knows how long this is going to last? Who knows how it’s going to end? This could be carry on for a very, very long time, but any uncertainty like this in the markets usually isn’t a great thing for stock markets and people are trying to respond accordingly. And that’s what we always go back to is not making those investment decisions based on headlines, based on what you see in the news, it’s scary, it’s bad, but trying to manage your portfolio, manage your retirement account based on headlines is never a good idea. And that’s really what we try to do. And how we try to manage expectations, at least with clients is to head some of those conversations off.
Nate Kreinbrink:
Right. And I think it’s important too, to keep in mind that again, obviously the conflict is a big driving force on some of the impacts on the market, but there’s a lot of underlying factors into that as well, as far as the energy sector and some of the prices, as far as what we’ve seen even prior to the conflict kind of escalating to where it’s at today. There were some things going on with there that have contributed obviously have now been magnified. So again, it’s not just that conflict as far as causing some of these ripples, it was some of the other cracks that we were kind of seeing leading up to it, and obviously now have been magnified due to what is going on.
James Nelson:
Yeah, no doubt. And the energy sector and commodities in general have had a massive boom here in recent times. But again, like you said, Nate, even, even in the last year, we could see commodities picking up momentum and it’s not just oil and gas. That’s certainly getting the most attention these days, but commodities in general have been performing really well, and that probably continues at least here in the near term.
Nate Kreinbrink:
And then another factor that kind of went into it, and we’ve kind of seen that play out, and have heard news of this for years now, as far as the fed and interest rates, and I think it’s to put that whole thing in magnitude, I mean, you can almost go back to ’08, ’09, since that time interest rates 4, 5, 6% at that point in time have been driven down to near all time lows now for years now. And, the fed has always tried, and talked about trying to start pushing those up a little bit and kind of attempted to, and then kind of fell back and then attempted to and fell back. And in previous years when the fed has looked at doing any rate hikes or changes to interest rates, it’s always kind of been an unknown, an uncertainty as far as when they were going to do that. This time around and more recently, the fed has obviously made it no secret that they are going to be raising interest rates.
Nate Kreinbrink:
And we had it at their last fed meeting where they’re going to look to raise it by a quarter of a percent and look to do a couple of those through out the year. Now, obviously that’s not a significant change in interest rates. However, it does have an impact, but when we have times like this, when the market has almost kind of factored it into it, and we kind of not being, if they’re going to do it, but when they’re going to do it, we’ve gotten to that point and markets have responded a little bit, but maybe not like they have in past.
James Nelson:
Yeah. I mean, everybody’s trying to figure out how for straight hikes going to affect their portfolio. And like you mentioned, Nate, it’s not a secret anymore, everybody knows what they’re going to talk about going into these fed meetings. That never used to be the case. But again, today access to information is so widely available that we pretty much know what’s going to be discussed going into the meeting.
James Nelson:
Now, why are they raising interest rates? That’s a big question. They’re raising interest rates in large part to combat inflation. The idea is that inflation’s running pretty hot right now. Really their only weapon, the Fed’s only weapon is to raise interest rates to try to tame that down a little bit, and we’ll see if it works.
James Nelson:
Now, generally they raise rates at a quarter percent and they’re planning to do that maybe four times this year, maybe five times, they’re going to see how it goes, but there’s also another group of people that say, “Hey, why don’t we just get it over with quicker?” How about a half a percent increase here in March? And then maybe another half a percent in the summertime. And that’s been discussed, probably not as likely, but still at their disposal, if they want to go a little bit faster approach than what they normally do, certainly they could do that.
James Nelson:
So we’ll see here, I think in the next week or two, we’re going to have a pretty good idea what the interest rate hike is. I think that’s going to happen here in March.
Nate Kreinbrink:
End of March.
James Nelson:
And, we’re going to have an idea kind of the path that they’re taking, whether that’s the slow go, normal route, or are they going to go a little bit quicker and try to get it over with a little bit sooner in the year?
Nate Kreinbrink:
Right. And I think you look at where things kind of currently stand with some of that the 10-year treasury, which is kind of a benchmark in some regards to what they’re looking at doing. A month or so ago was kind of pushing up over that 2% range, as far as what it was yielding. Now it’s kind of fallen back a little bit recently with some of the recent events back below that level.
Nate Kreinbrink:
So again, just seeing where things kind of sit, how they’re going to kind of continue to factor into all this. And again, it all goes back to what we talk about as far as having a plan and planning for worst type environments like this. It’s easy to sit here and everything’s going well and all that, but again, it’s how you react when you’re going to have volatility like this, whether it’s in the markets, whether it’s interest rates, whether it’s whatever the case may be, how can your plan adapt to these changes and be able to move on with it? And that’s where, again, the planning that we talk about constantly, whether it’s with James and I, when Andy comes on and we talk a little tax planning the third Wednesday of every month, it’s, how does it react to all that? And being able to adapt and move forward?
James Nelson:
Well, and I think finally, going into an environment that we’ve talked about for quite some time. Is when interest rates go up, value of your bond goes down. And we’ve talked about as an industry, we’ve kind of brainwashed people into believing that bonds are safe, and they are when interest rates are falling or they stay level. Well, now we’re going into this new environment that we’ve talked about for the last couple years, Nate, where people are actually seeing that, they are losing money in bonds, especially when the Feds talk about raising rates three, four, five times this year.
James Nelson:
So anyway, it goes back to knowing what you own and doing that planning ahead of time before these events take place.
Nate Kreinbrink:
Again, all good stuff. Again, questions on any of it, give us a call. I’d be happy to sit down with you, see how your kind of portfolio adds up to all this.
Nate Kreinbrink:
Did want to mention real quick before we run out of time that every Friday NelsonCorp Wealth Management is wearing jeans for charity. Money raised in the month of March will be donated to the Northeast Elementary PTO Fundraiser for all inclusive playground equipment.
Nate Kreinbrink:
James. Again, appreciate you joining me today.
James Nelson:
Absolutely.
Nate Kreinbrink:
Nate and James with NelsonCorp Wealth Management, bringing you this week’s Financial Focus. Thanks again 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 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. For more information visit our website at www.NelsonCorp.com.