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Markets After A Hawkish Fed Signal · HPK Provident Advisors: The Weekly Bull

• 0:05
  SPEAKER_01: Welcome to Friday Live.
• 0:07
  SPEAKER_01: Every Friday, some of the partners of HBK Profit and get together and discuss what we're seeing going on in the markets, the economy, and tying in some of our financial planning blog posts.
• 0:15
  SPEAKER_01: So it's just me today.
• 0:17
  SPEAKER_01: Uh market is closed June 19th for Juneteenth.
• 0:20
  SPEAKER_01: Um, but international markets are still open, and there was some eventful things that happened this week.
• 0:26
  SPEAKER_01: So I wanted to get on here and make sure I covered them for everyone.
• 0:29
  SPEAKER_01: So we heard from the new Fed chair, um, Kevin Warsh.
• 0:33
  SPEAKER_01: Takeaways.
• 0:35
  SPEAKER_01: Um overall, the market interpreted the meeting as a little bit on the hawkish side.
• 0:40
  SPEAKER_01: Um, a main reason for that was the dot plot or projections of rate hikes.
• 0:46
  SPEAKER_01: Nine members were in support of a hike this year.
• 0:49
  SPEAKER_01: Um, so those odds certainly increased.
• 0:52
  SPEAKER_01: They upped their PC target for year-end um unemployment actually a little lower.
• 0:57
  SPEAKER_01: Um, so overall, the pressure um caused stocks to sell off a little bit, bond yields to go up.
• 1:05
  SPEAKER_01: I think I don't I don't know.
• 1:06
  SPEAKER_01: I don't have a dip feel for the new Fed chair yet.
• 1:09
  SPEAKER_01: I'll have to see a couple more meetings, but he seemed a little arrogant to me.
• 1:16
  SPEAKER_01: Like inflation is the choice.
• 1:17
  SPEAKER_01: Um, there's no reason we can't have low inflation and growth, which I mean was the case during uh over a decade um before we had this Russia-Ukraine and all the stimulus that cause high prices.
• 1:31
  SPEAKER_01: But I don't know.
• 1:32
  SPEAKER_01: I mean, every every answer you kind of just deflected and said, you know, we have a committee for that.
• 1:38
  SPEAKER_01: I don't know if more separation in government entities is really the answer to things.
• 1:43
  SPEAKER_01: Um, but we'll see.
• 1:45
  SPEAKER_01: We'll see how he does.
• 1:46
  SPEAKER_01: Um historically, when he was on the Fed before, he was a little more on the hawkish side, but you would have to imagine if the president appointed him, he probably has some designs to cut interest rates, but we all have to see.
• 1:58
  SPEAKER_01: It is a committee decision, not just one individual member.
• 2:02
  SPEAKER_01: So, you know, typically from a marketer perspective, you get a little volatility just when a new Fed chair comes in, not really sure what he's gonna do, how he's gonna persuade the board, how he's gonna mesh with the board.
• 2:14
  SPEAKER_01: So we'll just have to keep an eye on that.
• 2:16
  SPEAKER_01: Outside of um the Fed meeting, I mean, the highlight was really retail sales that came in strong.
• 2:23
  SPEAKER_01: Um, looks like uh headline was 0.9 for a month.
• 2:27
  SPEAKER_01: Obviously, energy prices have gone into that quite a bit.
• 2:31
  SPEAKER_01: Um, but actually 11 of the different categories were actually an increase for the month, and you you strip out food and gas and the control group, which which feeds directly into GDP, was actually 0.7.
• 2:43
  SPEAKER_01: So a very healthy reading.
• 2:46
  SPEAKER_01: Um as you can see here, I'll pull up the chart of the SP 500.
• 2:52
  SPEAKER_01: Um, we were essentially flat on the week, but there was some volatility.
• 2:56
  SPEAKER_01: We had that sell-off on the Fed meeting on Wednesday and then saw a bit of a rebound yesterday, um, finishing close to all-time highs.
• 3:06
  SPEAKER_01: Um, I mean the the interday highs for the day.
• 3:09
  SPEAKER_01: Um, outside of that, we've seen a big downtick in um to start before the Fed meeting in yields, and then those bounce back up when the the Fed meeting occurred.
• 3:19
  SPEAKER_01: But oil is the real story.
• 3:20
  SPEAKER_01: We have that um memorandum of understanding that was supposed to be signed today.
• 3:25
  SPEAKER_01: Um, I I hear that that's being pushed out, so I don't know if there's some issues going on with that, but that would essentially, you know, extend the the peace talks and hopefully get some ships running through the Strait of Hormuz um as they work out a deal.
• 3:39
  SPEAKER_01: But I mean, I I don't it doesn't really seem like Iran's you know giving in to giving up nuclear capabilities, and so I don't I don't know if we're really getting anywhere on that, but hopefully that would be great.
• 3:52
  SPEAKER_01: But anyways, energy prices are down about 30% from the high.
• 3:56
  SPEAKER_01: We were at about 75 a barrel.
• 3:58
  SPEAKER_01: So um although the dot plot in the Fed meeting was um a lot of members thinking there might be a hike, I was in that camp too, but with energy prices coming down, um you know, it makes it a little harder to justify it for that.
• 4:14
  SPEAKER_01: Um, but we have been above, well above the Fed target for years now.
• 4:19
  SPEAKER_01: So I don't know.
• 4:20
  SPEAKER_01: I mean, it might be good for them to just, you know, the economic data is pretty healthy overall.
• 4:27
  SPEAKER_01: Um, the employment situation seems pretty stable.
• 4:30
  SPEAKER_01: We're averaging about 185,000 jobs a month.
• 4:34
  SPEAKER_01: Sorry, we had a little dog conflict in the background.
• 4:37
  SPEAKER_01: Relax.
• 4:39
  SPEAKER_01: Um, and then as as I just noted, retail sales are strong.
• 4:43
  SPEAKER_01: I mean, you are seeing some, it's definitely a K-shift economy.
• 4:46
  SPEAKER_01: The personal spending numbers are outpacing the personal income numbers, not really a sustainable trend.
• 4:53
  SPEAKER_01: Um, but overall, uh, I mean, the technical setup here is pretty healthy.
• 4:59
  SPEAKER_01: Um, we bounced nicely off the 50-day moving average.
• 5:03
  SPEAKER_01: There's a good chance that we break above those those recent highs.
• 5:08
  SPEAKER_01: Um, but we'll just have to see and keep an eye on it.
• 5:12
  SPEAKER_01: Outside of that, um, let's get to some of the blog posts for the week.
• 5:16
  SPEAKER_01: Uh, let's see.
• 5:17
  SPEAKER_01: So we had the how Americans overpay in taxes, selling securities too soon, um, not using tax-advantaged vehicles like 401ks or Roth IRAs, um, not utilizing municipals as much as you can, and then having those mutual funds that you don't really have control, you don't have any control over whether they're going to be pay a capital gain in the year or not.
• 5:44
  SPEAKER_01: I mean, the the market could be down on the year and they still realize things for a gain, and you may have to pay capital gains, even though your investments are down overall.
• 5:54
  SPEAKER_01: And then it's just getting, you know, everyone, the different areas of professions together to make sure you have a good tax efficient plan.
• 6:02
  SPEAKER_01: And we do a lot of coverage on that in our financial planning topics and um financial planning software.
• 6:08
  SPEAKER_01: So that's something we can certainly help you with at.
• 6:11
  SPEAKER_01: Um the structure of building portfolios has a lot to do with your liquidity needs.
• 6:18
  SPEAKER_01: I mean, the the money that you need in the short term, um, in the next six months, the next year, should be generally in safer vehicles, um, maybe even as safe as cash or money market.
• 6:30
  SPEAKER_01: And then the further you go out on that time horizon bucket, 11 plus years, you can afford to take out a little more risk.
• 6:36
  SPEAKER_01: Um, the the idea behind that is even if you have a bear market, um, it has enough time period to recover.
• 6:44
  SPEAKER_01: So that's really about building portfolios.
• 6:48
  SPEAKER_01: And then we had a blog post about um estate planning.
• 6:51
  SPEAKER_01: There's a nice checklist on there that I would advise everyone to look at and just make sure your things are in order.
• 6:57
  SPEAKER_01: Um, I think, especially with the boomer population, they don't like to share their finances with their kids.
• 7:03
  SPEAKER_01: Uh, we see that a lot where a parent dies and the kids are just shuffling around to try to like piece together where different assets are, how to access them, who's representing those assets.
• 7:15
  SPEAKER_01: So it's just a good idea to at least appoint a person that knows how to find that information.
• 7:22
  SPEAKER_01: Um, you don't necessarily have to tell them all the money you have in the bank, but it's good to make that process a little more streamlined.
• 7:29
  SPEAKER_01: And obviously, no one really likes to think about their eminent death, but um, it is good to always prepare for different things.
• 7:38
  SPEAKER_01: So, as I said, the market is closed.
• 7:40
  SPEAKER_01: Um, and so we'll keep this one a little shorter.
• 7:43
  SPEAKER_01: Next week, the highlight of the week will be the PCE data.
• 7:46
  SPEAKER_01: Um, I anticipate that'll still be high, but with energy prices coming down, um maybe we'll start to see some better readings in that in that arena.
• 7:56
  SPEAKER_01: So before I go, I'm gonna flip on the disclosures and we will see you next Friday.
• 8:00
  SPEAKER_01: Hopefully, I have one of the other partners on with me to go a little deeper in the financial planning topics.
• 8:05
  SPEAKER_01: But everyone have a nice long weekend.
• 8:07
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• 8:13
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• 8:19
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• 8:25
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