Every Day the Market Overreacts: Capitalize on That

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Arena Investor is modern planning and investing built for the busy, hardworking professionals who know their money needs more attention but don't have the time, or simply want better work-life balance

Good morning, Heroes!

Here’s your Morning Market Preview for September 23th, 2024
Read, or listen relaxingly for a few minutes – whichever you prefer!

Key Economic Reports

• At 9:45 am US Services PMI and US Manufacturing PMI report, monthly reports that give insight into service and manufacturing activity.

Key  Earnings Reports & Events Today

• AAR Corp, Red Cat Holdings, and Phoenix Motors have their earnings calls today.
  
  
• Boeing’s strike continues, and the company has furloughed thousands of workers. Mechanics are saying they are ready for a long strike. The strike began on September 13th.

The Fed

• The Atlanta, Chicago, and Minneapolis Fed Presidents speak today, giving insight into the last Fed rate cut and possible insight moving forward for Mr Market.

Stocks

Year-to-Date Performance:

• Up Most: Tech is now up 27.44% this year. Utilities is second-best on the year, up 25.61%.
  
  
• Down Most: Important to know, no sectors are negative on the year. The smallest gain has been in Energy, up 5.69% this year. Second-to-last is Materials, up 9.59%.

5 Day Moving Average: 

• Up Most: 86% of Energy Large Cap stocks are now above their 5 day average. Tech is second now with 76% of its Large Caps above their 5 day average.
  
  

• Down Most: Real Estate is down, and only 26% of Large Caps are above their 5 day average. Next closest is Health Care with 32% of Large Caps above their 5 day average. 

Crypto

• Bitcoin: Up big recently, now over $63,000, which puts it at a staggering 52% gain on the year.
  
  
• Ethereum: It’s been a good couple of days for Ethereum again, and is nearly $2,600 now, which means a 12.5% gain on the year.
  
  
• Top Gainers Recently: Bitcoin and Litecoin have performed well recently, up about 2.2 to 3.3% in the last day.
  
  
• Important to note: Crypto markets are always open and prices change constantly.

Bonds

• 2-Year Treasury:  Yields continue to come down, now at 3.597%.
  
  
• 10-Year Treasury: Up a tick to 3.741%, but overall it’s had a decline this year too.
  
  
• The yield curve is no longer inverted, having un-inverted in late August, 2024.

Gold

• Price: Gold has had a great year, now over $2,600 per ounce, and up 27% on the year.

Real Estate

• 30-Year Fixed Mortgage Rate: Up just a bit, now to 6.15%. The mortgage rate has dropped about 7.8% this year.

Geopolitical Aspects

• Europe: Continued recovery with a focus on green energy, impacting commodity markets.
  
  
• Asia: Economic rebound in China post-COVID, influencing global manufacturing and tech sectors.
  
  
• Global Tensions: Ongoing trade negotiations and regional conflicts could sway investor sentiment, particularly affecting oil prices and defense stocks.

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Built for The One in the Arena

Arena Investor is on a mission not only to help with financial planning, and investment management, but also with education. Keep reading, watching, following, and sharing great Arena Investor content. And as always if you want professional advice, we are glad to be your teammate – along a financial journey you can actually enjoy.

You’re the Hero.
    We’re the Guide.

P.S.

Continue reading, if you would enjoy some simple explanations of key concepts to level up your financial education

Each of these elements interacts, creating the dynamic we call 'the market'.

Understanding these aspects of the investing arena can help investors in making informed investment decisions.

You’re the Hero.
    We’re the Guide.

• PMI (Purchasing Managers' Index): This is like a health check for businesses. A number above 50 means more growth, below 50 indicates contraction. It's crucial because it shows if companies are buying more stuff, which suggests they're confident about future sales.
• Economic Reports: Data like jobless claims help predict economic health. For instance, rising claims might suggest economic slowdown.
• Jobless Claims: These are weekly reports that show the number of people filing for unemployment benefits. Higher numbers can indicate a weakening labor market.
• Housing Starts: This measures the number of new residential construction projects and is a key indicator of real estate market health.
• The University of Michigan's Consumer Sentiment Index measures consumer confidence through surveys, reflecting optimism or pessimism about personal finances and business conditions.
• Federal Reserve Rate Decisions: The Fed adjusts interest rates to either stimulate the economy (by lowering rates) or control inflation (by raising rates). Rate cuts can make borrowing cheaper, while rate hikes aim to curb inflation.
• Treasury Yields: The return on U.S. government bonds, often used as a measure of investor sentiment about future inflation and economic growth.
• Stock Sectors: Different sectors thrive in different economic conditions. Tech might boom during innovation, while energy could struggle with green shifts.
• Bonds and Yields: Bonds are safer than stocks but yield reflects risk or inflation expectations. Higher yields could mean investors demand more return.
• Cryptocurrency: Digital currencies like Bitcoin and Ethereum have been volatile but offer significant returns in 2024.
• Gold: A traditional safe-haven investment that often rises during times of uncertainty or when inflation is high.
• Real Estate: Influenced by rates, economic health, and demographic trends. Lower rates can inflate home prices due to increased buying power.
• Mortgage Rates: Higher rates make borrowing more expensive, which can cool down housing demand and affect real estate prices.‍
• 1 Basis Point (BPS) equals 0.01%. It’s easier to say “5 bips” than it is to say “zero point zero five percent.”

When it comes to financial planning, managing your "Qualified Term" is not only about preparing for a comfortable retirement but also about strategically reducing your current tax liabilities. This term essentially measures how long your retirement assets can sustain your lifestyle. Here's a detailed explanation of how optimizing your Qualified Term can lead to tax savings now while also securing your financial future.

What is Qualified Term?

The Qualified Term is a financial metric that evaluates the sustainability of your retirement savings based on your current lifestyle and planned retirement spending. It helps you understand how many years your retirement assets, such as 401(k)s or IRAs, can support you post-retirement, taking into consideration your annual withdrawal rate and the expected growth of your investments.

Immediate Benefits: Reducing Tax Bills

1. Pre-Tax Contributions: Contributing to qualified retirement plans like a traditional 401(k) or IRA allows you to make pre-tax contributions, which reduce your taxable income. By maximizing these contributions, you can lower your current tax bill significantly. Simply put: Every dollar you contribute to a qualified retirement account reduces your taxable income by that amount. If you make $75,000 and contribute $12,000 then your taxable income is reduced to $63,000.

2. Tax-Deferred Growth: Investments in these accounts grow tax-deferred, meaning you don't pay taxes on the earnings until you withdraw them, potentially at a lower tax rate in retirement. This can result in substantial tax savings over the course of your career.

3. Tax Credits and Deductions: Depending on your income and how much you contribute, you may also qualify for additional tax credits or deductions. These benefits enhance the immediate financial advantages of strategic retirement planning.

Long-Term Advantages: Secure Retirement Planning

1. Ensuring Sufficient Retirement Funds: Understanding and managing your Qualified Term helps ensure that your retirement savings are sufficient to support your desired lifestyle for many years post-retirement.

2. Strategic Withdrawal Planning: An optimal Qualified Term involves planning the timing and amount of withdrawals from your retirement accounts to ensure financial stability in retirement while minimizing tax liabilities.

How an Arena Investor Advisor Can Optimize Your Qualified Term

1. Tailored Financial Strategies: An Arena Investor Advisor can develop personalized strategies that optimize both your immediate tax benefits and long-term financial goals. They can help determine the right contribution levels to your qualified accounts to maximize tax efficiency now and sustainability later.

2. Adapting to Financial Changes: Life events and financial markets ebb and flow. Your financial advisor will monitor changes and adjust your plan as necessary, ensuring that your Qualified Term remains aligned with your evolving financial situation.

3. Educational Support: For newcomers to financial planning, understanding the nuances of qualified accounts, tax implications, and retirement planning can be overwhelming. Your Arena Investor Advisor will provide clear, jargon-free explanations and ongoing education to empower your financial decision-making.

4. Advanced Planning Tools: Utilizing sophisticated planning tools from industry-leading apps and platforms , Arena Investor Advisors can illustrate various scenarios and strategies, showing you how different approaches affect your Qualified Term and tax liabilities.

All In All

Your Qualified Term is a critical element in your financial strategy, impacting both your current tax situation and your future financial security. By effectively managing this term, you're taking a proactive approach to reduce your immediate tax burden while ensuring a stable, financially secure retirement.

With the expert guidance of an Arena Investor Advisor, tailored to your unique financial needs and goals, you can navigate the complexities of tax planning and retirement with confidence, ensuring that you make the most of your financial resources today and tomorrow.

Built for The One in the Arena

Arena Investor is on a mission not only to help with financial planning, and investment management, but also with education. Keep reading, watching, following, and sharing great Arena Investor content. And as always if you want professional advice, we are glad to be your teammate – along a financial journey you can actually enjoy.

You’re the Hero.
    We’re the Guide.

Arena Investor is modern planning and investing built for the busy, hardworking professionals who know their money needs more attention but don't have the time, or simply want better work-life balance

Good morning, Heroes!

Here’s your Morning Market Preview for September 13th, 2024
Read, or listen relaxingly for a few minutes – whichever you prefer!

Key Economic Reports

• Sentiment: The preliminary consumer sentiment report is released at 10am this morning. From the University of Michigan the consumer sentiment report is considered the go-to resource for measuring consumer feelings about the market.

Key Events & Earnings Reports Today

• There are no key earnings reports on Friday
  
  
• The Goldman Sachs Communacopia & Tech conference wrapped up Thursday evening. Here’s a couple key points:
  
  
  • Excitement Over AI and Tech Innovation: There was considerable interest in AI, with some suggesting that while AI might not revolutionize industries overnight, its impact will be profound over time. This perspective was shared by industry leaders like Josh Silverman from Etsy, indicating a nuanced view on AI's role in the future of work.
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  • Anticipation for Economic Easing: Financial analysts like Ashish Shah from Goldman Sachs expressed optimism about an upcoming easing cycle, suggesting a positive outlook for market opportunities due to expected rate cuts. This reflects a broader economic sentiment that could influence tech investments.

The Fed

• Meeting on the 17th and 18th, all investor eyes have turned to a quarter percent rate cut. After Thursday’s PPI numbers, thoughts of a half percent rate cut have mostly stopped, although some investors would still prefer that. Few feel the Fed holds and makes no cut.

Stocks

Year-to-Date Performance:

• Up Most: IT takes over the top spot, now up 24.66% this year. And Utilities is in a close second at 21.27%.
  
  
• Down Most: Materials improved this week and is up 6.04% this year, holding the second lowest spot. The lowest performing sector this year is Energy, which is up just barely at 0.46%.

5 Day Moving Average: This is the percent of Large Cap stocks above their 5 day average

• Up Most: IT continues to have a great week with 84% of their Large Cap stocks above their 5 day average. And 81% of Real Estate Large Cap stocks are above their 5 day average currently.
  

• Down Most: Financials have had the second lowest performance the last 5 days with 41% above their 5 day average. Energy is down the most with only 23% above their 5 day average.

Crypto

• Bitcoin: Up to about $57,609 at the open, up a ton (38.3%) this year.
  
  
• Ethereum: Opening at about $2,342, and staying positive at 2.37% this year.
  
  
• Top Gainers Recently: Mana and XRP have had a great 24 hours, up 4.09% and 4.07%, respectively.

Bonds

• 2-Year Treasury Yield: Down another 49 basis points to 3.603%, continuing its yield decline this year.
  
  
• 10-Year Treasury Yield: Down 34 basis points to 3.649%, also continuing its yield decline this year.

Gold

• Open Price: Up again in the last day, now at $2,562 per ounce, having gained a hefty 24.25% this year.

Real Estate

• 30-Year Fixed Mortgage Rate: Up just a bit over the last day, now to 6.15%. But the rate has dropped about 7.8% this year.
  
  
• Trends: Real estate is local, and each market is seeing different specific conditions. Some report high-end home sales staying strong while others report a weakening there and an improvement in affordable housing sales.

Geopolitical Aspects

• Global markets are reacting to weaker economic data from China and rising energy prices in Europe. These developments are causing volatility across global equity and commodity markets.

Built for The One in the Arena

Arena Investor is on a mission not only to help with financial planning, and investment management, but also with education. Keep reading, watching, following, and sharing great Arena Investor content. And as always if you want professional advice, we are glad to be your teammate – along a financial journey you can actually enjoy.

You’re the Hero.
    We’re the Guide.

P.S. 

Some Simple Explanations of Key Concepts to Level Up Your Financial Education

Federal Reserve (The Fed): This is the central bank of the United States. It controls monetary policy, including interest rates, to manage inflation and employment. Lowering rates can stimulate borrowing and spending, potentially boosting the economy.

Stock Market Sectors: The market is divided into sectors like technology, healthcare, and energy. Each sector performs differently based on economic conditions, policy changes, and technological advancements.

Bonds and Yields: When you buy a bond, you're lending money to the government or a corporation. The yield is the return you get. Higher yields can mean higher risk or expectations of higher inflation.

Understanding these aspects of the investing arena can help investors in making informed investment decisions.

You’re the Hero.
    We’re the Guide.