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Good morning, Heroes!
Here’s your Morning Market Preview for September 18th, 2024
Read, or listen relaxingly for a few minutes – whichever you prefer!
Key Economic Reports
- Housing Starts, previously 1.24 million, and the market expects 1.31 million in this report.
- Building Permits, previous 1.4 million, with an expected 1.41 small uptick.
- FOMC Interest Rate Decision, expected at 2:30pm Eastern.
Key Events & Earnings Reports Today
- Steelcase and Sang Technologies report today, but all eyes are on the Fed.
- Boeing is in the middle of a strike, and the company has frozen hiring and is discussing furloughs as well. The strike began on September 13th.
The Fed
- Today is the day we likely get our first rate cut since The Fed began hiking rates in March 2022. It was the fastest rate hike in American history. The market hasn’t seen a rate cut since March 2020.
Stocks
Year-to-Date Performance:
- Up Most: Although down just a bit in the last day, Tech leads the pack, up 25.01% this year. Utilities was also down just a tad, but is still the second-best on the year year, up 24.08%.
- Down Most: Important: no sectors are negative on the year. The smallest gain has been in Energy, up 3.05% this year. Second-to-last is now Consumer Discretionary, up 8.73% this year.
5 Day Moving Average:
- Up Most: 100% of Energy Large Cap stocks are now above their 5 day average. Materials is close to the top position too, with 96% of its Large Caps above their 5 day average.
- Down Most: Real Estate stocks have had a bad 5 days, and only 26% of Large Caps are above their 5 day average. Next closest is Health Care at 49%.
- Overall, investors are trying to position themselves ahead of The Fed’s decision, and in light of some data that the economy is slowing.
Crypto
- Bitcoin: Over the past day, it is up about $60,155, which puts it at a staggering 43% gain on the year.
- Ethereum: It’s been a good day for Ethereum, and is up to about $2,358, which means a 2.15% gain on the year.
- Top Gainers Recently: Uniswap is up most as of this report, 7.14% on the day.
- Important to note: Crypto markets are always open and prices change constantly.
Bonds
- 2-Year Treasury Yield: At 3.599%, it has continued its yield decline this year.
- 10-Year Treasury Yield: At 3.644%, it also continues its yield decline this year.
Gold
- Price: Gold was down about 50 basis points the last day, now about $2,569 per ounce, up 24.57% on the year.
Real Estate
- 30-Year Fixed Mortgage Rate: Down just a bit, now to 6.11%. The mortgage rate has dropped about 8.4% this year.
Geopolitical Aspects
- Tensions in key oil-producing regions impacting energy markets, with potential for new trade agreements influencing global economic stability.
- Europe: Economic recovery post-COVID, with a focus on green initiatives is affecting various industries.
- Asia: Growth in tech sectors, while facing challenges from supply chain disruptions due to geopolitical issues continues.
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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.
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P.S.
Some Simple Explanations of Key Concepts to Level Up Your Financial Education
- Economic Reports: These are snapshots of the economy's health. For instance, Retail Sales show consumer spending, crucial for economic growth. Industrial Production indicates manufacturing strength.
- Federal Reserve (The Fed): This is like the economy's central bank in the U.S. They control interest rates, influencing borrowing costs, which can affect everything from your mortgage to stock prices. A rate cut typically means they want to stimulate economic activity.
- 1 Basis Point (BPS) equals 0.01%. And here's why this is useful:
- Precision: Financial changes are often tiny. For example, if an interest rate goes from 3.50% to 3.51%, that's an increase of just 0.01%, or 1 basis point. It's easier to say "1 basis point" than "point zero one percent."
- Clarity: When discussing changes, especially small ones like those in interest rates, basis points avoid confusion. Imagine discussing if a rate changed by 0.1% or 0.01% over the phone. Saying "10 basis points" or "1 basis point" is clear.
- Consistency: It's a universal standard in finance. Whether you're talking about stock returns, bond yields, or central bank rates, basis points keep the conversation standardized.
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.
Understanding Tax Rate
Navigating taxes can be daunting, whether you're new to managing your finances or you’ve been doing it for decades. A fundamental concept to grasp is your "Tax Rate," which significantly influences financial planning and decisions. This article will guide you through the basics of understanding your tax rate, its importance, and how it affects your financial well-being
What is a Tax Rate?
Simply put, a tax rate is the percentage at which your income or property is taxed by the government. In the United States, the federal income tax system is progressive, meaning the rate increases as your income increases. These rates are applied only to your taxable income, which is your gross income minus any deductions or exemptions you're eligible for.
Types of Tax Rates
1. Marginal Tax Rate: This is the rate at which your last dollar of income is taxed. It's important because it affects how much tax you'll pay on additional income if your income increases.
In other words, as your income enters higher brackets due to increases, each additional dollar earned will be taxed at a higher rate. Understanding your marginal tax rate is essential for effective financial planning because it determines the tax impact of additional income, such as bonuses, raises, or earnings from a side job. This rate essentially dictates how much of each new dollar earned will go to taxes, influencing decisions about investments, additional work, and tax strategy adjustments to potentially lower your overall tax burden.
2. Effective Tax Rate: This rate is the average rate you pay on all your taxable income. It's calculated by dividing the total tax you pay by your total taxable income.
3. Capital Gains Tax Rate: If you sell an asset like stocks or property for more than you paid for it, the profit is subject to capital gains tax, which can have different rates than ordinary income. There are short-term capital gains taxes for investments held less than a year; and there are long-term capital gains taxes for investments held for a year or more. Long-term capital gains tax have been taxed less (at a lower rate) than short-term capital gains.
Why Understanding Your Tax Rate is Important
1. Financial Planning: Knowing your marginal tax rate helps you understand how much of any additional income will be taken as tax. This is crucial for planning investments, raises, or starting a side business. An Arena Investor Advisor can help you make decisions about how to manage your income.
2. Tax Efficiency: By understanding your effective tax rate, you can make more informed decisions about deductions and credits to minimize your tax liability, essentially letting you keep more of your money.
3. Investment Decisions: Different investments are taxed differently. For instance, long-term capital gains are taxed at a lower rate compared to ordinary income. Knowing your tax rates helps you plan your investment strategies to maximize after-tax returns. Your Arena Investor Advisor can monitor your investments and advice which ones will incur long-term capital gains tax and which will incur short-term capital gains tax.
How an Arena Investor Advisor Can Help
1. Personalized Tax Planning: An Arena Investor Advisor can help tailor a tax plan that fits your unique financial situation. They can guide you on how to take full advantage of tax credits, deductions, and tax-advantaged investments based on your tax rate.
2. Strategic Investment Advice: Our advisors can also help you understand which investments are more tax-efficient and how to structure your portfolio to minimize taxes and maximize returns. This includes deciding between investment in Roth IRAs or traditional IRAs based on your current and expected future tax rates. Please be aware that you can have both a Traditional IRA and a Roth IRA, and they can be funded in a strategically wise way.
3. Regular Updates and Adjustments: Tax laws change frequently, and keeping up can be challenging. Your Arena Investor Advisor will monitor these changes and advise you on how any new tax laws affect your finances.
4. Educational Support: Arena Investor Advisors ensure you understand the why and how behind the strategies they recommend. This includes explaining complex tax concepts in simpler terms, ensuring you're informed and confident in your financial decisions.
5. Technology Integration: Using advanced tools from industry-leading app and platforms, your Arena Investor Advisor can provide visualizations and simulations showing how different tax strategies can impact your financial future. This helps make the abstract concepts of tax planning more tangible and understandable.
All In All
Understanding your tax rate is more than just knowing how much you owe. It’s about strategically managing your finances in a way that reduces your tax liabilities and aligns with your overall financial goals. Whether you’re just starting out or looking to refine your financial strategies, working with an Arena Investor Advisor can provide the expertise and support you need to navigate the complexities of tax planning effectively.
By embracing the guidance of a skilled advisor who is leveraging robust financial tools, and presenting simple solutions to you, you can achieve a deeper understanding of your tax obligations and opportunities, leading to better financial health and peace of mind.
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.
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Morning Market Preview for September 11th, 2024
Good morning, Heroes!
Here’s your Morning Market Preview for September 11th, 2024
Read, or listen relaxingly for a few minutes – whichever you prefer!
Key Economic Reports
- Tomorrow’s market may react to new data regarding U.S. inflation, as investors await further insights into consumer price trends. The Consumer Price Index (CPI) and core CPI are set for release, key indicators used to measure inflation. These reports are critical as they will provide insight into how inflation is behaving and influence Fed decision-making.
Key Events & Earnings Reports Today
MIND Technology
- MIND Technology, Inc. specializes in providing advanced technology solutions primarily to the marine survey, defense, seismic, and security industries.
- Importance: The earnings report underscores MIND Technology's role not just as a company reporting financials but as a trendsetter in technology adoption, operational efficiency, and market expansion strategies. This makes their earnings not only a reflection of past performance but a predictor of future market trends and investor sentiment in the tech sector.
- Expectations: Investors and analysts are likely expecting MIND Technology to report on several key metrics including revenue, earnings per share (EPS), and possibly updates on gross margins, given the mention of 77% gross margins in recent discussions. There's an anticipation of continued or improved profitability, especially with hints of cost-cutting measures and operational efficiencies.
The Fed
- The Fed's next meeting is scheduled for the 17th and 18th. Expectations of whether they will continue or pause rate hikes will depend on tomorrow’s CPI report, which will provide clues on inflation’s trajectory.
Stocks
Year-to-Date Performance:
- Up Most: Utilities & Information Technology continue to lead the way at 20.32% and 19.27%, respectively.
- Down Most: Energy and Consumer Discretionary trail all other sectors still at 3.39% and 4.44%, respectively.
5 Day Moving Average: This is the percent of Large Cap stocks above their 5 day average
- Up Most: Real Estate is at 90% the last 5 days, and Utilities at 74%.
- Down Most: Energy is down to 14% the last 5 days and by far the biggest laggard.
Crypto
- Bitcoin: Up to about $57,101 at the open, and is up 36.93% this year.
- Ethereum: Also up, at about $2,351 at the open, and is up 3.62% this year.
- Top Gainers Recently: Luna and Zcash are both up a good bit recently at 4.18% and 3.7% respectively.
Bonds
- 2-Year Treasury Yield: Open at 3.59%, continuing its yield decline this year.
- 10-Year Treasury Yield: Open at 3.637%, also continuing its yield decline this year.
Gold
- Open Price: $2,504.85 per ounce, up again, now up 22.07% this year, driven by safe-haven buying amid economic uncertainties.
Real Estate
- 30-Year Fixed Mortgage Rate: Around 6.22%, down a bit more than 6% this year.
- Trends: A cooling market continues its shift towards more affordable housing options.
Geopolitical Aspects
- Global markets are being influenced by ongoing concerns surrounding U.S.-China relations, with trade and supply chain issues still in focus. Additionally, rising energy prices are a key global concern impacting market sentiment.
Worldwide Market News
- In global news, China’s economic slowdown continues to be a focal point for investors. Global supply chain disruptions and inflation concerns are still top of mind, influencing commodity prices and corporate earnings.
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. Simple Explanations of Key Concepts to Level Up Your Financial Education
CPI: Measures inflation by tracking price changes in everyday goods. A higher CPI suggests rising inflation.
Earnings Reports: Companies release quarterly reports to show profits or losses. Investors look at these to predict future stock prices.
Treasury Yields: The interest rate the government pays to borrow money. Higher yields mean investors expect future inflation or higher interest rates.
Cryptocurrencies: Digital assets like Bitcoin are volatile but can provide high returns. Their value is influenced by market demand and adoption.
Real Estate: Higher mortgage rates make home buying more expensive, which can cool down the housing market.
Understanding these elements helps in navigating the financial markets, where each piece of information can be a puzzle piece in predicting market movements or making informed investment decisions.
You’re the Hero.
We’re the Guide.
Understanding Liquid Term
Understanding Liquid Term
When managing personal finances, especially for future goals and emergencies, understanding the concept of "Liquid Term" becomes crucial. This term, though less commonly discussed outside professional financial circles, provides essential insights into the liquidity of your assets and how quickly you can convert them into cash without significant loss. Here’s a detailed explanation of Liquid Term, simplified for those new to finances, and how an Arena Investor Advisor can guide you in optimizing this aspect of your financial planning.
What is Liquid Term?
Liquid Term refers to the measure of how long you can sustain your current lifestyle or cover expenses using only your liquid assets without additional income.
In simpler terms, it's an estimate of how many months or years you can fund your living expenses using readily available resources if no more money comes in. This measure is crucial during periods of financial adjustment, such as a job change, or unexpected situations like a medical emergency.
Importance of Understanding Liquid Term
1. Emergency Preparedness: Knowing your Liquid Term helps gauge how well-prepared you are for unexpected events. It highlights the importance of having accessible funds that can be quickly mobilized in emergencies.
2. Financial Flexibility: A healthy Liquid Term implies more financial flexibility. It allows you to make choices such as changing careers or moving without the immediate pressure of financial constraints.
3. Investment Decisions: Understanding your Liquid Term can influence your investment strategies. If you have a short Liquid Term, you might prioritize increasing it by investing in more liquid assets to enhance your financial security.
Calculating Liquid Term
To calculate your Liquid Term, you divide your liquid assets by your monthly expenses. Liquid assets include things like cash in checking or savings accounts, stocks, and other marketable securities that can be quickly converted to cash. For example, if you have $30,000 in liquid assets and your monthly expenses are $3,000, your Liquid Term is 10 months.
How an Arena Investor Advisor Can Help
1. Assessment and Planning: An Arena Investor Advisor starts by assessing your current financial situation, including calculating your Liquid Term. They can help you understand what your number means and plan steps to improve it if necessary.
2. Customizing Investment Strategies: Depending on your needs and goals, your advisor might suggest ways to adjust your investment portfolio to improve liquidity without sacrificing long-term growth. This could involve diversifying investments or reallocating assets to include more liquid options.
3. Budgeting and Expense Management: Advisors can work with you to optimize your budget, potentially reducing monthly expenses and extending your Liquid Term. They can offer insights into cost-saving without compromising lifestyle quality too much.
4. Continuous Monitoring and Adjustment: Financial situations evolve, so continuous monitoring is vital. Your Arena Investor Advisor will help update your financial plan based on changes in your life and goals, ensuring that your Liquid Term remains adequate.
5. Educational Support: Understanding financial concepts can be overwhelming. Arena Investor Advisors are dedicated to educating you about key financial indicators like Liquid Term. They ensure you’re equipped with the knowledge to make informed decisions.
6. Utilizing Technology: Tools from industry-leading app and platforms you Arena Investor Advisor's ability to present visual and easy-to-understand representations of your financial data, including Liquid Term assessments. This helps you see and understand your financial health in an easy way. It also helps in making informed, data-driven decisions.
All In All
Liquid Term is a vital aspect of financial health, for both new investors learning to navigate the complexities of personal finance and for established investors too. Understanding and managing this term can significantly impact your financial flexibility and security. Working with an Arena Investor Advisor provides you with expert guidance and tools to optimize your Liquid Term effectively. Together, we can build a simple to understand and use financial plan that not only prepares you for the unexpected but also helps achieve your long-term financial goals.
By approaching your financial planning with a clear understanding of Liquid Term, supported by professional advice and advanced financial tools, you can ensure greater stability and confidence in managing your finances.
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.
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