Insightful Articles

Monday, September 20th, the S&P 500 sold off 1.7%. It was painful to watch. By Friday, the market recovered the losses and ended the week higher. Market pullbacks can be unpredictable but should be expected. In this chart, we see that since 1980 there have only been three previous years without a pullback of 5% or more. There have not been two years in a row without such a pullback. A drawdown of 5% or more before year-end would be typical. To go the next 15 months without a correction of 5% or more would be a statistical anomaly.

Americans have a history of being charitable. According to the Giving USA Foundation's annual report, individuals, corporations, and foundations gave a record $471.44 billion to charities, social causes, and other qualified organizations in 2020. The US tax code encourages charitable giving by providing various income tax incentives to charitably minded taxpayers. Some of the more common tax-favored charitable donation methods are Cash Donations, Qualified Charitable Distributions, and the donation of Long-Term Capital Gain Property.

In my May 29th client email, I said, "I still expect we may see a Summer Swoon. This isn't unusual between Memorial Day and Labor Day and would not be a cause for alarm." And right on cue, a couple of weeks later, we see a June Swoon. As we get into July, we'll begin to get second-quarter earnings announcements. I expect corporate earnings will continue to be good. Ultimately earnings and earnings expectations are what drive equity prices. Until we get into second-quarter earnings, I expect markets will remain focused on inflation and the Fed. As a result, volatility may continue.

This week the Bureau of Economic Analysis reported April PCE (Personal Consumption Expenditures) excluding food and energy, the number rose 3.1%. This marks the first time this number has been over 3% since 1992. This is an economic number that the Federal Reserve watches closely as an indication of inflation at the consumer level.

What is Bitcoin? Bitcoin is a digital unit of value. It is an encrypted text file stored on the Bitcoin blockchain. The Bitcoin blockchain is an encrypted, decentralized ledger on a global public computer network. That is as technical as I'm going to get. Let's focus on the idea of a ledger. When you deposit money in your checking account or write a check against the balance, your bank keeps records of the inflows and outflows on an account ledger on their computers, and it is denominated in dollars. But it is still just an encrypted text file that represents value. We trust that we can exchange the value represented by that text file at the bank for physical currency or transfer the value to others to buy goods and services.

The Bureau of Labor Statistics released the January Consumer Price Index (CPI) report this week. CPI is a measure of inflation at the consumer level. CPI rose1.4% year over year. I know, it's thrilling! It seems people either yawn at this number or don't believe it accurately reflects what's going on in the real world. So, what is inflation, and why is it something we need to watch right now? Inflation is an increase in prices or a fall in the purchasing power of money. Some believe that Washington's response to the Financial crisis and actions by the Federal Reserve will be inflationary.