By: Alex Olshanskiy
Currency can impact expenses and revenues. Many quarterly updates by companies in 2022 consisted of negative results due to a strong dollar. This was especially the case with technology companies that are included in the S&P 500 Information Technology Index, which generate a majority of its revenue (57.8%) outside of the United States. If you were lucky enough to travel overseas in 2022, you may have experienced the benefits of a stronger dollar since purchasing power for U.S. citizens increased on international products and services.
By: Rick Rubin, CFA
The SECURE Act 2.0 (Setting Every Community Up for Retirement Enhancement) builds on the SECURE Act of 2019 and was signed into law on December 29, 2022. The legislation provides many changes that could help strengthen and improve the retirement system in America.
By: Chad Meyer, CFA
As the temperature finally drops, the landscape subtly shifts, and children everywhere resignedly dig out their real shoes and dust off their textbooks, it’s difficult not to take pleasure in the perennial change that autumn brings. After all, and as anyone who’s watched more seasons pass than they care to admit knows, this brand of change—the predictable kind—doesn’t really count as change at all. Instead, it represents a keeping of plans and all the comforts that come with knowing the world is still spinning right on schedule.
By: Eric Schopf
The third quarter was an extension of the second. Red-hot inflation, tight labor markets, war in Ukraine and sporadic Covid-related shutdowns in China all weighed on the financial markets. The Federal Reserve responded to inflationary market conditions with two more 75 basis point interest rate increases, and the result was additional drawdowns in the stock and bond markets. The Standard & Poor’s 500 index delivered at total return of -5.9% while the Bloomberg US Intermediate Government/Credit index declined 3.1% during the quarter. For the year, the S&P 500 has declined 23.9% and the intermediate-term Bloomberg fixed income index is down 9.6%. Longer term fixed income returns have fared even worse, with the Standard & Poor’s Treasury Bond Current 10-year index down 16.7% year-to-date.
By: Alex Olshanskiy
The COVID-19 pandemic that started in 2020 sparked an unprecedented flow of money from the government. This broadly based stimulus flowed into every area of the market, sending the market on a wild ride—spurring inflation—and eventually giving rise to a bear market. Investors will find that our value investing strategy will help with soaring inflation and market performance.
By: Chad Meyer, CFA
As humidity takes hold and Fourth of July memories fade, there’s just no denying it. The dog days of summer have officially arrived. And while it’s no surprise for market activity to “cool off” around this time of year, one cannot help but suspect there’s more than the usual pre-Labor Day lull currently at work in the financial world. In this space roughly twelve months ago, I described the second quarter of 2021 as “frothy times,” characterized by the feeling that almost any stock was a winner. Looking back over the last six months, it’s clear that froth has given way to a drastically more cautious mood, due in no small part to a collective acknowledgement that uncertainty is the new normal. The view from the beach, it would seem, now includes whitecaps.
By: Eric Schopf
If the first quarter was a struggle for the financial markets, the second quarter was just plain painful. Two additional interest rate increases by the Federal Reserve have heightened awareness for a potential recession, and the stock market reaction was a 16.2% retreat in the Standard & Poor’s 500 Index. The bond market provided some protection but still delivered negative returns. Yields on the 10-year United States Treasury note moved from 2.32% to 2.97%. The Bloomberg US Intermediate Government/Credit Index, which tracks the performance of intermediate term U.S. government and corporate bonds with an average maturity of about 4.5 years, declined 2.37% during the quarter. For the year, the S&P 500 has declined 19.96% and the Bloomberg fixed income index is down 6.77%.
By: Scott Murphy
On June 13th, the S&P 500 tumbled into a bear market. It fell about 20% from the most recent high reached in January of 2022. In the post-World War period from 1945 to the present, there have been fourteen bear markets, ranging in length from one month to 1.7 years, and in severity from a 20.6% drop to a 57% decline in the S&P 500.
By: Barb Rishel
Of all the goods and services being impacted by higher inflation, the price of a gallon of gasoline may be the one that we notice the most. It certainly is the cause for a lot of conversations these days, and opinions on why the price is so high vary considerably.
How are gas prices determined?
By: Chad Meyer, CFA
For much of the last year, the investment community reaped the fruits of a truly odd phenomenon. While the world changed dramatically (and often, it seemed, without warning), the market continued its ascent. Beset by uncertainty on all fronts, the financial story of 2021 was one of growth that simply could not be bothered to share in the rest of the world’s worries. As the headlines zigzagged from one uncertainty to the next, nearly every major index climbed higher and to the right.
By: Eric Schopf
The first quarter of 2022 was a struggle for the financial markets. A more hawkish Federal Reserve combined with the Russian invasion of Ukraine resulted in the steepest losses for stocks since the first quarter of 2020. The bond market suffered its worst loss since the financial crisis in 2008. Just as the Omicron wave of Covid-19 peaked and supply chain issues eased, we were presented with a new set of problems.
By: Eric Schopf
Medtronic PLC (Ticker: MDT) is a medical technology company that develops, manufactures, distributes and sells device-based medical therapies. The company serves healthcare systems, physicians, clinicians and patients in more than 150 countries. The company was founded in 1949 and employs over 90,000 people. Although Medtronic is headquartered in Dublin, Ireland, the company operates primarily in the United States.
By: Rick Rubin, CFA
In Tufton’s Winter 2020 newsletter, we provided an overview of the Setting Every Community Up for Retirement Enhancement (SECURE) Act, which was signed into law in late 2019. The SECURE Act allows more individuals to access workplace retirement plans and to increase retirement savings. Many of the provisions became effective on January 1, 2020. But in response to the COVID-19 pandemic in the U.S., new legislation was enacted in March 2020 that delayed many of the SECURE Act’s provisions for 2020.
Notwithstanding the massive government stimulus provided during the first year of the pandemic, many individuals continued to have weak finances and less savings for retirement. U.S. lawmakers decided to take on the challenge of improving retirement outcomes for Americans and to build upon the SECURE Act. In May 2021, the House Ways and Means Committee unanimously passed the Securing a Strong Retirement Act of 2021. We wrote extensively about the bill’s provisions in Tufton’s Summer 2021 newsletter. The bill enjoyed strong bipartisan support, but unfortunately, it did not move forward in Congress last year.
In this space, a bit over twelve months ago, I admitted that I didn’t have a clue what sort of market 2021 would bring. “Perhaps the economy will thrive…buoyed by the message that America is now ‘open for business’,” I wrote. “Or perhaps…historically low interest rates coupled with strong corporate earnings and healthy balance sheets may lead to another strong year for the equity markets.”
By Eric Schopf
After limping to a close in the third quarter, the stock market came roaring back in the fourth. The Standard and Poor’s 500 provided a total return of 9.8% and closed the year with a gain of 28.7%. The ten-year U.S. Treasury yield treaded water during the quarter with a move from 1.53% to 1.51%. Stock market returns were buoyed by low interest rates courtesy of the Federal Reserve’s accommodative monetary policy.
