Thought Leadership Resource Center
Welcome to the 2023 Mid Year Update. In our original Outlook 2023 report, we assessed economic and market conditions coming into the new year with a cautionary perspective. The macro headwinds in 2022 were very real and generally hostile. We had the highest inflation in 40 years, with the most aggressive monetary tightening campaign in decades. We also had the war in Ukraine, political upheaval, and the collapse of the crypto ecosystem, among many other problems.
Following the most aggressive monetary tightening cycle in the past 40 years, stock prices are approaching the threshold of a new bull market - rising almost 20% from the bear market low last October. A cursory look at U.S. equity price movement so far in 2023 would suggest that stocks have been able to shrug off a wide range of troubling issues.
Read MoreOn Saturday, June 3rd President Biden signed the debt ceiling bill, avoiding a potential waterfall of economic headlines. His signing comes just 2 days before the date the Treasury said the government would run out of money. Understanding this critical component of fiscal governance is vital in grasping its potential impact on the nation's economy and financial stability.
Read MoreMany have sought to put a monetary value on the benefit of an advisor, but it is difficult to pin down quantitatively due to the essential uniqueness of each client-advisor relationship. There are many components to creating a cohesive, clear, and personalized financial plan to grow and adapt to the many different stages of life. A few of the many forms of strategic advising include tax planning, estate planning, business succession planning, charitable and philanthropic planning, and investment management. The overarching goal of these various components is to make wealth complement an individual's lifestyle and discover what a meaningful use of wealth means for each client.
Read MoreThe Federal Reserve and Chairman Jerome Powell will hold its latest policy meeting on Wednesday, May 3rd. The central bank is largely expected to deliver on another 25-basis point hike to the Fed Funds rate, bringing the benchmark rate to a range of 5.00% - 5.25%. This would mark the 10th straight rate hike this cycle and take the Fed Funds rate to its highest level since 2007.
Read MoreLast month I spent a week on the UPenn Wharton Campus, the conclusion of my 2nd year of the Securities Industry Institute (SII) program. The class syllabus ran the full spectrum focusing on critical topics such as market dynamics, risk management, regulatory changes, leadership development, and strategic decision-making. More interestingly, however, is that while hitting each of these key areas, the program also affords its professors flexibility on how to accomplish each noted area of study. One theme that stuck out throughout the various topics was the rate at which artificial intelligence (AI) was brought up. Whether it was Chat GPT, AI or AI ethics, the subject arose in every single class.
Read MoreThe rules surrounding Required Minimum Distributions (RMDs) from inherited retirement accounts have always been complex. After the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019 enacted sweeping changes, the rules were made all the more complicated. One of the most impactful changes was the elimination of the “stretch” provision for inheritances which allowed most beneficiaries to take small amounts out of the account(s) annually based on their own life expectancy. Under the new rules, many inheritances that occur after January 1, 2020 will be subject to a new 10-year rule.
Read MoreLast month, Brazilian President Luiz Inácio Lula da Silva urged developing countries around the world to start using alternatives to the U.S. dollar in international trade and investing. In conjunction with that, Brazil and Argentina began to explore the possibility of a common currency, partially to circumvent the need for U.S. dollars in many cross-border transactions between the two countries.
Read MoreThe most significant challenge for the U.S. economy has shifted from an uncertain path for monetary policy to a potential banking crisis and associated issues connected with tightening credit conditions.
The supply of bank credit is an important driver of macroeconomic outcomes and a contraction in credit availability serves to further slow already decelerating economic activity. Banks will likely raise lending standards in response to the current set of problems and the pace of new loan origination, for businesses and consumers alike, will decline.
Read MoreTypically, the content in our monthly thought leadership package is reserved for original, in house written material from members of our team. There are, however, moments of exception when we come accross a piece that is just so good that we feel is worthy and worthwhile to include in this client communication. Recently, JPMorgan released their annual Guide to Retirement report. This is a piece, similar to their Guide to Markets, that we find very useful each year. This week I reviewed the 52 page report and have summarized it with their 4 major themes for 2023.
Read MoreBy 2045, it’s estimated that US households will transfer $84 Trillion in wealth. Take steps now to preserve the assets you’ve worked hard to acquire and ensure your family is equipped to build on a foundation of financial stability.
Read MoreLast year the technology sector was down roughly 27% due to high inflation and interest rates. Tight monetary policy has significantly limited growth forecasts, and slowed down new startups. While some positive performance has returned to start the year, mass layoffs have instilled additional fear in the eyes of investors. According to TechCrunch there have already been over 150,000 layoffs in the first 3 months of this year and there are no signs of it slowing down. Large and small cap companies alike are experiencing the pain of having to let employees go.
Read MoreOver the past several weeks, U.S. equity markets have been dominated by headlines involving uncertainties over banks, liquidity problems, and potential insolvencies. The collapse of three U.S. banks and the scramble to rescue others, including Europe’s Credit Suisse Group AG and First Republic Bank, sent stocks and bond yields plunging. Volatility in the bond markets has surged to the highest level since 2009.
Today, the Federal Reserve voted to increase the Fed Funds rate by 0.25%, as was widely expected. Some economists have suggested that the banking crisis might be equivalent to a 1.00% hike in the Fed Funds rate and that further tightening is no longer necessary to get it into restrictive territory as Fed officials have been aiming to do since they started the latest monetary policy tightening cycle a year ago (Yardeni Quicktakes).
Read MoreOver the past several days there have been significant developments in the financial sector that warrant a direct response from your team at Clearwater Capital Partners. This morning we convened a full session of our Investment Policy Committee, and we offer this multi-layered response to recent events.
Read MoreThe new year has begun very much as we had expected with inflation proving to be more sticky than many investors had expected, and another bear market rally in equities is unraveling, just as the seven prior such rallies have.
Read MoreAn inverted yield curve has become a prominent indicator within the financial world that suggests a recession may be on the horizon. Currently, the yield curve is near the most inverted we have seen in over 40 years.
Read MoreRoth IRA’s can be one of the more misunderstood wealth accumulation tools. Traditionally, Roth IRA’s are thought of as advantageous for those earlier in their career who are earlier in their career earnings curve. However, Roth IRAs can also be used for High Net Worth individuals as a longer term wealth accumulation tool. This article will cover how individuals can utilize the account and back door Roth contributions to maximize tax free earnings.
Read MoreThe Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019 brought key changes to many of the most popular retirement accounts and strategies. Three years later on December 23, 2022, the long awaited sequel, aptly named SECURE Act 2.0, was passed as part of the year end spending bill. Secure 2.0 builds upon the changes made by the 2019 legislation and will likely impact even more individuals than the original act did. The following is a summary of the main provisions in SECURE 2.0 that are likely to impact individual investors.
Read MoreBeing chosen as the executor of an estate can be both an honor and a major obligation depending on the complexity of the estate and a number of issues that may arise along the way. For this reason, a potential executor should make sure he or she knows what is involved before accepting this responsibility.
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Establishing and maintaining an economic outlook is an essential discipline for serious investors. A well-researched and rational perspective of the environment generates vital insights that will inform important decisions going forward.
Clearwater Capital Partners is pleased to announce that our Outlook 2023 has been published. You may access an Executive Summary of our commentary using the link below. From there you may also download the full report.
As always, should you have any questions or concerns, please give us a call.
Disclosures:
THIS COMMENTARY HAS BEEN PREPARED BY CLEARWATER CAPITAL PARTNERS. THE OPINIONS VOICED IN THIS MATERIAL ARE FOR GENERAL INFORMATION ONLY AND ARE NOT INTENDED TO PROVIDE OR BE CONSTRUED AS PROVIDING LEGAL, ACCOUNTING, OR SPECIFIC INVESTMENT ADVICE OR RECOMMENDATIONS FOR ANY INDIVIDUAL. ALL ECONOMIC DATA IS DERIVED FROM PUBLIC SOURCES BELIEVED TO BE RELIABLE. TO DETERMINE WHICH INVESTMENTS MAY BE APPROPRIATE FOR YOU, PLEASE CONSULT WITH US PRIOR TO INVESTING. INVESTING INVOLVES RISK WHICH MAY INCLUDE LOSS OF PRINCIPAL.
This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities, insurance products, or to adopt any investment strategy. The opinions expressed are as of the date of writing and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Clearwater Capital Partners to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. Past performance is no guarantee of future results. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Investment involves risks. International investing involves additional risks, including risks related to foreign currency, limited liquidity, less government regulation and the possibility of substantial volatility due to adverse political, economic or other developments. Index performance is shown for illustrative purposes only. You cannot invest directly in an index. S&P 500 is a registered trademark of Standard & Poor’s Financial Services, a division of S&P Global (“S&P”) DOW JONES, DJ, DJIA and DOW JONES INDUSTRIAL AVERAGE are registered trademarks of Dow Jones Trademark Holdings (“Dow Jones”). FTSE Russell® is a trading name of FTSE, Russell, FTSE Canada, FTSE FI, FTSE FI Europe, WOFE, RBSL, RL, and BR. “FTSE®” “Russell®”, “FTSE Russell®”, “FTSE4Good®”, “ICB®”, “Refinitiv”, “Beyond Ratings®”, “WMRTM”, “FRTM” and all other trademarks and service marks used herein are trademarks and/or service marks owned or licensed by the applicable member of LSEG or their respective licensors and are owned, or used under license, by FTSE, Russell, FTSE Canada, FTSE FI, FTSE FI Europe, WOFE, RBSL, RL or BR. The two main risks related to fixed-income investing are interest rate risk and credit risk. Typically, when interest rates rise, there is a corresponding decline in the market value of bonds. Credit risk refers to the possibility that the issuer of the bond will not be able to make principal and interest payments.
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