Interest rates are headed back down, at least according to recent market consensus. Understanding the almost constant stream of news we hear about rates moving up or down, why should an ordinary investor care? Here’s why:
Many people believe that the stock market tends to do well when the U.S. Federal Reserve System, commonly known as “The Fed,” lowers interest rates. “We have now reared an entire generation of investors that buy stocks because interest rates go down,” said Brian Belski, chief investment strategist at BMO Capital Markets. The thinking: Easier monetary policy will help boost borrowing, pad corporate earnings, and possibly free up more cash for stock buybacks. However, history has repeatedly shown that it is best to turn a deaf ear to the Fed’s and to the market’s interest-rate chatter, and that rising rates have actually been good for stocks:
The central banking system of the United States was created primarily to alleviate financial crises; however, over the years, the roles and responsibilities of the Federal Reserve System have expanded. And while it is of great debate whether or not the Fed has too much control and power, what is certain is when the Chair of the Federal Reserve (currently Jerome Powell) speaks, investors and the markets pay attention.
There are current concerns that the growth of the U.S. economy is slowing, and with those concerns comes speculation that the Fed will reduce interest rates to stimulate the economy. However, at Towerpoint Wealth, we do not get too excited at the prospects of lower interest rates, and we do not become too worried at the prospects of higher rates, for reasons evidenced above. We follow a disciplined process and philosophy with our clients to help them build and protect their wealth, with shorter-term movements in the markets, in the economy, in politics, and in interest rates typically being of little concern. While we certainly pay attention and are attuned to what is happening, we rarely are reactionary.
TPW Celebrates Two Year Anniversary at Frank Fat’s
Locally, the Towerpoint Wealth family had an opportunity to let our hair down last week as we celebrated the firm’s two year anniversary, and enjoyed a fun long lunch at the iconic Frank Fat’s in downtown Sacramento. Fat’s was recently honored with a listing as a Bib Gourmand by Michelin Guide (customers must be able to order two courses and a glass of wine or dessert for $40 or less), and everyone agreed the meal did not disappoint!
There will always be a clear expectation for everyone to work their butts off at TPW, but there is also a clear expectation that we are a family, and will be having a lot of fun along the way!
Aside from downtown dining and interest rate scrutiny, a number of trending and notable events have occurred over the past two weeks:
- Memorial Day 2019
- Robert Mueller makes first public remarks on the Russia investigation
- Virginia Beach gunman kills 12 in a municipal office complex
- 30th anniversary of Tiananmen Square protests
- 75th anniversary of D-Day landings in Normandy
- NBA Finals 2019: Golden State Warriors on the verge of being upset as the Toronto Raptors take a 3-1 series lead
- American tourists continue to die in the Dominican Republic
- Helicopter crash-lands on 54-story midtown Manhattan high rise office building
Lastly, please take three or four minutes to review the curated content found below, highlighted by:
- An excellent article discussing whether or not a recession may be around the corner here in the United States
- An article in the well-known wealth management industry periodical Financial Advisor IQ, featuring TPW’s President, Joseph Eschleman
- Seek, an app that gives you detailed information on any plant or animal you take a photograph of by using image recognition technology
We encourage you to reach out to us (email@example.com) with any questions, concerns, or needs you have. The world continues to be an extremely complicated place. We are here for you, and look forward to connecting with, helping, and being a direct, fully independent, and objective expert financial resource for you.
– Joseph, Jonathan, and the entire Towerpoint Wealth team