6.28.20 — Weekly Wealth Wrap-up
Quick Markets Wrap:
The Federal Reserve released its Stress Test results alongside its decision to limit major banks’ ability to buy back shares and dividends to preserve reserve capital to withstand financial stress. While on the face of it, it may seem like this is a negative. However, as we head into a very uncertain period economically, it makes sense to have Banks keep as much capital as possible to withstand any potential future storm that could be on the horizon.
Fed puts restrictions on bank dividends after test finds some banks could be stressed in pandemic
https://www.federalreserve.gov/publications/files/2020-sensitivity-analysis-20200625.pdf
On the positive side of the ledger, consumer spending edged up 8% in May, showing some signs of economic resilience coming out of lockdowns across the country.
The IRS has come out with new guidance for withdrawals from retirement accounts related to COVID and are taking controversial liberties in their interpretation and enforcement of the tax law. Additionally, the Treasury and IRS are contemplating delaying the tax filing deadline to later this fall.
Initial Unemployment claims remain stubbornly high, coming in at 1.48m for the week ending of June 20th, and higher than economists estimated. Additionally, previous weeks numbers have been revised upward. This is a negative trend, especially as we near the end of July, where PPP loan forgiveness requirements to keep employees on-staff expires. Consequently, we may see a pickup in additional layoffs come August.
On Tuesday evening, President Trump’s economic advisor, Peter Navarro, came out in an interview with FOX news and said that the trade deal with China was dead, causing equity futures markets to sell-off. Not 30 minutes later, President Trump’s tweeted that the trade deal was still very much alive. All equity futures losses were quickly erased. As citizens and investors, we’re still left scratching our heads, but needless to say, uncertainty around U.S.-China relations remain highly uncertain.
https://twitter.com/realDonaldTrump/status/1275252814206447618?s=20
COVID cases continue to accelerate to the upside with new daily cases hitting records several days in a row. This uptick has caused concern across the most affected states, stopping some of them from re-opening plans.
Large corporations are responding to the increase in COVID cases and risk by dialing back their retail operations. Notably, Apple is closing 32 of its stores in many of the affected states.
On the industry news front, the CFP board, the governing body of CERTIFIED FINANCIAL PLANNER™ Professionals like yours truly, will begin enforcing a newly revised and stricter code of ethics and standards of conduct of its practitioners. This includes needing to provide advice in the client’s best interest beyond when providing comprehensive financial planning services, but more generally, when giving financial advice. This is a much broader definition and application of the standards and is designed to further distinguish CFP® practitioners as the highest standard in the profession. They will also be stepping up their enforcement efforts of these standards to ensure we’re living up to those standards.
Additional Reading of the week:
- Howard Marks came out with a new Memo: https://www.oaktreecapital.com/insights/howard-marks-memos
As we look to the week ahead we have:
- A new month and America’s birthday next Saturday.
- June unemployment numbers on Thursday, July 2nd.
What I’m paying attention to:
- I’m keeping my eyes on daily new COVID cases, the positivity rate, as well as daily new death rates.
- Here is an excellent newsletter resource that I follow to stay up to date on domestic and international COVID stats, information, and development: https://landing.hedgeye.com/covid-19/
Okay, that’s it for this week.
Take care, stay safe, much love.
Matt Faubion, CFP®
The information on this site is provided “AS IS” and without warranties of any kind either express or implied. To the fullest extent permissible pursuant to applicable laws, Faubion Wealth Management LLC (FWM) disclaims all warranties, express or implied, including, but not limited to, implied warranties of merchantability, non-infringement, and suitability for a particular purpose.
FWM does not warrant that the information will be free from error. None of the information provided on this website is intended as investment, tax, accounting or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. The information should not be relied upon for purposes of transacting securities or other investments. Your use of the information is at your sole risk. Under no circumstances shall FWM be liable for any direct, indirect, special or consequential damages that result from the use of, or the inability to use, the materials in this site, even if FWM or a FWM authorized representative has been advised of the possibility of such damages.
In no event shall FWM have any liability to you for damages, losses, and causes of action for accessing this site. Information on this website should not be considered a solicitation to buy, an offer to sell, or a recommendation of any security in any jurisdiction where such offer, solicitation, or recommendation would be unlawful or unauthorized.
