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Market Update – May 21, 2020

“Never confuse a single defeat with a final defeat.” — F. Scott Fitzgerald

The economic struggles in our country are among the worst we’ve ever seen. In April, a record 20 million people lost their jobs, and 36 million people have filed for unemployment since the COVID-19 pandemic struck in mid-March. Record drops in consumer confidence, manufacturing, and spending are all adding to the immediate economic fallout. Specific industries have been devastated, with names like J.C. Penney, J.Crew, and Neiman Marcus filing for bankruptcy.

Clothing sales are down 89%, furniture sales down 66%, and restaurant sales down 49% from this time last year, according to the United States Census Bureau. Yet, as F. Scott Fitzgerald wrote, these many single defeats won’t necessarily add up to the final defeat. Our country has survived many trying times before, and we are starting to see glimmers of hope on both the medical and economic fronts. Our resolve and fortitude will once again shine, as we head toward better times in the second half of 2020.

More testing for COVID-19 is needed to help identify infected people and to stop the virus from spreading. As testing has soared, the number of positive COVID-19 results as a percentage of total tests has trended lower, and that percentage consistently has been beneath 10%, according to data from the COVID Tracking Project. In addition, doctors have developed a “toolbox” of drugs to help provide patients a better chance at survival. Antiviral drugs like remdesivir in combination with other drugs are showing significantly better results now than just a few weeks ago. The World Health Organization has reported “potentially positive data” in several treatments. Although a vaccine could still be a year or more away, human drug trials are underway with encouraging initial results.

In the face of the devastating loss of human life and historically weak economic data, however, the S&P 500 Index has experienced one of its greatest short-term rallies ever, up more than 30% from the March 23 lows at its recent peak. Based on historical trends, a warranted correction in stocks over the coming months may be possible. Stock valuations are historically expensive, tensions are building between the United States and China, the stock market’s momentum is showing signs of waning, and we’re entering the historically weak summer months—all of these are reasons to be alert. History bears this out. All major S&P 500 bear markets in the past 60 years had a significant bounce off the market lows, followed by a correction of about 10% on average before another surge higher. Based on this historical trend, a market correction of 8–12% after the recent big rally may be likely over the coming months.

While current economic data may sound bad, it’s important to remember it is backward-looking. Real-time economic data points such as public transportation, traveler data from the Transportation Security Administration, fuel sales, railroad traffic, and federal tax withholding are all showing improvement as the economy begins to re-open.

Finally, small businesses are the lifeblood of the US economy, and the Bureau of Labor Statistics shows they employ 47% of all private sector jobs. Recent data showed small businesses are as optimistic about the next six months as they’ve been in 18 months, suggesting the worst may be behind us, and a growing demand for their products and services could be brewing. The pain from this recession is impacting all of us, but better times are coming.

 

 

 

Important Information
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.

References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

All data is provided as of May 19, 2020.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.

All index data from FactSet.

This Research material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

How To Get Back In The Market

In your own effort to avoid the ups and downs of the recent market ride, perhaps you made the decision to move your retirement account assets away from equities and into cash. You know you don’t want to sit on the sidelines of the market forever. Weeks later, are you left wondering…

How Do I Get Back In the Market?

Watch this 5-minute video from SRP’s Giorgina Nguyen, CFP®
to hear 3 strategies to get back in the market.
(Hint: she may even share a 4th bonus strategy for SRP participants!)

SRP is here to help.

 

 

 

 

Giorgina Nguyen is a registered representative with, and securities are offered through, LPL Financial. Member FINRA/SIPC. Investment advisory services are offered through Global Retirement Partners, an SEC Registered Investment Advisor. Global Retirement Partners and Strategic Retirement Partners (SRP) are separate entities from LPL Financial.

Global Retirement Partners employs (or contracts with) individuals who may be (1) registered representatives of LPL Financial and investment adviser representatives of Global Retirement Partners; or (2) solely investment adviser representatives of Global Retirement Partners. Although all personnel operate their businesses under the name Strategic Retirement Partners (SRP), they are each possibly subject to differing obligations and limitations and may be able to provide differing products or services.

This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

Investing in stock includes numerous specific risks including: the fluctuation of dividend, loss of principal and potential illiquidity of the investment in a falling market. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price. Dollar cost averaging involves continuous investment in securities regardless of fluctuation in price levels of such securities. An investor should consider their ability to continue purchasing through fluctuating price levels. Such a plan does not assure a profit and does not protect against loss in declining markets An investment in a target date fund is not guaranteed at any time, including on or after the target date, the approximate date when an investor in the fund would retire and leave the workforce. Target date funds gradually shift their emphasis from more aggressive investments to more conservative ones based on the target date. All investing involves risk including loss of principal. No strategy assures success or protects against loss.

Market Update – May 7, 2020

Investors like labels for the economy and financial markets—many of them with the word “great” in them. The Great Depression. The Great Recession. The Great Lockdown. Well, we’ve moved into what we might call the Great Disconnect. How can stocks have rebounded so strongly in the last month amid so much suffering and economic damage? What’s Wall Street seeing that so many on Main Street are not?

For one, in the United States more than 20 states have already begun to reopen their economies, and others have plans to begin very soon. In Europe, lockdowns are being eased, following Asia’s lead. Even gradual progress like this may help the stock market focus more on what’s ahead than where we are right now.

As lockdown restrictions are lifted, timely indicators like vehicle traffic, electricity consumption, public transportation use, daily consumer confidence surveys, and a wide variety of weekly economic indicators point to a low mark in economic activity in the United States in April. The “Great Lockdown” recession of 2020 may be over already—although it may not be officially declared a recession for several more months.

Nowhere to go but up isn’t normally very reassuring, but to the stock market it may be. Historically, when things have looked their worst, the opportunity in stocks has tended to be the best. The S&P 500 Index has usually hit its bottom and started the climb back up about five months before a recession has ended.

Other factors have helped boost investor sentiment recently. Market participants have gained confidence from the bold stimulus response from policymakers in Washington, DC, and the Federal Reserve. The total amount of the stimulus this year is about 22% of the entire US economy, based on gross domestic product (GDP). During the entire 2008–09 financial crisis, the total amount of stimulus was 16.6% of GDP. And there may be more. Surging unemployment and weakening finances at the state and municipal levels may be catalysts for more action. Though millions of jobs have been lost to this crisis, many millions surely have been saved as well.

The medical community also has provided reasons for optimism. Though no one knows for sure when a COVID-19 vaccine will be ready, rapid progress is being made, and several promising candidates are now in human trials. Testing capacity has also ramped up, while some of the best capitalized and most innovative companies in the world are developing contact-tracing tools to help facilitate safe re-openings. While stocks may have come a bit too far, too fast in the short term, markets are clearly responding to these positive developments.

Reopening the US economy will be a gradual process, and temporary setbacks may be possible. Some of the lost jobs may not return. The possibility of disappointment as the “Great Reopen” unfolds is real. We are facing a tremendous challenge, but it is being met with incredible resilience, resourcefulness, and innovation. Together we will get through this crisis and return to better times.

 

 

 

 

 

Important Information

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.

References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

All data is provided as of May 6, 2020.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.

This Research material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Documents You Need In A Crisis

Many of us are home indefinitely and may be attending to projects that would have otherwise gone unnoticed in 2020. Consider rounding up the documents below (or conferring with aging parents as to the whereabouts of these documents). These can be critical when managing any kind of healthcare situation.

Health Insurance policies – most likely, your parent’s hospital and doctor costs will be covered by traditional Medicare, or a Medicare Advantage Plan. If your parent has traditional Medicare, find out whether their coverage includes a Medicare Supplement (Medigap) plan that covers the Medicare deductibles and co-insurance. Also, review the prescription drug plan to learn what that covers. If your parent has a retirement health insurance plan from another employer, contact the HR department for help in understanding coverage.

Long Term Care policy –  this type of coverage mostly pays for custodial help with activities of daily living. Some older plans from the 1990’s may only pay for nursing home care, so be aware of that.  Most plans sold in the past 20 years will cover all forms of care from home health care, to assisted living, memory care, hospice, and nursing home care. Please bring any of these plans to me as I will be happy to review them for you.

Bank Assets, Investment Accounts, Life Insurance, Annuities – figure out how much money is available to pay for your parent’s care. Determine which funds are liquid and how you an access the funds.  Without a Financial Power of Attorney, you may not be able to exercise control over your parent’s finances. And if you have a Power of Attorney, submit the document to each bank, Investment Company, and insurance company immediately.  A Power of Attorney is only as good as the willingness of a financial institution to honor it.  Unfortunately, there is no legal requirement that they do so.  If a particular institution refuses to honor a properly executed Power of Attorney, engage an elder law attorney to help you.

Health Care Power of Attorney – gives you the authority to make medical decisions for your parents such as choosing or rejecting treatment, dismissing physicians, and selecting rehabilitation facilities.

Living Will – a written statement detailing a person’s desires regarding their medical treatment in circumstances in which they are no longer able to express informed consent, also called an “advanced directive”.

Do Not Resuscitate Order – (DNR) – specifies whether a parent wants to be revived if he or she stops breathing.

Durable Financial Power of Attorney – this document gives you the power to manage your parent’s financial affairs. This includes a variety of tasks such as buying and selling assets, paying bills from their bank accounts, or accessing IRA funds. Please make sure this document is “durable”. Durable means that the terms of the document remain in effect even after your parent becomes incapable of making their own decisions.

Trust Documents – if your parents have set up trusts, review them now.  Unfortunately, people often set up trusts without properly transferring the intended assets. Check to see if trusts are funded properly.  Also, find out if funds can be withdrawn, and by whom. Get in touch with the attorney that drafted the trust, if possible.

 

 

 

 

Securities offered through LPL Financial, Member FINRA/SIPC. Investment advisory services are offered through Global Retirement Partners, an SEC Registered Investment Advisor. Global Retirement Partners and Strategic Retirement Partners (SRP) are separate entities from LPL Financial.

Global Retirement Partners employs (or contracts with) individuals who may be (1) registered representatives of LPL Financial and investment adviser representatives of Global Retirement Partners; or (2) solely investment adviser representatives of Global Retirement Partners. Although all personnel operate their businesses under the name Strategic Retirement Partners (SRP), they are each possibly subject to differing obligations and limitations and may be able to provide differing products or services.

This information is not intended to be a substitute for individualized legal advice. Please consult your legal advisor regarding your specific situation.

Pre-Retiree Considerations

There’s no doubt recent market volatility has been especially worrisome for pre-retirees. The majority of calls we’ve received in the past month have been from those nearing retirement, with concerns about their retirement accounts. Workers who are within 5-10 years of retirement have specific concerns, and may need to consider specific actions, to keep moving toward their goals.

If you are nearing retirement, click on the link below! In just 5 minutes, SRP Managing Director Jim Robison, AIF® discusses 4 key considerations for Pre-retirees.

 

 

 

Securities offered through LPL Financial, Member FINRA/SIPC. Investment advisory services are offered through Global Retirement Partners, an SEC Registered Investment Advisor. Global Retirement Partners and Strategic Retirement Partners (SRP) are separate entities from LPL Financial. Global Retirement Partners, Strategic Retirement Partners and LPL Financial are not affiliated with NFIB.

Global Retirement Partners employs (or contracts with) individuals who may be (1) registered representatives of LPL Financial and investment adviser representatives of Global Retirement Partners; or (2) solely investment adviser representatives of Global Retirement Partners. Although all personnel operate their businesses under the name Strategic Retirement Partners (SRP), they are each possibly subject to differing obligations and limitations and may be able to provide differing products or services.

This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

Market Update – April 21, 2020

“Life is 10% what happens to you and 90% how you respond to it.” — Lou Holtz, Hall of Fame football coach

As the battle against the COVID-19 pandemic continues, how we respond to it will determine how we beat it. Continued sacrifices range from everyone in the medical community working on the front lines to the thousands of truck drivers across our country keeping goods flowing, parents who have become homeschoolers, and folks missing their family events to help stop the spread of this terrible outbreak. As Lou Holtz said, we can’t control what happens, but how we respond to it is what matters. Our response to this crisis has shown the resolve and strength of the human spirit, which is why we will overcome.

The response from the economy and stock market, however, has shown a disconnect between the two. Tragically, 22 million people have filed for unemployment in the past four weeks, nearly wiping out all the jobs created during the record 10-year economic expansion. Historic drops in consumer confidence, retail sales, industrial production, oil prices, and housing starts have shown how quickly our economy has gone from solid growth to virtually stopping in its tracks. Yet, stocks have been soaring the past few weeks. Remember, stocks tend to weaken before the economy, and they tend to lead before the economy turns around. Stocks see light at the end of the tunnel before the economy feels it, and the big move recently may be a sign the economy could turn around later this year.

Small businesses have been impacted the most by the economic crisis, and the government and Federal Reserve actions to bridge the gap to better times are unprecedented. The combined stimulus from fiscal and monetary policy is more than 20% of the value of the entire US economy, as measured by gross domestic product, greatly mitigating the economic hardships. The hurried roll out of the small business loan program wasn’t perfect, but it is helping those businesses.

This recession—though not officially declared yet—is unlike any other. It wasn’t caused by the virus itself, but by the government telling people to stay home in an effort to flatten the curve. The government can’t simply turn on a switch to get things back to normal, but with all of the stimulus making its way through the system, it’s possible this could be one of the shortest recessions ever. First quarter earnings season has begun, and it will be interesting to learn how quickly corporate America anticipates the slowdown ending. Estimates for earnings in 2020 have reduced drastically, but there is still hope that a strong second-half economic rebound could help support a recovery in corporate profits.

More than 2 million people worldwide have been infected by the virus, and we all have been impacted in some way. Last week there was very positive news on a potential COVID-19 treatment from Gilead Sciences, while Boeing, one of the hardest hit companies during this crisis, said it might start building planes again soon. We aren’t out of the woods yet, and the economic data and headlines may get worse before they get better, but our response to this crisis reinforces our confidence that the future remains bright.

 

 

 

Important Information
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.
References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.
All data is provided as of April 21, 2020.
Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.
This Research material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

SRP 2nd 2020 Quarter Participant Webinar

Saving for both college and retirement can be a daunting task. It’s easy to feel like these huge financial goals are in competition with one another. How does one prioritize? Let’s explore the challenges of saving simultaneously for multiple family goals. SRP’s very own Zach Morris (Financial Advisor, Providence RI) will offer specific strategies and tools – especially around 529 accounts, college cost trends, and student debt management – that can help you prepare more effectively.

All retirement plan participants and eligible employees are welcome!

Please join us on Tuesday, May 12th (1:00pm EST / 12:00pm CST / 10:00am PST) for this live Participant Education event!

REGISTER HERE:  https://tinyurl.com/SRPCollege

Limited space available so register today!

This session will be recorded.

The CARES Act and Student Loan Repayment Benefits

Did you know the CARES Act has provisions that impact student loans?

• Extends the tax benefits of Tuition Reimbursement programs under IRS Section 127 Education
Assistance Programs
• Payments by an employer to student loans are not included in an employee’s income
• Up to $5,250 is eligible
• Applies to payments made between 3/28/2020-12/31/2020
• Covers principal and interest
• Federal student loan automatic monthly payments are suspended through 9/30/2020
• Interest on federal student loans is 0% through 9/30/2020
• Any manual payments to federal student loans through 9/30/2020 will go to principal only
• Any missed payments under the CARES Act will still qualify as a payment under the PSLF Program

Student Loan Repayment Benefit Plans are one of the fastest growing employer benefits

• Number of employers offering this benefit increased 100% from 2018-2019¹
• Student loan repayment plan is the most requested financial benefit²
• Outstanding student loan debt has tripled in 12 years from 2007 to 2019³
• Average student loan debt balance is $37,172⁴
• 1 in 4 Americans have student loan debt⁵

Types of Student Loan Repayment Benefits Plans Available

• Direct Pay – Employer makes payments to a student loan provider for a fixed amount (monthly)
• Employer Matching – Company makes a matching contribution to retirement plan for employees
making student loan payments unable to contribute to the retirement plan (Abbott Labs example)
• FlexMatch – Gives employees the flexibility to use company matching dollars towards paying
down student loan debt or being traditionally matched in their retirement plan

SRP can help with the administration of Student Loan Benefit Plans.
Contact your local SRP Managing Director to learn more!

 

Securities offered through LPL Financial, Member FINRA/SIPC. Investment advisory services are offered through Global Retirement Partners, an SEC Registered Investment Advisor. Global Retirement Partners and Strategic Retirement Partners (SRP) are separate entities from LPL Financial.
Global Retirement Partners employs (or contracts with) individuals who may be (1) registered representatives of LPL Financial and investment adviser representatives of Global Retirement Partners; or (2) solely investment adviser representatives of Global Retirement Partners. Although all personnel operate their businesses under the name Strategic Retirement Partners (SRP), they are each possibly subject to differing obligations and limitations and may be able to provide differing products or services.

Sources:

¹https://www.shrm.org/hr-today/trends-and-forecasting/research-and-surveys/Documents/SHRM%20Employee%20Benefits%202019%20Executive%20Summary.pdf;

²https://www.benefitspro.com/2018/05/07/student-loan-benefits-more-popular-with-workers-th/ and https://blog.accessperks.com/2018-employeebenefits-perks-statistics#engagement;

³https://www.valuepenguin.com/average-student-loan-debt and https://www.studentloanplanner.com/student-loan-debtstatistics-average-student-loan-debt/;

⁴https://www.nitrocollege.com/research/average-student-loan-debt;

⁵https://www.thebalance.com/student-loan-debtstatistics-4173224