King Wealth Planning

RUSSIA TO HOST BRICS SUMMIT 2024 AMID HEIGHTENED GEOPOLITICAL CLIMATE

Quincy Krosby, PhD, Chief Global Strategist, LPL Financial
Joshua Cline, Associate Analyst, LPL Financial

https://www.kingwealth.com/blog

In December 2023, Vladimir Putin declared that the 2024 BRICS Summit, hosted by Russia, would be focused on establishing a “fair world order” based on shared principles. At the core of Putin’s goals for stronger BRICS economic integration is a longstanding and overriding objective to provide a viable alternative to the West’s global hegemony in nearly all facets of political, military, economic, financial, and security affairs.

IT’S GO TIME FOR THE FEDERAL RESERVE

Jeffrey Roach, PhD, Chief Economist, LPL Financial

https://www.kingwealth.com/blog

In his recent speech, Federal Reserve (Fed) Chairman Jerome Powell focused on the fragilities of the labor market and is preparing markets for the new phase for policy. “The time has come for policy to adjust.” A soft landing looks achievable, barring any shocks. Disinflation while preserving labor market strength is only possible with anchored inflation expectations, so an independent and credible central bank is key. One of the best concepts in the speech for investors to understand is the current data shows an evolving macro landscape. The jury is still out on if the Fed can successfully manage the risks to both sides of their dual mandate.

New Social Security Lunchtime Webinar!

We'll be hosting a free lunchtime webinar coming up on Tuesday, October 29 from 12-1pm. Join Paul King, King Wealth Planning CEO and LPL Registered Principal, and Grant Martin, Regional Director at MFS Investment Management for an educational presentation on Social Security, a detailed analysis of benefits, what your options are, and how Social Security fits into your retirement plan.

Visit our events page to register:

https://www.kingwealth.com/2022-events-1

STOCK AND BOND MARKET FAQs FROM THE FIELD

Jeffrey Buchbinder, CFA, Chief Equity Strategist, LPL Financial
Adam Turnquist, CMT, Chief Technical Strategist, LPL Financial
Lawrence Gillum, CFA, Chief Fixed Income Strategist
Brian Booe, Associate Analyst

https://www.kingwealth.com/blog

Every year as the summer months draw near their end, LPL Financial hosts its annual conference for financial advisors. While the conference is an excellent opportunity for advisors to expand upon professional interests, discover ways to enhance their impact on clients, and connect with industry experts — learning is a two-way street. At this year’s big event with nearly 9,000 attendees in sunny San Diego, the LPL Research team had the unique opportunity to connect with many of these advisors in person to get their perspectives on the capital markets. Below are some of the frequently asked questions from the road.

PULLBACKS ARE COMMON BUT PAINFUL

Adam Turnquist, CMT, Chief Technical Strategist, LPL Financial
George Smith, CFA, Portfolio Strategist, LPL Financial

https://www.kingwealth.com/blog

Pullbacks are the stubbed toe of the stock market. I was reminded of this over the last week as I contemplated the recent surge in volatility while picking up toys after our two-year-old finally fell asleep. As I carried a Tonka truck back to its usual parking spot next to the toy farm, I slammed my toe into the foot of the couch. The pain was acute, but not worthy of a full-blown panic. After a few deep breaths, the sting began to wear off and I assessed the damage to find a little redness, but nothing broken. Somewhere in this painful process, the parallels between my toe’s unfortunate encounter with the couch and the recent equity market sell-off became clear. For the market over the last week, the foot of the couch was embodied by overbought conditions — especially in big tech, waning confidence for a soft landing due to weak employment data and a contractionary Institute of Supply Management (ISM) manufacturing reading, and the rapid unwinding of the crowded yen carry trade.

THOUGHTS ON GLOBAL SELLOFF AND THE DOLLAR'S PATH TO DECOMPRESSING

Dr. Quincy Krosby, PhD, Chief Global Strategist
Jeffrey Buchbinder, CFA, Chief Equity Strategist
Joshua Cline, Associate Analyst

https://www.kingwealth.com/blog

Before the jobs report was released on Friday, we wrote a commentary on the U.S. dollar. In light of the events over the weekend and Monday, we start with some comments on the global stock market selloff.

KEY THEMES FOR THE MACROECONOMIC LANDSCAPE IN THE SECOND HALF OF 2024

Jeffrey Roach, PhD, Chief Economist

https://www.kingwealth.com/blog

Investors had a healthy appetite for risk so far this year as a so-called potential soft landing has been factored in. We have an economy with rising wages, decelerating inflation, and a Federal Reserve (Fed) on the cusp of cutting rates. What more could you ask for? Of course, political uncertainty and headwinds from geopolitical risks could rain on that parade, and that’s why investors should exhibit discernment in a market like this.

KEY THEMES FOR BONDS IN THE SECOND HALF OF 2024

Lawrence Gillum, CFA, Chief Fixed Income Strategist

https://www.kingwealth.com/blog

The first half of the year was a challenging environment for a lot of fixed income markets, especially higher-quality markets. With the Federal Reserve (Fed) seemingly unlikely to lower interest rates until after the summer months (at the earliest), the “higher for longer” narrative has kept a lid on any sort of bond market rally. While falling interest rates help provide price appreciation in this higher-for-longer environment, fixed income investors are likely better served by focusing on income opportunities, which has been the traditional goal of fixed income investors. Investors can best navigate the late-cycle economic environment by adding high-quality bonds, offering attractive risk-adjusted returns, and lowering overall portfolio volatility. Consider moving away from cash, with the Fed likely to cut rates in the second half.

KEY THEMES FOR STOCKS IN THE SECOND HALF OF 2024

Jeffrey Buchbinder, CFA, Chief Equity Strategist

https://www.kingwealth.com/blog

Outlook 2024: A Turning Point, released in December 2023, featured our perspective on how stocks might respond to turning points in inflation and monetary policy. That response was quite positive as we now know, as easing inflation, anticipation of Federal Reserve (Fed) rate cuts, increasing chances of a soft landing for the U.S. economy, and artificial intelligence (AI) excitement combined to send stocks up double-digits over the first six months of 2024. Now past the halfway mark, a lot of good news is priced in, valuations are elevated, and monetary policy may not offer much opportunity for upside. If stocks are going to add to first half gains in the second half, earnings must play a key role.

DOUBLE-DIGIT EARNINGS GROWTH ON TAP

Jeffrey Buchbinder, CFA, Chief Equity Strategist

https://www.kingwealth.com/blog

With stock valuations elevated after such a strong first half, earnings growth will be key to holding, or potentially building on these gains. LPL Research believes stocks have gotten a bit over their skis, but earnings season may not be the catalyst for a pullback in the near term given all signs point to another solid earnings season and stocks have mostly performed well during the peak weeks of reporting season in recent years. We may not get an increase in second-half estimates over the next couple of months — that's a lot to ask — but we should get a few points of upside and double-digit earnings growth for the second quarter on the back of technology strength.

King Wealth Planning is helping support a local organization that is making a difference.

We’re working with local Bay Area non-profit, Cancer CAREpoint in several ways: volunteering our time with their events and committees, and also providing our financial support over the years.

We’re donating $500 to the organization as part of their fundraising efforts associated with their annual Cancer CAREpoint Garden Party, a gorgeous outdoor event with speakers, food, music and a lively auction taking place Sunday August 18, 2024 at the Montalvo Arts Center in Saratoga.

In addition, several years ago we raised $10,000 for the organization when Paul King participated in a 100-mile run, and we acquired 100 each $100 donations from all of you, our clients and friends! Thank you for helping us make an impact in our local community!

https://www.cancercarepoint.org/gardenparty/

ARTIFICIAL INTELLIGENCE: THE ANTIDOTE TO FED POLICY?

Jeffrey Roach, PhD, Chief Economist
Jeffrey Buchbinder, CFA, Chief Equity Strategist

https://www.kingwealth.com/blog

Developments in artificial intelligence may be the antidote for an aging population, but it takes time for these advancements to work themselves into the fabric of our nation’s businesses. The impact of new developments can persist in markets, so investors need to carefully discern what could be different this time around.

KEEP CALM AND CLIP BOND COUPONS

Lawrence Gillum, CFA, Chief Fixed Income Strategist

https://www.kingwealth.com/blog

With a Federal Reserve (Fed) meeting, a Bank of Japan (BOJ) meeting, two very important inflation reports, and nearly $120 billion of new Treasury securities auctioned — last week was quite the week for markets. And while the Fed meeting was supposed to get top billing, it turned out the inflation data stole the show. In fact, at least for the Treasury market, it’s been the economic data that has had the largest impact on changing bond prices/yields. But with economic data released daily, that has meant the volatility in the Treasury market has been dizzying lately. So, what should bond investors do during this period of heightened volatility? Keep calm and clip bond coupons.

INDIA AT THE CROSSROADS

Dr. Quincy Krosby, PhD, Chief Global Strategist
Joshua Cline, Associate Analyst

https://www.kingwealth.com/blog

Indian Prime Minister Narendra Modi’s recent victory in the national elections was muted at best. While he secured a rare third term in the nation’s highest office, his decisive legislative supermajority failed to materialize. Modi has made revitalizing the Indian economy and increasing foreign direct investment (FDI) a cornerstone of his pro-business platform. With markets adjusting to the unexpected outcome and new legislative circumstances, he and his party now pursue cementing the economic gains generated in his earlier terms, to ensure India continues making strides towards a modern capitalist economy that includes the wider populations and supports all Indians. Global markets will be monitoring the composition of the new cabinet and the introduction of the budget in July to ascertain that the Modi doctrine remains relevant, pro-business, and above all else, pro-India.

ADJUSTING THE SECTOR SAILS

Adam Turnquist, CMT, Chief Technical Strategist
Jeffrey Buchbinder, CFA, Chief Equity Strategist

https://www.kingwealth.com/blog

To say May was an eventful month for the market is an understatement. Investors navigated around the latter half of first-quarter earnings, a breakout to record highs for the broader market, elevated volatility across fixed income and currency markets, and a mixed bag of economic data — not to mention elevated political uncertainty stemming from the conviction of former President Donald Trump. Overall, markets shrugged off political uncertainty, bad economic data was mostly taken as good news for stocks by reviving hope for interest rate cuts, while good news helped write the goldilocks narrative of economic conditions being just right.

Last chance to register! We're hosting a free lunchtime webinar on Wednesday, June 5 on Artificial Intelligence and how it will impact the investment world. See the link below to register, and tune in to our webinar on June 5 to learn more.

https://www.kingwealth.com/2022-events-1

EARNINGS ARE DOING THEIR PART

Jeffrey Buchbinder, CFA, Chief Equity Strategist

https://www.kingwealth.com/blog

The first quarter earnings season is largely in the books, and it was excellent. In fact, S&P 500 earnings per share (EPS) would have been up double digits in the quarter if not for a big loss Bristol Myers Squibb (BMY) absorbed in an acquisition. Even with that nearly three-point drag from the drugmaker, a nearly 7% increase in earnings — the biggest since the first quarter of 2022 — is impressive. Big tech strength was again the primary driver, and estimates impressively rose.

We'll be hosting a free lunchtime webinar coming up on Wednesday, July 24, 12-1pm. Join King Wealth Planning and Goldman Sachs Asset Management for this informational webinar on the current market. We will discuss the last half of 2024 and insights on what we can expect for the rest of this year.

Visit our events page to register:

https://www.kingwealth.com/2022-events-1

HOW’S IT GOING? DEPENDS ON WHO YOU ASK

Jeffrey Roach, PhD, Chief Economist

https://www.kingwealth.com/news-1

The post-pandemic economy is treating people very differently, creating a headache for central bankers. The extreme differences can often get traced back to living situations, as renters have a very different experience than homeowners. Since millions of homeowners refinanced mortgages to extremely low rates a few years ago, the economy is less sensitive to interest rate policy. In fact, the Jackson Hole Economic Policy Symposium sponsored by the Kansas City Federal Reserve in August will debate the effectiveness and transmission of monetary policy because of these post-COVID-19 dynamics, likely revealing important investment implications.

PREFERRED SECURITIES: STILL OUR PREFERRED NON-CORE BOND SECTOR

Lawrence Gillum, CFA, Chief Fixed Income Strategist

https://www.kingwealth.com/blog

It continues to be a challenging environment for a lot of fixed income markets, especially higher quality markets. With the Federal Reserve (Fed) seemingly unlikely to lower interest rates until after the summer months (at the earliest), the “higher for longer” narrative has kept a lid on any sort of bond market rally. And while falling interest rates help provide price appreciation in this higher-for-longer environment, fixed income investors are likely better served by focusing on income opportunities. That’s where preferreds come in. With yields still elevated relative to history, we think preferred securities are an attractive option for income-oriented investors.

King Wealth Planning and Paul King were recently highlighted by the Grass Valley Downtown Association. Thanks, Mariah, for the great write-up!

SELL IN MAY? MAYBE NOT

Adam Turnquist, CMT, Chief Technical Strategist
Jeffrey Buchbinder, CFA, Chief Equity Strategist

https://www.kingwealth.com/blog

“Sell in May and Go Away” is one of the most widely used maxims on Wall Street. There is no shortage of financial media coverage on this topic as the calendar turns to May. However, this phrase may be more rhyme than reason, as stocks tend to trade higher during this period (especially more recently), subject to potentially elevated volatility. Of course, seasonality is one factor that could influence markets, but the economy and monetary policy are much bigger factors. With the Federal Reserve (Fed) pointing to higher-for-longer monetary policy last week (before Friday’s softer jobs report), we also explore how stocks perform during prolonged Fed pause periods.

THAT WAS QUITE A WEEK

Jeffrey Buchbinder, CFA, Chief Equity Strategist
Quincy Krosby, PhD, Chief Global Strategist
Jeffrey Roach, PhD, Chief Economist
Adam Turnquist, CMT, Chief Technical Strategist

https://www.kingwealth.com/blog

Last week was a pivotal one for markets, with the S&P 500 coming off a 3% weekly decline the week before. In terms of economic data, we got our first look at first quarter gross domestic product (GDP) as well as the March reading of the Federal Reserve’s (Fed) favorite inflation measure — the core PCE deflator. If that wasn’t enough to digest, over 150 S&P 500 companies reported quarterly earnings last week, including the first batch of big tech names. Stocks passed the test, with the S&P 500 up 2.7% for the week, recapturing most of the prior week’s losses despite a mixed GDP report and a double-digit decline in shares of social media giant Meta (META) on April 25, after its results. Here we recap the week’s events and check in on sentiment.

THE EVER-CHANGING MARKET NARRATIVE

Adam Turnquist, CMT, Chief Technical Strategist

https://www.kingwealth.com/blog

Volatility has come back into the market as the narrative shifted toward a higher-for-longer monetary policy backdrop. Signs of sticky inflation and a resilient economy, including a strong labor market, have underpinned the change in expectations. Yields have reacted by rerating significantly higher this month, while stocks have pulled back from overbought conditions. Technical damage is beginning to mount on the S&P 500, but its longer-term uptrend remains intact. The U.S. dollar has followed yields higher, creating headwinds for U.S. multinationals and currency stability headaches for other central banks.

REVISITING ENERGY

Quincy Krosby, PhD, Chief Global Strategist
Joshua Cline, Associate Analyst

https://www.kingwealth.com/blog

As the first quarter earnings season kicked off on April 12, expectations for the energy sector were decidedly negative. That low bar has tempted analysts to forecast a series of positive surprises as recent data releases for both the U.S. and China suggest a stronger economic underpinning, and the manufacturing sector appears to have bottomed in both countries. Oil demand — and prices — typically follow rising manufacturing and factory output, while rising consumer sentiment normally portends an increase in air travel, which also requires higher oil allocations.

Join King Wealth Planning for a valuable webinar on understanding Artificial Intelligence, how it works, why it matters, and the broad impacts of its implementation. We are collaborating with Goldman Sachs Asset Management to bring this important information to you and your family and friends. It’s a webinar, so anyone can attend from anywhere and benefit from this event. To register, simply go to:

https://attendee.gotowebinar.com/register/2028314618318352988