Personal finance insights: Market sentiments,investment strategies & economic trends
By: Krishna Gupta, YBB Personal Finance
SENTIMENTS
AAII Bull-Bear Spread +20.4% (high)
$NYA50R, NYSE %Above 50-dMA 53.17% (positive)
$SPXA50R, SP500 %Above 50-dMA 59.00% (positive)
Delta MSI 73.3% (overbought; it lags)
ICI Fund Allocations (Cumulative)
OEFs & ETFs: Stocks 60.98%, Hybrids 4.48%, Bonds 17.94%, M-Mkt 16.61%
INTEREST RATES
CME FedWatch
Cycle peak 5.25-5.50%
FOMC 9/18/24+ cut
FOMC 11/7/24+ cut (50 bps cut)
Treasury
T-Bills 3-mo yield 5.13%, 1-yr 4.10%; T-Notes 2-yr 3.66%, 5-yr 3.50%, 10-yr 3.72%; T-Bonds 30- yr4.03%;
TIPS/Real yields 5-yr 1.64%, 10-yr 1.69%, 30-yr 1.98%; FRNs Index 5.033%.
US Savings I-Bonds, Rate from 5/1/24 – 10/31/24 is 4.28%; the fixed rate is 1.30%, the semiannual inflation is 1.48%.
For current banking rates, see www.depositaccounts.com/
Stable-Value (SV) Rates, 9/1/24
TIAA Traditional Annuity (Accumulation) Rates
Restricted RC 5.25%, RA 5.00%
Flexible RCP 4.50%, SRA 4.25%, IRA-101110+ 4.50%
TSP G Fund 4.000% (previous 4.125%)
Due to publication lag, the data above are as of the Sunday preceding.
MARKETS
SEPTEMBER is off to a bad start. But the US markets have adjusted well to concerns about the AI/chips highflyer Nvidia/NVDA – a new Blackwell chip in 2025 would run AI 4x faster. Semi ETF SOXX may be attractive after August low-test.
GOLD has been rallying on geopolitical concerns, high US deficit & debt & central bank purchases (bullion ETFs IAUM, IAU, GLD, SGOL), but gold-miners (ETFs GDX, GDXJ) are lagging badly.
Soft landing & Fed rate cuts scenario should benefit consumer-cyclicals, financials, industrials.
Cash may be king now but that will be changing soon. Consider defensive stocks (ETFs XLP, XLU, XLRE, VNQ), dividend stocks (SCHD, NOBL), small-caps (IJR, SPSM), short & intermediate term bonds (SHY, VGIT, LQD), gold (IAU), & bank or brokered CDs.
With the US electricity demand soaring (from AI, data-centers, EVs), the NUCLEAR energy option may become viable again. There are 94 operating nuclear reactors in the US generating 18.6% of the US electricity. The US goal now is to triple the US nuclear power capacity by 2050.
MEXICAN President AMLO is rushing controversial constitution changes before his term ends on October 1 & his handpicked protégé Claudia SHEINBAUM takes over. She will deal with the aftermath, but she is more moderate. These developments have spilled over into the US-Mexico & Canada-Mexico relations.
CHINA’s economic troubles are hurting the US multinationals. Consumer confidence is low. The government’s timid efforts haven’t helped its disastrous property sector. The crackdown on big tech has restrained business enthusiasm. With production overcapacity, China is now focusing on manufacturing & exports, but other countries are responding by imposing tariffs. The US-China relations remain poor.
Focus this week is on #2 India ETF in the US, EPI with the AUM $4 billion & ER 0.87%. The firm WisdomTree is well-known for its lineup of fundamental &/or currency-hedged ETFs. EPI has weights based on earnings (i.e., not by market-caps), so it does have a large-cap orientation. A nearby chart from MFO Premium shows the data for EPI over 5 years – the total return (TR) & the net fund flows are from the start of the period, & the AUM history. This 5-yr period captures the pandemic & the recent bullish leg that began in March 2023.
There is also a newer WisdomTree INDH (05/2024- ; AUM $54 million only; ER 0.63%) that is currency-hedged. It’s LC-growth oriented, has only 75 holdings, & 47% in Top 10. It follows a market-cap index that is capped at 10% for a stock & 30% for a sector but is rupee-hedged. This hedging would be effective when rupee is weakening (as has been a trend) but won’t be needed when dollar is weakening.
RETIREMENT
Auto -enrollments & -escalations have increased participation in workplace 401k/403b plans. But there are problems with the job turnovers. Some employer contributions that may not have vested may be lost. Also, many simply cashout (with10% penalty plus tax before 59.5) instead of rolling over into IRAs or new employers’ 401k/403b. Newer rules make cashing out of large balances more difficult. Cashing out is undesirable & people may require more personal finance education. Bengen’s 4% SWR with COLA worked for the worst 30-yr stretches in the US (but not globally). Many can use higher 5% withdrawals with COLA but monitor & be ready to make interim adjustments.
For more information, see ybbpersonalfinance.proboards.com/
