A Patient Fed, an ECB About-Face, and RSWA March Madness!

Posted in , , , , , By David M. Smith

Economic news this week was broad coming from the Fed Chair, the European Central Bank, plus an array of economic data.  Brexit is also coming to a critical point and could be disruptive to businesses globally.  And March Madness is about to start, and for those who are interested, we have an invite to participate in the RSWA bracket pool.    

Thank you for reading The Friday Buzz.  Please share with anyone who may have interest.  Enjoy March Madness and the articles!

  • The Fed Chairman Interview:  Jerome Powell, the Federal Reserve Chairman, was interviewed on 60 Minutes Sunday.  He said the Fed would be data-driven and patient with future rate hikes.  He also said the law was clear that he couldn't be fired, and he intended to serve his full four-year-term.  Though he was a little slow reacting to last fall's changing economic dynamics, overall, he seems to be a reasonable and capable Fed Chairman.
  • Job Growth Slowed:  The February job growth was a paltry 20,000 jobs.  But it is too soon to read into that number and many times it is best to look at a three-month average to smooth out volatility.  Despite the low overall number, there was still good news about job growth
  • RSWA NCAA Bracket Challenge!  March Madness starts next week.  This year, RSWA has a bracket pool through CBS Sports and we are inviting friends of the firm to play along.  Anyone who joins will be able to see the other players and standings of the group.  A small prize will go to the winner.  If you are interested in playing, email David Smith no later than Wednesday, March 20th at dsmith@robinsonsmithwealth.com.  Have fun watching the tournament and go Bearcats!  (My alma mater, the University of Cincinnati)
  • ECB Back to Stimulus:  In a major reversal, the European Central Bank is going to reinstitute stimulus programs.  All of their quantitative easing programs ended late last year but now they pledged to hold interest rates extremely low and provide banks with ultra-cheap long-term loans.  The policy moves are a reaction to recent slowing growth and indicates a proactive ECB willing to react quickly to conditions.
  • Equipment Purchases are Up:  Orders for business equipment grew the most in half a year.  Non-military capital goods orders were up 0.8% in January.  Though the gain is not as high as some of the 2017 and early 2018 months, it is a reversal from the lower readings in the last half of 2018.
  • Credit Freezes:  We usually recommend that clients freeze their credit unless they plan to apply for a loan or credit card soon.  But what about the credit of your children?  Most don't think about it, but your children's credit is vulnerable as well.  Also, dependent kids (and their parents) may not be looking at their credit so fraud and errors can occur for a long time.  A good first step is to check your kid's credit and then decide if you should freeze it. 
  • The Brexit Countdown:  The members of U.K. parliament voted down the latest deal on leaving the European Union.  The deadline for leaving the EU with a plan is March 29th. If there is no deal, the U.K. will be facing a hard exit, or no deal exit, which will be difficult on British businesses and travelers.  There is the possibility of extending the deadline, and that may be the next logical step for all involved.  Expect to see chaotic parliamentary machinations to continue for the rest of the month.
  • Traveling to Europe in the Future Will Require a Visa:  In 2021, U.S. citizens will be required to obtain a visa to travel to parts of Europe.  The European Parliament created the rule last July, and it affects 60 countries, including the U.S.  The new rule was implemented for security reasons so European officials have more information on visitors.  Currently, U.S. citizens can visit Europe visa-free for up to 90 days.
  • The U.S. Trade Deficit Widens Further:  Despite the efforts of the Trump administration, the U.S. trade deficit widened last year.  In 2018, the deficit grew 10% to the largest annual trade deficit on record hitting $891B.  Even tariffs and tough talk did not avert a record trade deficit with China.  If the U.S. economy is strong, the trade deficit will probably remain intact.
  • Travel Tips:  Ever want to avoid a bad cup of coffee on the road?  Read this road warrior's travel tips on coffee, exercise and room service.  When I travel, I like to take a few packets of Starbucks Via Instant Coffee - then I only need to locate hot water to have a decent cup of coffee.
david-m-smith

About the Author David M. Smith

David is a Senior Financial Advisor and the firm’s Co-Chief Investment Officer. He has more than 20 years’ experience in the financial services industry and holds the highly respected Certified Investment Management Analyst™ and Certified Financial Planner™ designations; he is a Co-Managing Member of the firm.
Disclaimer and Disclosures: Past performance is no guarantee of future results. The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. Our opinions are subject to change without notice as market and economic conditions shift.