Coronavirus Still the Focus, Shrinking Populations & How to Fly Through Airport Security!

Posted in , By David M. Smith

The fears surrounding the coronavirus that dominated investor's concerns at the end of January and in early February started to ease up a few days ago.  Reports started coming out that government actions in China had reduced new cases, meaning the virus could be peaking.  AP News  With that risk potentially diminishing and positive comments from the Fed, the markets reacted very positively, and stock indexes hit new record highs.  But by Thursday, China had reported a big uptick in cases and the markets reacted negatively.  So, for now, the virus is the big market mover and will be the focus.  Researchers are working on a vaccination for the virus, but it is in the early stages.  WSJ  Until the virus has peaked and is in the rear view mirror or until a vaccination is available, it will continue to affect the markets and earnings outlook.

  • Fed Speak 101:   The Federal Reserve Chair, Jerome Powell, testified before the Senate Banking Committee this week for the Semi-Annual Monetary Policy Support.  He commented on a wide range of topics and questions including climate change, inequality, and the coronavirus (which he said they are carefully watching).  Probably his most important comment was that the U.S. economy is in a very good place and that "There's no reason why the expansion can't continue.  There's nothing about this expansion that is unstable or unsustainable."  Yahoo Finance
  • Strong Job Growth Continues:  The economy added 225,000 jobs in January.  This was well above expectations.  Healthy job growth is essential for the U.S. consumer-driven economy and a great way to start off the year.  Wash Post  
  • The Shrinking Global Population and the Scarcity of Children:  More and more countries' populations are shrinking.  Japan's population is currently shrinking by 250,000 people per year.  Without immigration, the U.S. and Europe are also shrinking.  And by 2050, 48 countries will have smaller populations and some by as much as 15%.  This is a massive shift.  Many social programs are built on the foundation of growing populations and more workers paying the benefits of those older than them (think Social Security and Medicare).  This is a topic that will continue to come up and need addressing in future years.  World Economic Forum  AXIOS  AXIOS   
  • Housing Construction Heating Up?  Ever since the financial crisis, home construction has not rebounded to the levels expected by experts for new families and replacing existing stock.  There are some signs this is ending.  In December, housing starts jumped 16.9% to an annualized rate not seen since 2006.  It's only one month but it's being driven by low mortgage rates, strong job growth, and the largest demographic group in history, the Millennials, finally starting to enter the market in force.  If this continues, it will be another boost for the economy.  CNBC  Knowledge@Wharton
  • Protect Your Estate from Taxes:  Currently, only the very wealthy in America pay estate taxes when they pass.  That is due to the gift tax exclusion currently set at $23.2M for a married couple and half of that for single filers.  Those exclusion amounts are set to sunset after 2025 and revert to lower 2017 levels.  Lawmakers could institute even lower thresholds than 2017 or create other ways to tax "wealthy" estates and proposals are floating out there.  If you have sizeable assets, it may be time to update your estate plan and take advantage of the current high exclusion amounts.  FA Magazine   Tax Policy Center
  • How to Best "Fly Through" the Security Line at the Airport:  Like most folks, when I travel, I want to spend as little time in the security line as possible.  There are some choices out there like TSA Pre-Check, Global Entry, and Clear, and this article gives you the low-down on how to choose a service to expedite your security line wait.  CNBC
  • Last Minute Valentine's Day Gifts:  In case you forgot, today is Valentine's Day.  It's the day you get your main squeeze something special to show your love and appreciation – or end up in the proverbial doghouse.  For those of you who just thought it was another Friday, click on the links for some last-minute ideas.  Esquire  Today 

Thank you for reading The Friday Buzz!  Have a great weekend!

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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.
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