Weekly Reflection for March 15, 2024

The Week - An Update in Charts

The three major averages are little changed in value this week, or even over the last three. Momentum has slowed for stocks which are now over the hump of earnings season and enthusiasm is waning for some of the most influential companies in the world. For example, Tesla down 28% year-to-date and Apple is off 12% YTD. Next week's Federal Reserve meeting will give something for investors to chew on when they issue their comments on the economy and interest rates.

No one promised a straight ride down on disinflation train, however, consumers were very disappointed that February's inflation data has been retracing some ground and heading up. Inflation, depending on which metric is considered, is 3.2% to 3.8%.

The Federal Reserve meeting next week will likely end without a lowering of the Federal Funds rate from the 5.25% - 5.50% range. It is still expected that rates will be cut three times by the end of the year, potentially starting in May or June.

The White House recently released an update on the Bipartisan Infrastructure Law, which has resulted in money spilling out all over the country for the last two years.

$442 billion has been spent among nine major categories. Transportation projects will slurp up the most of the money, some 60%, and includes work on roads, bridges, airports, waterways and electric vehicle infrastructure.

Money for all of the projects will be spent in and impact every state, Washington D.C. Puerto Rico and other territories. The projects overlap 2022’s CHIPs and Science Act, which grants money to private corporations with the aim of shoring up America's semiconductor supply and therefore improve our security and economic resilience.

This question comes up every four years - how does the stock market perform in a Presidential Election year? Meh. There really is no winning combination looking all the way back to the 1948 election, as the economists at U.S. Bank did recently. The tail on this dog and market will remain our GDP growth, interest rates and inflation, and not so much the rematch between President Biden and former President Donald Trump, as close as it seems it will be.

Per data from Vanguard Group, in 2022 and 2023, "hardship withdrawals" from 401(k)s hit the highest percentages ever. Hardship withdrawals from retirement accounts are subject to income tax and a 10% Federal penalty since the money is not associated with an "exempt" expense such as a new home or education, and the account owner is younger than 59.5.

In 2023, 40% of account owners said that they were trying to avoid foreclosure on their homes. 75% withdrew amounts of $5,000 or less, underscoring the concern that Americans still do not have enough money in emergency cash reserves.

Did you miss out on the latest "it" item when swinging through Trader Joe's recently? No worries, you can buy this highly desired tote one on any number of resale websites.

On Poshmark, which is better known for sales of used high-end clothes and accessories, you can get your tote for $20. Or head over to eBay where a seller will give you four for $90. (Surely, with all the

bellyaching over how high prices are on the shelves at grocery stores, people have better things to do and spend their money on these days, right? Right? )

Three Prongs of Estate Planning

Planning a vacation is fun - and see our thoughts on the upcoming vacation season below. But other than for a few souls, planning for your estate is less fun. Use these three tips to make your organization easier.

Start by thinking about how to get what you currently have over to the people that you want to receive it in a way that is efficient and controlled. It is not as challenging as you may think. It does take time and often the help of an attorney who specializes in getting the language down correctly, but your heirs will be so grateful that you took it on.

First, consider a Revocable Trust, if you have young dependent children, dependent elderly family members or heirs who will need help managing an inheritance. A trust is like a will but this document allows heirs to avoid probate and keep your estate details private. Revocable means that you can make changes in the future.

Second, make sure you retitle your assets into the name of the trust once it is setup. For example, brokerage accounts, your real estate, and bank accounts can all be labled this way. If no assets ever get titled in your trust, it renders all of the work you put into writing it much less powerful.

Third, make sure you have the four trust “cousins”, like a durable power of attorney (to help with financial day-to-day decisions), a health care proxy (to help with health care decisions), an advanced health care directive (also called living will) and a HIPAA release (so that your loved ones can get information on your health situation from medical providers).

We also encourage individuals to consider a Letter of Instruction that gives your heirs instructions on where to find things if you are ever incapacitated or when you die. A sample one can be found on our website here.

Spring is Upon Us - So Are Vacations

The annual vacation season that runs from spring break this month through early September is underway. It has been a cold and wet winter so many are in desperate need of Vitamin D and relaxation. Families will be swarming amusement parks, the great outdoors and of course the beaches. We are out of the “revenge travel” phase during which people wanted to travel where ever for any cost just to not be stuck at home during 2020 and 2021. But this year it is expected fewer will get away too far from home. Per Vacasa, the online lodging-rental business, only 35% of families will travel for spring break compared to 41% in 2023.

Traveling still costs plenty. A family of four will spend nearly $8,000 on a week-long vacation in 2024, which includes the flight, car rental, and entertainment.

Families with young children will probably hope to avoid big kids, like those in college, who treat Spring Break like a mad long-deserved celebration after spending January and February in class. 1.5 million U.S. college students travel for spring break annually and spend approximately 2.25 billion dollars. That’s a lot of dough in a short period of time. And although their dollars are appreciated, the debauchery is not.

Miami Beach Florida officials have already

declared weekend curfews and restricted beach zones. Certain areas will double-fine miscreants if found in violation of basic traffic and public behavior

laws. Officials are trying to avoid what they call “dangerous mayhem”. In 2023 there were two fatal shootings and 488 arrests in Miami Beach. The city is determined to avoid a repeat and would prefer that college kids would book elsewhere, even though Miami Beach is an annual favorite. In an attempt to dissuade young visitors, the city recorded a PSA to “break up” with spring breakers. “It’s not us, it’s you” says one in the video; another says “maybe we can talk when you are done with your Spring Break phase”.

It has to hurt Miami Beach to willingly turn away those dollars. Tourism in coastal cities during the last two weeks of March is survival for many businesses, which earn some 15-20% of their annual revenue then.