Evans Wealth Management Blog

Articles written by Evans Wealth Management are designed to educate clients & potential clients on concepts important to their financial future.

America First: Policy-Driven or Coincidence?

 

During the Trump presidency, the US stock market outperformed all major world economies for the period. (See the above chart for details.) For a president with a campaign theme of America First, this feat is incredibly ironic. Maybe, it was more than just rhetoric??? You be the judge.

For all the noise about trade wars, it is interesting to note the bickering didn’t seem to hurt the US or Chinese economies.

Chart Source: Bespoke Investment Group

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Dire Predictions of Corporate Debt Appear Overstated

Prior to the coronavirus pandemic, many corporations viewed corporate debt markets a cheap source of capital. As a result, they loaded up their balance sheet with bonds in anticipation of higher rates in the future. When the virus cases escalated and decisions were made to lockdown the economy, many experts predicted wide-scale downgrading of bonds from investment grade to junk status (aka, fallen angels). Now that the worst of the virus cases are behind us, let’s take a look at the current state of the corporate bond market.

The accompanying chart shows several bond market metrics reflecting its health. To be fair, the number of downgrades to junk status clearly hit record volumes (see Fallen-angel debt tally chart). However, they appear to have fallen short of many experts’ expectations.

Many attribute the lack of downgrades to the Federal Reserve extending its corporate bond purchase programs to issuers losing their investment grade rating. This step, taken in April, helped open the funding markets to these troubled firms and kept them in business.

The other reason cited for the fewer downgrades is the amount of cash on hand. When the Fed cut interest rates to zero, firms traded shorter-term borrowings for longer-term debt and kept the proceeds as emergency cash to help them weather the pandemic. During an economic crisis, liquidity becomes paramount, so firms boosted their cash reserves to maintain solvency.

The above isn’t to suggest firms are totally free of future financial concerns, but their actions have certainly bought more time. Now we need the economic recovery to continue and life return to normal, so the hardest hit firms regain their footing before their cash runs out.

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The Social Security Admin Announces Its New Portal

Social Security plays a large role in funding retirement for many Americans. However, many struggle to find information relevant to their retirement and are often left on hold for hours when they call. Fortunately, the Social Security Administration introduced a portal in June making the website easier to navigate and locate crucial information. It can be found at https://www.ssa.gov/benefits/retirement/.

The website was redesigned to share more condensed and summarized information. It has been adapted to be more accessible on mobile devices. From the portal, you can apply for Social Security easily and sign up for updates from the SSA.

The Social Security portal allows one to name a representative payee, an individual or organization that manages one’s Social Security payments on their behalf (if one becomes unable to do so). One can add up to three representative payees and adjust them through the portal at any time.

This is just one of the updates the SSA will be introducing throughout 2020 to simplify the process of applying for Social Security benefits. For more information, the SSA press release is located at https://www.ssa.gov/news/press/releases/2020/#6-2020-1.

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Cybersecurity Threats and Best Practices

During a recent conference, a session was held on cybersecurity threats and best practices. The following is a summary of several points likely to benefit you.

  • Strong Passwords. Many of the more famous hackers were perpetrated because the passwords were easy to guess. Many custodians now offer voice-passwords and 2-factor authentication to better secure your accounts. Contact them to take advantage of either opportunity.
  • Email isn't safe. Don’t send anything in an email that you wouldn't want on a postcard. In other words, don't send sensitive documents via email. Using a firm’s document vault or secure email are ideal alternatives.
  • Phishing awareness. The latest scam is sending an email looking like it is from your custodian stating they detected unusual activity on your account. You are asked to login to confirm certain transactions. The next screen is a duplicate of the custodian’s website except all it is doing is capturing your login information. Just be aware.
  • Install updates timely. Frequently, security patches are part of Windows / Apple updates. Most hacks happen on devices with outdated versions of software.
  • Destroy completely or wipe clean hard drives of old pcs. People are replacing devices at faster rates than in the past leading to more being thrown away. Make sure the hard drive can't be recovered potentially exposing confidential financial information enabling a hack of your accounts.

Even at our firm, two families' email accounts have been hacked, the hacker discovered I was the family’s advisor and sent me an email requesting money. Fortunately, I know them too well so action was taken immediately to secure their accounts, but the threat is real.

Hope you will take one step to secure your information beyond what it is today.

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Mid-Year Economic and Market Review Presentation

We live in a very unusual time. With the pandemic causing significant economic uncertainty, many are wondering what is next. Below is a video reviewing the market performance to date and analyzes the most recent data to determine the state of the economy.  This is for anyone who appreciates a fact-filled assessment of the current environment.

 

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