Market Update 12.9.24
Our Investment PerspectiveNow that the election is concluded there is improved clarity on the policy and financial impacts ahead. Generally speaking, taxes are expected to stay lower with the administration’s goal of extending the 2017 tax cuts when they expire at the end of next year. Inflation could see a second surge due to U.S.-imposed tariffs and likely retribution from our trade partners. Higher inflation will keep longer-term interest rates higher (including mortgage rates), even while the Federal Reserve moves short-term rates lower, so we expect a steeper yield curve going forward. Finally, U.S. stocks will be expected to outperform foreign markets due to our ‘America First’ policies, but we cite current valuations on U.S. companies as a risk to this thesis.
We are considering the various policy changes in our investment analysis, of course. There are a few steps you can take to stay ahead of these developments:
1. Monitor the interest rates being paid on your savings and outside investment accounts. Short-term rates are moving lower due to the Federal Reserve’s actions and will continue to do so. Consider locking in better rates now using C.D.’s or intermediate term bonds, if the funds do not need to be immediately available.
2. If you are planning a large purchase, such as a car or appliance, consider making the purchase sooner versus later. Inflation on imported items, or items made with imported parts, could climb sharply once tariffs are applied.
3. Pay down any debt that has an adjustable rate. Make sure that any purchases made via credit card are paid off at the end of the month incurred. We are happy to help analyze your outstanding debt to help you prioritize which to address first.
4. Above all, stick with your long-term planning. These changes could be reversed in four years, as we have seen with past changes in leadership. We want to be strategic in the short term but always keep the key focus on your long-term goals and the strategies we have outlined to attain them.
Our team is always happy to discuss the expected changes and how they will impact you specifically, so if you have more questions, please reach out to your Buffington Mohr McNeal advisor, or anyone at our firm.