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Financial Focus

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Forecasting—More Art or Science? Thumbnail

Forecasting—More Art or Science?

Many people from all walks of life seem to enjoy reading articles or listening to shows where “experts” forecast the future. Predicting what will happen in the future is one of those basic human behaviors that seem so appealing. Who wouldn’t want to invest 10 minutes of their time to listen to an expert who, in that small timeframe, will provide the audience with some ingenious piece of information that will allow them to get rich quick?

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Market Commentary, September 2019 Thumbnail

Market Commentary, September 2019

One partial explanation for economic weakness could come from the financial sector. Banks and other financial institutions derive a good portion of their income from lending at longer-term rates and borrowing at shorter-term rates. When the spread begins to narrow and possibly turns negative, profitability can take a hit. This has been reflected in weakness in bank stock performance that strongly correlates with moves toward a flatter yield curve. While it is difficult to hold a single sector responsible for weakness in the overall economy, the financial sector is a critical economic driver, and therefore, can increase the likelihood of broader weakness.

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Everybody Knows Thumbnail

Everybody Knows

In a recent call with a bond fund manager that we follow, he related that just five months ago, he was getting calls asking him “Why aren’t you short the Treasury? Everybody knows that interest rates are going to five percent.” As many of us know, not only did interest rates not rise, they have dropped sharply and had this manager based his decision making on what “everybody knows,” the investors in his strategy would have realized significant losses.

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Financial Strategies for the Sandwich Generation Thumbnail

Financial Strategies for the Sandwich Generation

Welcome to the “sandwich generation,” where a growing number of adults find themselves sandwiched in between two generations, serving as the glue that holds the entire family together. Today, close to half of the adults in their 40s and 50s have at least one parent 65 or older as well as one or more children under the age of 18.

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The Truth About Interest Rates and Yield Curves Thumbnail

The Truth About Interest Rates and Yield Curves

Interest rates are really important. The prevailing interest rate environment determines how much interest we pay on our mortgages, car loans, student loans, and any other loan of which you can think. Interest rates also determine at what rate corporations can borrow to invest in and grow their business. They also determine the type of yield investors and depositors can earn on the hard-earned funds that they lend to banks and/or corporations for a finite period.

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Market Commentary, July 2019 Thumbnail

Market Commentary, July 2019

As we move into quarterly earnings season here in the U.S., the economic backdrop is littered with mixed signals. On the positive side of the ledger, we are seeing a healthy consumer buoyed by steady employment and improving wages. Stable inflation and an accommodating Federal Reserve also help. On the negative side of the equation, there is lingering political uncertainty due to what feels like never-ending trade tensions. Corporate confidence is wavering, limiting capital expenditures and earnings expectations for the most recent quarter are muted.

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