What does this mean to you?
If this continues, it will weaken the dollar and cause further inflation.  Commodities and goods will cost more dollars and the dollar will eventually weaken against other currencies because it is no longer being used by the whole rest of the world.  The amount of money flowing into our Treasury, and therefore our markets, will diminish.  Treasury bond interest rates could soar, requiring the governments to pay even higher rates to service ~35 Trillion in existing debt.  We already spend more on debt interest than on national defense or Medicare.  Our great companies will also struggle under the pressure of higher rates and be less attractive to investors both here and abroad.
What am I doing about it?
KCG has built two composite portfolios.  Combined in different proportions, Bond Ladder and Blended Equity Securities models work together as Conservative, Moderate or Aggressive investment accounts for our Clients.
Since 2017, we have focused on the use of individual bonds rather than bond funds in the fixed income portion of our diversified accounts. The advantage of a ladder of individual bonds is that, barring a default, we can be sure of how much income will be generated annually, and how much liquidity will be generated upon maturity (or call).  Especially for Client who are taking recurring distributions, they can be assured that the cash they need will be available regardless of whether the market is going up or down.  They won’t have to sell a falling stock or variable bond fund if the market happens to be down when they need to take a distribution.
KCG’s stock models have always been diversified across asset classes, sectors and styles similarly to the S&P 1500, then adjusted tactically to profit from opportunities and mitigate risk.
Today the selection of securities in our models involves a weighted consideration for a company’s ability to pivot, should the U.S. dollar experience a crisis.  By investing in U.S. domiciled multi-national companies, we believe we are mitigating some of the de-dollarization risk; because these companies have the wherewithal to pivot to other currencies should the need arise.
Bonds would be especially impacted should we experience a crisis of the dollar.  However, just as our diversified portfolios are built so that the bonds protect you when the stock market falters; we believe that our specific stock choices will help to protect your principal if the bond market experiences such a hit.  We are proactively developing a global footprint for preserving and stabilizing capital while enhancing growth.
If you’d like to know more, call me on my cell at 912-224-3069 to discuss!

Volatility returned to the equity markets in July as earnings became a focal point for technology and other growth oriented sectors. A weaker than expected jobs report along with an increase in the unemployment rate to 4.3% ushered in a flurry of worry surrounding the continuation of economic expansion.

The ongoing conflict in the Middle East, should it escalate, may further impede on critical shipping routes and oil transports, affecting the delivery and price of goods and commodities worldwide. There is a remote possibility that the Fed may actually lower rates sooner than September and perhaps even more than anticipated should economic data and market dynamics warrant it.

Data complied by the Federal Reserve Bank of New York found that consumers are increasingly falling behind on debt payments, with delinquency rates on credit cards rising above 3% in the first quarter, the highest level since 2011. The initial rate cut is highly anticipated as economists believe that consumers can only endure so much more.

Unemployment claims rose for the ninth consecutive week in July, the longest stretch since 2018, raising the unemployment rate to 4.3%. The data suggests that people are having rising difficulty in finding a job, as companies pare back on hiring and initiating layoffs.

A closely tracked consumer sentiment index eased in July to an eight-month low as high prices continued to weigh on attitudes about personal finances. The University of Michigan Sentiment Index fell to 66.4 in July, down from 68.2 in June. The drop in sentiment reflects the continued high costs of borrowing as well as ongoing inflationary pressures with food, energy, insurance, and medical expenses.

In a sign that economic conditions are contracting in China, the Chinese government cut both short term and long term rates in July with the intent to boost growth as the country’s economy has rapidly slowed down. China is currently struggling with deflationary pressures as well as a significant real estate property crisis.

A major malfunction with a widely used software platform caused widespread outages and disruption among various industries in July, The outage exposed the vulnerability to global software platforms and systems affecting various industries and companies worldwide.

Elevated interest rates continue to place pressure on the nation’s deficit, costing the U.S. government billions in additional interest as Treasury rates have risen. In 2023, the interest payments reached approximately $1 trillion, driven by high interest rates and a national debt of $34 trillion. (Sources: Treasury Dept., Federal Reserve Bank of New York, University of Michigan, Labor Dept.)