Stocks Endure Difficult Third Quarter – Domestic Equity Overview

Equities across the board were down in the quarter ending September 30th, as the market continues to react to global turmoil and the Fed’s aggressive interest rate spikes. Sectors that held up the best relative to other sectors included biotechnology, healthcare services, and oil/gas, joined by banks, semiconductors, and healthcare equipment. Various equity analysts believe that the current rallies in equities are bear market rallies with little or no fundamental strength. Optimistically, certain sectors are establishing more attractive valuations as prices have receded.(Sources: S&P, Dow Jones, Bloomberg)

Short-Term Bond Rates Remain Higher Than Long-Term Bond Rates – Fixed Income Review

Rising rates are being compounded by the Fed’s suspension of buying U.S. Treasuries and mortgage bonds on the one market. Along with the Fed’s current increase in short-term rates, the additional pressure on the fixed-income market has exacerbated the rapid rise in interest rates. Short-term Treasury bond yields remained higher than longer-term maturities in September, known as an inverted yield curve. The 2-year Treasury yield finished September at 4.22% while the longer-term 10-year Treasury yield was at 3.83%.(Sources: U.S. Treasury, Bloomberg, Federal Reserve)

U.S. Strategic Oil Reserves Dwindle Down Sharply

To combat rising gas costs, the Biden administration ordered an unprecedented release of barrels from the strategic reserves in March. Throughout the summer, Americans experienced sticker shock as gas prices rose to over $6 per gallon in some places with already high taxes, including California.

On Wednesday (October 4th), the Biden White House criticized OPEC and its allies for making a “shortsighted decision” to reduce oil production by two million barrels per day. The action may result in significantly higher petrol prices in the US. Biden’s government has been stifling domestic oil production while continuing to release barrels to cover costs, resulting in the US Strategic Oil Reserves being almost half empty already. As a result, Biden’s political emptying of the SPR has left it with a record low of just 22 days of supply.  (Source ThePostMillennial.com; Zerohedge)

Homeowner’s Insurance Basics

What’s Covered

A homeowner’s insurance policy is a package of coverages, including:

• Dwelling: Covers damages to your house and any attached structures, including fixtures such as plumbing, electrical and HVAC systems.
• Other Structures: Pays for damage to unattached structures, including a detached garage, tool shed, fence, etc.
• Personal Property: Covers personal possessions such as appliances, furniture, electronics, clothes, etc.
• Loss of Use: Reimburses for additional living expenses while you are unable to live in your home.
• Personal Liability: Pays claims if you are found liable for injuries or damages to another party.
• Medical Payments: Pays the medical bills incurred by people who are hurt on your property or by your pets.

Remember, these coverages pertain only to losses caused by a peril covered by your policy. For instance, if your policy doesn’t cover earthquake damage, then losses will not be reimbursed.

Types of Homeowners Policies

The types of covered perils will depend on the type of policy you buy. The Special Form is the most popular policy since it insures against all perils, except those specifically named in the policy. Common exclusions include earthquake and floods. Typically, flood insurance is obtained through the National Flood Insurance Program, while earthquake coverage may be obtained through an endorsement or a separate policy.

Limits of Coverage

Your policy will impose limits on the amount of covered losses. If you have a valuable art collection or jewelry, you may want to secure additional insurance on those items. Be aware of whether your policy insures for replacement cost (pays the cost to rebuild your home or repair damages using materials of similar kind and quality) or actual cash value (home value based on age and wear and tear), which may not cover all your losses.

Coordinating Umbrella Liability Coverage

Individuals with significant assets may want to consider attaching an umbrella policy to their homeowner’s policy, which provides liability coverage in excess of the liability limits of your current policy. I usually recommend somewhere between 1 and 5 million depending on  the value of your assets. In the end, it is a cost/benefit analysis that you need to review with your insurance agent and advisor.