W.P. "Bill" Atkinson, III

Certified Financial Planner TM / Attorney

Access Financial Resources, Inc.

3621 NW 63rd Street, Suite A1

Oklahoma City, OK  73116

(405) 848-9826

www.afradvice.com / bill@apaplans.com

October 2024
Market Update
(all values as of 11.28.2025)

Stock Indices:

Dow Jones 47,716
S&P 500 6,849
Nasdaq 23,365

Bond Sector Yields:

2 Yr Treasury 3.47%
10 Yr Treasury 4.02%
10 Yr Municipal 2.74%
High Yield 6.58%

YTD Market Returns:

Dow Jones 12.16%
S&P 500 16.45%
Nasdaq 21.00%
MSCI-EAFE 24.26%
MSCI-Europe 27.07%
MSCI-Emg Asia 26.34%
MSCI-Emg Mkt 27.10%
 
US Agg Bond 7.46%
US Corp Bond 7.99%
US Gov’t Bond 7.17%

Commodity Prices:

Gold 4,253
Silver 57.20
Oil (WTI) 59.53

Currencies:

Dollar / Euro 1.15
Dollar / Pound 1.32
Yen / Dollar 156.21
Canadian /Dollar 0.71
 

Macro Overview

Uncertainty among global markets rose as conflict in the Middle East elevated tensions and roiled energy markets. Oil and fuel prices spiked as the threat of supply constraints and the disruption of shipping routes imposed duress on an already fragile environment.

The aftermath of Hurricane Helene is estimated to result in roughly $34 billion in losses, after dumping a staggering 42 trillion gallons of rainfall and becoming one of the most destructive hurricanes on record. The massive destruction of homes, businesses and coastal areas is expected to possibly take years to repair and revitalize. The Federal Emergency Management Agency (FEMA) which has already been stretched thin by record-setting wildfires and other extreme weather events, has warned that the agency doesn’t have enough funding to make it through the 2024 hurricane season.

The port workers strike affected every port and major maritime trade gateway from Boston to Houston, where billions of dollars of imported and exported products flow. Economists believe that the damage from the supply-chain disruption may be widespread, especially hindering the nation’s retail sector. Union workers voted on postponing the strike and resuming work until January 15th, in order to allow for negotiations between employers and the International Longshoremen’s Association union.

A price war has emerged among restaurants and the fast-food industry for increasingly cost-conscious consumers, announcing promotions on popular menu items in order to help increase sales. Consumers have been cutting back and have been evading pricy restaurants and food items as budgets tighten up. The results of increasing promotional activity and cost-conscious consumers are considered to be deflationary.

The Federal Reserve reduced its key rate, the Fed Funds Rate, by half of a percent or 50 bps to 4.75% – 5.00%, from 5.25% – 5.50%. It was the first rate cut by the Fed since March 2020, during the onset of the pandemic. The Fed made it clear that it was not easing rates because of a crisis as it did in 2020, but rather to counter growing weakness in the labor market.

The initial rate cut by the Fed received a lukewarm response by domestic and international equity markets, as the Fed announced that rate cuts such as the initial reduction should not be expected to continue at generous as it was. The Fed’s reduction immediately affected consumer interest rates from mortgages to auto loans. The Fed can only control short term rates, while the fixed income market dictates intermediate, and long term maturities. Mortgage rates fell to their lowest levels in over a year in September.

Insurance premiums are expected to rise even further in the wake of the damage caused by Hurricane Helene, prompting some homeowners to sell or relocate because of unaffordable insurance. The insurance industry is on edge as rising claims progress as a result of the unpredictable hurricane season.

The tremendous demand for energy driven by Artificial Intelligence (A.I.) has for the first time in decades, garnered support to reopen and expand existing nuclear facilities, including the infamous Three Mile Island nuclear plant in Pennsylvania. (Sources: Federal Reserve, Treasury Dept., FEMA, Bloomberg, Dept. of Energy)

 

 

 
The Looming Debt Crisis: Interest Rates, Inflation, and Economic Instability

The Looming Debt Crisis: Interest Rates, Inflation, and Economic Instability

The U.S. economy is facing a growing financial storm, with the national debt exceeding $33 trillion and expanding rapidly. In a recent article by Peter Schiff, an economist and founder of EuroPacific Funds, he warns that if current trends continue, the debt could surpass $50 trillion within five to seven years. This surge is driven by massive government spending and growing deficits, where borrowing averages $1 trillion per quarter. Schiff argues that these growing debt levels are putting significant pressure on the Federal Reserve, forcing them to consider cutting interest rates, even though inflation remains elevated.
In contrast to the 1990s, when the US government 10-year Treasury Note still yielded over 6%, the U.S. government ran budget surpluses, and there was little pressure from national debt. Schiff notes that in the 1990s, the economy could support higher interest rates without the burden of servicing massive debt. “Consider that, just before the pandemic in 2019, the annual interest bill was around $400 billion. So, it’s surged nearly 3x in five years.” So, interest payments on the national debt is approaching $1 trillion annually, a sustained high-interest rate environment could see interest costs ballooning to $2 trillion if the debt reaches $50 trillion.

Schiff believes the Federal Reserve will eventually be forced to cut rates to manage the skyrocketing interest payments. However, this is not a reflection of economic strength but of the government’s inability to manage its fiscal responsibilities. By cutting rates, the Fed will increase liquidity, further weakening the dollar and accelerating inflation, making the situation even worse. Unlike the strong economy of the 1990s, the current U.S. economy is fragile, relying on debt-fueled growth and low interest rates to avoid financial strain. Schiff’s prediction is that these cuts will lead to a devaluation of the dollar and a new wave of inflation. As interest rates are lowered, the flood of money into the economy will drive up prices, reducing the purchasing power of consumers and leading to long-term economic instability. He argues that without addressing the root causes of the debt crisis—such as excessive government spending and unsustainable fiscal policies—the Federal Reserve’s actions will only worsen the economic outlook, pushing the U.S. closer to a financial collapse.

Nuclear Power Generation Expected To Increase As A.I. Requires More Energy – Energy Industry Overview

The tremendous onset of Artificial Intelligence (A.I.) has brought about an enormous increase in the demand for energy. A.I. encompasses a multitude of numerous electronic components that consume enormous amounts of electricity as well as generating vast amounts of heat. Expanded use of air conditioners and temperature controlling equipment is also consuming energy past levels seen in the past.

Natural gas powered stations as well as nuclear fueled generation facilities are becoming the most viable sources of energy to meet the rapid expansion of A.I.

The infamous Three Mile Island nuclear reactor in Pennsylvania, is scheduled to reopen in 2028 under a 20 year contract to power new and expanding data centers involved with the expansion of A.I. Numerous other facilities across the country are also undergoing upgrades and expansions in preparation for increased power demand and for growing revenues.

Sources: Dept. of Energy, Office of Nuclear Energy

 

 

 
Biden Admin Faces Backlash Over BLS’s 818,000 Job Overreporting

Biden Admin Faces Backlash Over BLS’s 818,000 Job Overreporting

In August 2024, Wall Street erupted in outrage after the Bureau of Labor Statistics (BLS) delayed the release of crucial labor market data, revealing an overestimation of 818,000 jobs in the past year. Initially set for a 10:00 a.m. release, the data was delayed, causing widespread confusion in the markets. To make matters worse, some banks were able to obtain this key information via phone calls, while the rest of Wall Street was left in the dark, further escalating tensions.
This mishandling exposed serious flaws in the BLS’s process, leading to accusations of favoritism and incompetence. As the delayed jobs report confirmed one of the largest downward revisions in recent history, market participants were left questioning the reliability of future government-released economic data. Many, including economists, expressed concerns over the selective disclosure of critical information, emphasizing the need for transparent and fair data practices to maintain confidence in financial markets. This latest blunder has compounded ongoing frustrations over the Biden administration’s handling of economic matters, particularly as it coincides with concerns over an election year. The labor market revision, alongside the disorganized release process, has created further volatility in already fragile financial markets, leaving many to question the overall competence of the administration’s economic team.
More Workers Think That They’ll Be Unemployed – Labor Market Update

Primary objectives of the Federal Reserve include securing the value of the dollar by ways of countering inflation, and maintaining a healthy and robust labor market by encouraging employers to hire and workers to find favorable positions. Workers’ expectations of what their job prospects might be in the future is closely tracked by the Fed and economists. Such data gives the Fed insight as to where the labor market might be headed. The most recent data released reveals that a growing number of workers expect to become unemployed in the next few months, a record high since 2014.

The recent data also identifies that more workers are becoming unhappy with their current jobs and transitioning more frequently between jobs. More workers nearing retirement are also inclined to work longer and foregoing retirement until later years. Economists and the Fed believe that lingering inflationary pressures have imposed additional burdens on employees requiring them to work longer due to heightened living costs. (Source: Federal Reserve)

 
average rate on a 30 year fixed mortgage fell to 6.08% in September

Mortgage Rates Starting To Fall – Housing Market Overview

With the Federal Reserve’s initial rate cut this past month, interest rates on consumer loans from automobiles to credit cards began to see a decrease as well. Significantly affecting the housing market and homebuyers across the country are mortgage rates, which fell to a 12 month low following the Fed’s rate reduction in September. The average rate on a 30 year fixed mortgage fell to 6.08% at the end of September, down from 7.79% in October 2023.

Even though mortgage rates have been falling, the current home turnover rate is the lowest in 30 years, with roughly 25 of every 1000 homes being sold or bought so far this year. The lack of inventory nationwide has added to already tight supplies and limited new construction. Certain geographic regions as Florida and parts of the Southeast are starting to see a pullback in values as the cost of insurance becomes unaffordable for many homeowners.

The average 30-year fixed mortgage rate for the past 53 years is 7.72%, which is where the average rate was in the third quarter of 2023. The question everyone has is how much lower could mortgage rates fall as the Fed gradually decreases the Fed Funds Rate. Even at current levels, rates are below the 53 year average. As mortgage rates have fluctuated over the past 53 years, so have home prices. The average home in 1971 was valued at roughy $25,000, whereas the average home price was $412,300 in the second quarter of 2024.

As rates have risen, homes have become vastly unaffordable for millions of Americans, restricting many from becoming first time homeowners or simply moving. There remains tremendous hesitation among millions of homeowners that currently have historically low mortgage rates, which would be forgone should their house was sold.

Sources: FreddieMac, https://www.redfin.com/news/home-sales-turnover-2024/, Federal Reserve

 

 

 
Charted: U.S. Net Immigration, by President (2001-2024)

 
Know the Exceptions to the 10 Percent Penalty on Early IRA Withdrawals
Know the Exceptions to the 10 Percent Penalty on Early IRA Withdrawals
Early withdrawals from a traditional IRA before age 59 1/2 generally incur a 10 percent penalty tax on the taxable portion of the withdrawal. There are several exceptions to this rule that can help you avoid the penalty under specific circumstances. Below, we have outlined the key exceptions that may apply to your situation.
  • Substantially equal periodic payments. You can arrange for a series of substantially equal periodic payments. This method requires careful calculation and adherence to strict rules but allows penalty-free withdrawals.
  • Medical expenses. Withdrawals for medical expenses exceeding 7.5 percent of your adjusted gross income, or AGI, are exempt from the penalty.
  • Higher education expenses. You can use penalty-free withdrawals for qualified higher education expenses for you, your spouse, and your children.
  • First-time home purchase. You can withdraw up to $10,000 (lifetime limit) for qualified home acquisition costs without penalty.
  • Birth or adoption. You can withdraw up to $5,000 for expenses related to the birth or adoption of a child.IRS Raises 2023 Tax Brackets
  • Emergency expenses. Starting January 1, 2024, you can withdraw up to $1,000 annually for emergency personal expenses without penalty.
  • Disaster recovery. Withdrawals for qualified disaster recovery expenses are exempt from the penalty, up to an aggregate limit of $22,000.
  • Disability. If you are disabled and cannot engage in substantial gainful activity, you can withdraw funds without penalty.
  • Long-term care. Beginning December 29, 2025, you can take penalty-free withdrawals for qualified long-term care expenses.
  • Terminal illness. Withdrawals due to terminal illness are exempt from the penalty.
  • Post-death withdrawals. Amounts withdrawn after the IRA owner’s death are not subject to the penalty.
  • Military reservists. Active-duty military reservists called to duty for at least 180 days can withdraw funds without penalty.
  • Health insurance premiums during unemployment. If you receive unemployment compensation for 12 consecutive weeks, you can withdraw funds to pay for health insurance premiums without penalty.
  • Domestic abuse victims. Starting January 1, 2024, you can take penalty-free withdrawals of up to $10,000 if you are a victim of domestic abuse.
  • IRS levies. Withdrawals to pay IRS levies on the IRA account are not subject to the penalty.
It’s important to note that SIMPLE IRAs incur a 25 percent penalty for early withdrawals within the first two years of participation. Additionally, Roth IRAs have different rules, allowing penalty-free access to contributions but potentially taxing and penalizing withdrawals of earnings.