Wes Gautreaux

Summit Financial Wealth Advisors

326 Heymann Blvd

Lafayette, LA 70505

337.232.1141

http://www.summit-financial.com

Summit Financial Summer 2021 Newsletter
Market Update
(all values as of 04.29.2022)

Stock Indices:

Dow Jones 32,977
S&P 500 4,131
Nasdaq 12,334

Bond Sector Yields:

2 Yr Treasury 2.70%
10 Yr Treasury 2.89%
10 Yr Municipal 2.72%
High Yield 6.64%

YTD Market Returns:

Dow Jones -9.25%
S&P 500 -13.31%
Nasdaq -21.16%
MSCI-EAFE -12.94%
MSCI-Europe -13.65%
MSCI-Pacific -11.56%
MSCI-Emg Mkt -12.65%
 
US Agg Bond -9.50%
US Corp Bond -12.73%
US Gov’t Bond -10.03%

Commodity Prices:

Gold 1,897
Silver 22.75
Oil (WTI) 104.15

Currencies:

Dollar / Euro 1.05
Dollar / Pound 1.24
Yen / Dollar 130.36
Dollar / Canadian 0.77
 

Introduction

In recent years your team at Summit Financial Wealth Advisors has grown from a small office of professionals in Lafayette to sixteen professionals in four offices across Louisiana.  This growth has been invaluable as it has greatly expanded our ability to serve our clients in a consistent and timely manner while supporting them across the entirety of their financial lives.  It has also taught us the value of communicating clearly and frequently to ensure that everyone is informed and engaged as we continue to expand our reach.  To that end we are launching this first installment of a quarterly newsletter to provide thoughts on the financial markets and general updates on our firm; we hope that you enjoy it and would encourage you to please feel free to call or stop by an office anytime if our team can be of value.

Economic Overview

Inflationary pressures have taken hold throughout the economy, as raw materials required for most every consumer product from bread to automobiles have increased in cost due to short supply and growing demand. Commodities such as wheat, copper, corn, lumber and steel are essential for the production and manufacture of consumer products, whose rising costs are being passed along to consumers in the form of higher prices.

Markets reacted to proposals aimed at raising capital gains taxes as well as widening the reach of estate taxes. Small business owners are also expected to be affected. Some analysts believe that markets will tolerate a tax increase without any significant repercussions.

The proposed tax hikes by the administration are primarily targeted at those earning $400,000 and by raising the top rate on ordinary income from 37% to 39.6%. Capital gains would be taxed as ordinary income for taxpayers earning more than $1 million. Wealth transfer is expected to become more costly as estate taxes and exclusions on home appreciation are also a focus.

The Commerce Department reported that the U.S. economy grew at an annual rate of 6.4% in the first quarter. Concurrently, the Federal Reserve commented that the economy is heading into a period of faster growth and job creation, yet still remains vulnerable to a spike in COVID variant cases should it occur. Companies continue to struggle in finding workers for posted positions with nearly 7.5 million jobs unfilled. Economists believe that some workers have been deterred by generous state and federally funded unemployment benefits.  Projections by the International Monetary Fund (IMF) place global growth at an annualized rate of 6% this year, as pent-up demand drives growth globally. (Sources: Federal Reserve, Commerce Dept., U.S. Census, Tax Policy Center)

 
Summit Financial Summer 2021 Newsletter

Fixed Income Market

Rates stabilized in April recoiling from their ascent from the prior few weeks. Government bond yields as well as mortgage yields mildly dropped as the Fed continued to purchase mortgage and Treasury bonds at a rate of $120 billion per month, providing liquidity and a continued low rate environment.

Inflationary pressures are becoming more of a focus for bond markets as rising consumer prices are being seen on a broad scale. Treasury Secretary Yellen alluded that rates may need to rise to keep the economy from overheating. A closely followed gauge by the bond markets for inflation, the 10-year breakeven inflation rate, rose to 2.41% at the end of April, signaling an inflationary trend. Historically, the Fed has started to taper or reduce stimulus efforts once inflationary pressures are validated. (Sources: U.S. Treasury, Federal Reserve)

Domestic Stock Market 

Strong earnings and economic data helped propel equities higher in April, along with abundant liquidity provided by the Fed in the form of bond buying and continued low rates. Strengthening economic data has also helped maintain equity valuations, anticipating expanding growth across the economy.

The anticipated effects of the proposed increases in capital gains may be muted since roughly only 25% of U.S. stocks are in taxable accounts, while the balance are in retirement and pension accounts where capital gains tax is not applicable.

Higher prices on numerous consumer products are leading to rising margins for many companies, translating into elevating earnings and stock prices. Comments by Fed Chair Jerome Powell on April 28th suggested that parts of the market “are a bit frothy”, alluding to some overpriced valuations. (Sources: S&P, Bloomberg, Federal Reserve)

Global Economy

Widespread vaccinations across the globe along with continued liquidity provided by central banks internationally and the Federal Reserve, have compelled the International Monetary Fund (IMF) to revise global growth projections higher. The IMF expects advanced economies less affected than emerging economies by the pandemic, which has taken a toll on emerging countries such as India and Brazil. Smaller emerging economies reliant on tourism have lost vast amounts of revenue and jobs as international travel essentially came to a halt.  In a separately issued report released by the IMF, the Global Financial Stability Report, the IMF cautioned that the excessive use of central bank intervention and massive debt issuance as in the U.S. may produce unintended consequences such as inflationary pressures for consumers on a wide scale. (Source: IMF)

 
Summit Financial Summer 2021 Newsletter

Summit as Your Personal CFO

While many clients view us primarily as a kind of Co-Chief Investment Officer supporting them with savings and investment decisions, we tend to view ourselves instead as more of a Personal Chief Financial Officer (CFO).   “What is a personal CFO” you ask?  As your personal CFO, we not only support you with savings and investment decisions but also help to coordinate and organize the varying aspects of your financial life.  We fulfill this role by offering a full suite of services, some working alongside experts from the Summit team and others in partnership with trusted 3rd party experts such as a CPA or estate attorney.  Whether you find yourself in the “Building Wealth” phase were we work together to build and implement a financial plan or the “Leaving a Legacy” phase where we help to structure the tax efficient transfer of wealth, you can count on your team at Summit Financial to be there working alongside you in partnership for the entirety of your financial life.

 

 

Did you know that we can help you build a financial plan?  That’s right, as a client of Summit Financial you have access to a team of professionals with experience building and implementing a financial plan that helps to identify and acheive your financial goals.  At my current savings rate, when can I retire?  How much do I need to save in order to pay for my kids college expenses? When would be the best time for me to take my social security benefit? If interested in answering these and other financial questions, contact your advisor at Summit Financial to inquire about working together to build a financial plan.

 
Summit Financial Summer 2021 Newsletter

Team Member Spotlight

Toni Crawford, CRPC®

Toni is a wealth advisor and a Chartered Retirement Planning Counselor® who leads our Ruston, Louisiana office. She has two young adult children, Emma and Adam. She and her husband, Dickie, are proud Louisiana Tech University graduates and they enjoy attending Tech ballgames and other collegiate functions. She is active at The Bridge Community Church and in her free time you might find her attending a Zumba class, walking her rescue dog, Toby, or planning her next Disney trip.

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