Mixed Message From Fed Chair, Governor

Edwin A. McKnight, LUTCF, ChFC®

July 02, 2024

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Stocks finished the last week of June and Q2 mixed as investors digested a fresh round of economic data.

The Standard & Poor’s 500 Index slipped 0.08%, while the Dow Jones Industrial Average also dipped 0.08 percent. The tech-heavy Nasdaq Composite gained 0.24 percent. The MSCI EAFE Index tracks developed overseas stock markets and rose 0.27 percent for the week through Thursday’s close.¹

Nasdaq Regains Lead

Last week opened with the S&P 500 and Nasdaq heading lower, while the Dow rallied on momentum from the prior week. But by mid-week, the leadership shifted with the Nasdaq pushing higher.²

With the back half of the week packed with fresh economic data, conflicting stories developed about the economy. New home sales fell 11.3 percent in May—the largest month-over-month drop in a year and a half—while the supply of new homes hit a 16-year high. Meanwhile, first-quarter GDP revised slightly to 1.4 percent higher, and durable goods increased in May.^3,4,5

Friday's personal consumption and expenditure (PCE) data showed that core inflation slowed to 0.1 percent in May over the prior month and 2.6 percent year-over-year—its lowest annual rate in three years. Both figures were in line with expectations. Stock prices initially rallied on the upbeat inflation news, but the early gains faded as the trading day progressed.⁶

Apolitical

With election tensions mounting, many investors are concerned that upcoming policy rate decisions may be influenced by political pressures. Historically however, the Fed has adjusted rates by 25bps nearly 6 times, on average, during election and inauguration years, demonstrating that monetary policymakers have remained apolitical. We believe the Fed will continue to conduct monetary policy to fulfill its dual mandate of price stability and full employment.

^{Article for GSAM.com : Apolitical}

^{Source: YCharts.com, June 29, 2024. Weekly performance is measured from Monday, June 24, to Friday, June 28.}
^{TR = total return for the index, which includes any dividends as well as any other cash distributions during the period.}
^{Treasury note yield is expressed in basis points.}

"If you have passion, a chip on the shoulder, a sense of humor, and you can explain what you do very well, it doesn't matter if you're a plumber or a singer or a politician. If you have those four things, you are interesting."

– Larry King

Think About Credits And Deductions Now To Prepare For Filing

Here are a few facts about credits and deductions that can guide you through your year-round tax preparation:

Taxable income remains after someone subtracts any eligible deductions from their adjusted gross income, including the standard deduction. Some taxpayers may itemize their deductions to reduce their adjusted gross income.
The Tax Cuts and Jobs Act changed itemized deductions. In comparing these changes, many individuals accustomed to itemizing may find it more beneficial to take the standard deduction.
Generally, if a taxpayer’s itemized deductions are more significant than their standard deduction, they should itemize. Depending on the situation, some taxpayers may even be required to itemize.

Taxpayers can subtract tax credits from the total amount of tax they owe. To claim a credit, taxpayers should keep records demonstrating their eligibility. Some major tax credits include the child tax credit, the child and dependent care credit, the American opportunity credit or lifetime learning credit, and the earned income tax credit.

*This information is not intended to be a substitute for specific, individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.

Tip adapted from IRS.gov⁸

Macro Dieting Is A New Way To Approach Calorie Counting

Macro dieting is a diet that transcends basic calorie counting. Rather than counting simply the number of calories, you count the macronutrients, including proteins, carbs, and fats. How much of each macronutrient you need depends on your body type, goal, lifestyle, and activity level. Rather than depriving your body of nutrients, you instead focus on meals that give your body the nutrients it needs to be more efficient.

To start a macro diet, you must first calculate how many grams of each macro you should eat. A standard breakdown is 50-25-25, meaning that 50% of your calories come from carbs, 25% from protein, and 25% from fat. However, this breakdown will depend on your goals. For example, if you focus on strength training, eat more protein.

Tip adapted from Eatingwell.com⁹

This house attracts travelers with its brightness, yet it is often the loneliest home on the coast. What kind of house is this?

Last week’s riddle: At a stop sign on a rural road, there are two trucks in front of a truck, two trucks behind a truck, and one truck in the middle of two trucks. How many trucks are there in total?Answer: Three