The Dividend Decade
By Capital Ideas Investing Podcast
Capital Group portfolio manager Caroline Randall shares her views on why dividends may be a more significant and stable contributor to total returns for investors. Plus, how she is finding dividend opportunities in the energy, health care and industrial sectors.
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Moderate Impact of Bank Stress on Growth
By Goldman Sachs, Market Monitor
Credit conditions have tightened substantially since the onset of the Fed’s hiking cycle, but further deterioration following recent US bank stress remains subdued. The percentage of US banks reporting tighter C&I lending standards in the Fed’s April Senior Loan Officer Opinion Survey increased only marginally from 45% to 46%. The coast appears far from clear, but a credit-induced growth drag appears to have had a moderate impact thus far.
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Stocks were mixed last week as good inflation news was offset by mounting debt ceiling concerns and rekindled regional banking fears.
The Dow Jones Industrial Average lost 1.11%, while the Standard & Poor’s 500 slipped 0.29%. The Nasdaq Composite index rose 0.40% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, fell 0.67%.1,2,3
Uncertainty Weighs on Stocks
The week got off to a quiet start as investors waited on April’s two key inflation reports scheduled for release on Wednesday and Thursday. When consumer prices rose less than forecasted, stocks broke out of their lethargy and moved higher. Stocks also got a boost on Wednesday afternoon from comments from the White House, hinting at an opening for negotiation on the debt ceiling.
Despite a substantial cooling in producer price increases, stocks turned mixed on Thursday amid a disappointing earnings report from a Dow Industrial component and new data that reignited investor anxiety over regional banks’ financial health. Stocks ended the week the way they began, largely drifting in an otherwise directionless fashion.
Inflation Pressures Ease
Consumer prices rose 4.9% year-over-year, the tenth consecutive month that the headline inflation rate has declined. This was a slight improvement over March’s 12-month increase of 5.0%. April’s monthly inflation rate was 0.4 percent, above March’s 0.1 percent rise. April’s increase was driven by higher housing, gasoline, and used car costs.4
Inflation progress extended into wholesale prices, which rose 0.2% in April–below the consensus forecast of a 0.3% rise. For the last twelve months, producer prices increased 2.3%, an improvement from last month’s 2.7% year-over-year gain and the lowest recording since January 2021.5
This Week: Key Economic Data
Tuesday: Retail Sales. Industrial Production.
Wednesday: Housing Starts.
Thursday: Existing Home Sales. Index of Leading Economic Indicators. Jobless Claims.
Source: Econoday, May 12, 2023
This Week: Companies Reporting Earnings
Tuesday: The Home Depot, Inc. (HD).
Wednesday: Cisco Systems, Inc. (CSCO), Target Corporation (TGT), The TJX Companies, Inc. (TJX).
Thursday: Walmart, Inc. (WMT), Applied Materials, Inc. (AMAT), Ross Stores, Inc. (ROST).
Friday: Deere & Company (DE)
Source: Zacks, May 12, 2023
"Good habits, imperceptibly fixed, are far preferable to the precepts of reason."
– Mary Wollstonecraft
Know and Understand Your Correct Filing Status
Taxpayers should understand their filing status well and at least be familiar with the other choices.
When preparing and filing a tax return, the filing status affects:
Here are the five filing statuses:
Single: Normally, this status is for taxpayers who are unmarried, divorced, or legally separated under a divorce or separate maintenance decree governed by state law.
Married filing jointly: If a taxpayer is married, they can file a joint tax return with their spouse. When a spouse passes away, the widowed spouse can usually file a joint return for that year.
Married filing separately: Married couples can choose to file separate tax returns when doing so may result in more favorable treatment.
Head of household: Unmarried taxpayers may be able to file using this status, but special rules apply.
Qualifying widow(er) with dependent child: This status may apply to a taxpayer if their spouse died during one of the previous two years and they have a dependent child. Other conditions also apply.
Tip adapted from IRS.gov6
Keeping Your Heart Rate Up Indoors
A rainy day can steal our motivation to leave the comfort of our homes unless we have to. But your workouts don’t need to stop with bad weather. Here are a few ways to feel the burn indoors.
Hop to it with a rebounder (a mini trampoline) or a jump rope. If you have neither, fake it by keeping your hands to your sides and rotating them as you mimic the rest of the exercise sans equipment.
Find a YouTube video or other streaming guided workout. Can’t squeeze in a full half hour at once? Pause it and return when you’re ready.
Invest in workout equipment you know you’ll use. If you run or hike, consider a treadmill with an adjustable incline. Like to ride your bike? Consider getting a stationary one.
There are many ways to stay fit while the weather isn’t cooperating. But don’t forget to always discuss any medical concerns with your healthcare provider before beginning any fitness routine; the information provided is not a substitute for medical advice.
Tip adapted from Medical News Today7
Note this alphabetic progression: B, C, D, E, G. What letter should then follow as the sixth letter in this successive series?
Last week’s riddle: I may be red, green, or yellow. Eat me, and you may stay a healthy fellow. My interior is white; I don't give off light. What am I? Answer: An apple.
Liwa Desert, Abu Dhabi, United Arab Emirates
Footnotes and Sources
2. The Wall Street Journal, May 12, 2023
3. The Wall Street Journal, May 12, 2023
4. The Wall Street Journal, May 10, 2023.
5. CNBC, May 11, 2023
6. IRS.gov, 2023
7. Medical News Today, February 15, 2023
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