MarketMinder Daily Commentary

Providing succinct, entertaining and savvy thinking on global capital markets. Our goal is to provide discerning investors the most essential information and commentary to stay in tune with what's happening in the markets, while providing unique perspectives on essential financial issues. And just as important, Fisher Investments MarketMinder aims to help investors discern between useful information and potentially misleading hype.

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Soaring Debt and Deficits Causing Worry About Threats to the Economy and Markets

By Jeff Cox, CNBC, 5/20/2024

MarketMinder’s View: Citing the Congressional Budget Office’s (CBO) February report, this piece suggests soaring US federal debt presents major threats—today and in the future. “The [CBO] estimates that debt held by the public, which currently totals $27.4 trillion and excludes intragovernmental obligations, will rise from the current 99% of GDP to 116% over the next decade. That would be ‘an amount greater than at any point in the nation’s history,’ the CBO said in its most recent update.” Some of the finance executives interviewed here suggest rising debt will spur questions about the government’s ability to pay for its obligations, making US Treasurys less attractive to foreign investors—and that uncertainty could spill over into the stock market. Anything is possible, but the available data argue against these fears. Treasury auction demand is now stronger than in 2019—when US debt was lower—and foreign Treasury ownership has risen alongside total debt levels. Note, too, foreign investors aren’t the only source of US Treasury demand—US investors are willing and able buyers, too. Moreover, this article worries about the total amount of debt—even though its affordability is what investors care about most. In that vein, US debt is quite serviceable—today, federal interest payments are around 10% of total tax receipts (per the Office of Management and Budget), down from 2020’s levels and well below those seen in the 1980s and 1990s, a great period for the US economy and stock markets. For more on this particular concern, check out our February commentary, “Digging Into the CBO’s Debt Forecasts.”


Americans Are Down on the Economy (Again), With Inflation Topping Election Concerns

By Abha Bhattarai, The Washington Post, 5/20/2024

MarketMinder’s View: This piece mentions a few specific companies, so a friendly reminder that MarketMinder doesn’t make individual security recommendations. The University of Michigan (U-Mich) Index of Consumer Sentiment, a widely watched gauge of Americans’ feelings toward the economy, tumbled to a six-month low in May. According to the survey, respondents’ moods are souring due to inflation, unemployment and high interest rates. This piece gets into the weeds about what the results mean for consumer spending and this year’s elections, but we wouldn’t go that far. Consumer sentiment has little to no bearing on consumer spending—people may feel a certain way but act in an entirely different manner based on their personal financial situation. Our takeaway here? Sentiment is fickle and can change quickly for any or no reason. May’s poll is further proof. After warming at 2024’s start, the U-Mich survey and several other sentiment tools we use have cooled in recent weeks. This is a counterintuitive positive for investors, as stocks move on the gap between reality and expectations. With numerous fears still lingering, the bar for stocks appears relatively low—leaving plenty of room for positive surprise to propel the bull market up the proverbial wall of worry.


Managing an Inheritance: When โ€˜Momโ€™s Moneyโ€™ Becomes Yours

By Lisa Rabasca Roepe, The New York Times, 5/20/2024

MarketMinder’s View: Receiving an unexpected inheritance can present a slew of psychological effects—going from “barely scraping by” to managing a big sum of money can cause feelings of stress, uncertainty and unpreparedness. This article provides some useful insight on how to approach these feelings and make the decisions that work for your family and loved ones. That is, taking a long-term, holistic view can help find the money’s best purpose and ease some mental anguish along the way. As the article notes early on, this situation is becoming increasingly relevant—the silent generation and baby boomers are expected to transfer significant wealth to younger generations over the next 20 years. No matter your situation, it is always prudent to prepare for the unexpected. For more, please see Sam Lerner’s 2022 column, “Preparing For ‘Sudden Wealth’ Inheritances.”


Soaring Debt and Deficits Causing Worry About Threats to the Economy and Markets

By Jeff Cox, CNBC, 5/20/2024

MarketMinder’s View: Citing the Congressional Budget Office’s (CBO) February report, this piece suggests soaring US federal debt presents major threats—today and in the future. “The [CBO] estimates that debt held by the public, which currently totals $27.4 trillion and excludes intragovernmental obligations, will rise from the current 99% of GDP to 116% over the next decade. That would be ‘an amount greater than at any point in the nation’s history,’ the CBO said in its most recent update.” Some of the finance executives interviewed here suggest rising debt will spur questions about the government’s ability to pay for its obligations, making US Treasurys less attractive to foreign investors—and that uncertainty could spill over into the stock market. Anything is possible, but the available data argue against these fears. Treasury auction demand is now stronger than in 2019—when US debt was lower—and foreign Treasury ownership has risen alongside total debt levels. Note, too, foreign investors aren’t the only source of US Treasury demand—US investors are willing and able buyers, too. Moreover, this article worries about the total amount of debt—even though its affordability is what investors care about most. In that vein, US debt is quite serviceable—today, federal interest payments are around 10% of total tax receipts (per the Office of Management and Budget), down from 2020’s levels and well below those seen in the 1980s and 1990s, a great period for the US economy and stock markets. For more on this particular concern, check out our February commentary, “Digging Into the CBO’s Debt Forecasts.”


Americans Are Down on the Economy (Again), With Inflation Topping Election Concerns

By Abha Bhattarai, The Washington Post, 5/20/2024

MarketMinder’s View: This piece mentions a few specific companies, so a friendly reminder that MarketMinder doesn’t make individual security recommendations. The University of Michigan (U-Mich) Index of Consumer Sentiment, a widely watched gauge of Americans’ feelings toward the economy, tumbled to a six-month low in May. According to the survey, respondents’ moods are souring due to inflation, unemployment and high interest rates. This piece gets into the weeds about what the results mean for consumer spending and this year’s elections, but we wouldn’t go that far. Consumer sentiment has little to no bearing on consumer spending—people may feel a certain way but act in an entirely different manner based on their personal financial situation. Our takeaway here? Sentiment is fickle and can change quickly for any or no reason. May’s poll is further proof. After warming at 2024’s start, the U-Mich survey and several other sentiment tools we use have cooled in recent weeks. This is a counterintuitive positive for investors, as stocks move on the gap between reality and expectations. With numerous fears still lingering, the bar for stocks appears relatively low—leaving plenty of room for positive surprise to propel the bull market up the proverbial wall of worry.


Managing an Inheritance: When โ€˜Momโ€™s Moneyโ€™ Becomes Yours

By Lisa Rabasca Roepe, The New York Times, 5/20/2024

MarketMinder’s View: Receiving an unexpected inheritance can present a slew of psychological effects—going from “barely scraping by” to managing a big sum of money can cause feelings of stress, uncertainty and unpreparedness. This article provides some useful insight on how to approach these feelings and make the decisions that work for your family and loved ones. That is, taking a long-term, holistic view can help find the money’s best purpose and ease some mental anguish along the way. As the article notes early on, this situation is becoming increasingly relevant—the silent generation and baby boomers are expected to transfer significant wealth to younger generations over the next 20 years. No matter your situation, it is always prudent to prepare for the unexpected. For more, please see Sam Lerner’s 2022 column, “Preparing For ‘Sudden Wealth’ Inheritances.”