Daily Commentary

MarketMinder’s View: Here is a sobering, uncomfortable stat: “Even with financial advisers helping Americans prepare both boomers and heirs for the largest wealth transfer in history, more disputes are arising, data show. Between 2020 and 2024, the number of probate and estate cases entering state courts rose about 32%, based on data from 39 states, according to the independent nonprofit National Center for State Courts.” Now, all this hype about a massive wealth transfer from Boomers to their GenX and Millennial heirs is quite wide of the mark, presuming extravagant lifestyles and late-life health care costs won’t eat a big chunk of Boomers’ fortunes and that they actually will choose to pass their surviving assets to their offspring rather than donate them to a favored cause. Presuming Boomers’ entire current net worth will belong to younger generations in a couple decades is lazy and wrong. But setting all that aside, as the article explains, inheritances are getting increasingly tricky with blended and non-traditional families, which can make it unclear who has the legal right to certain assets. For instance, “Stepchildren are not automatically considered legal heirs unless they are legally adopted, so they must be specifically named in estate planning documents or risk being unintentionally disinherited.” And in some states, if the stepparent outlives the biological, the deceased’s biological children won’t inherit—no matter what their biological parent wanted—unless the stepparent names them in their will. The legal process to distribute the deceased’s assets and settle their debts can be costly both in time and money—not to mention potentially hurt feelings and damaged personal relationships. As the conclusion here counsels, being proactive in updating documents and meeting with family members and loved ones to discuss plans and intentions can go a long way in smoothing out a touchy topic. For more, see Sam Lerner commentary, “Preparing For ‘Sudden Wealth’ Inheritances.”

MarketMinder’s View: The titular question is one we see a lot, and the sentiment is understandable. Considering America is the world’s largest oil producer and a net exporter of petroleum products, why the heck are gasoline prices rising here? When it comes to markets, always think in terms of global supply and demand first. If there is a supply disruption in a major oil-producing area like the Middle East, that information will affect prices worldwide. Then, too, not all American-produced oil can be easily used by American refiners. “The type of oil produced in the United States tends to be higher-quality, so-called sweet oil, but domestic refineries are set up to handle heavy and sour oil. It is often more cost efficient to sell the sweet and buy the heavy. It would be expensive and difficult to reconfigure refineries, said Willy Shih, an international trade expert at Harvard Business School. Also, a federal law called the Jones Act requires goods shipped between U.S. ports to be carried on American-made and operated vessels, which can sometimes make it more efficient for refiners to import oil than moving it within the country. Refineries in New Jersey, for example, might import oil from Algeria or Nigeria instead of buying it from Texas.” Smart people can debate the sensibility of those choices, but from a high level, the prices you see at your local gas station reflect global developments, not only what is happening stateside—which is why they never sneak up on stocks, even if they give drivers sticker shock. 

MarketMinder’s View: With the four-year anniversary of Russia’s invasion of Ukraine and subsequent surge in energy prices due to supply worries fresh in observers’ minds, some wonder how central bankers will react to the conflict in the Middle East (e.g., will the European Central Bank and Bank of England hike interest rates to avoid 2022’s surge in inflation?). While central bankers’ ability to influence growth or energy prices is vastly overrated—we aren’t aware of ECB President Christine Lagarde’s ability to extract natural gas from Germany’s untapped shale reserves or steer oil tankers through the Strait of Hormuz—this article shows how today’s backdrop differs from 2022’s energy crisis. “At the time of Russia’s full-scale invasion of Ukraine, supply chains and labor markets had been massively disrupted by the Covid-19 pandemic and inflationary pressures were already high. In February 2022, the eurozone’s annual rate of inflation stood at 5.9%, then the highest on record. It went on to climb to a peak of 10.6% in October of that year. As the U.S. and Israel launched their attacks on Iran, the eurozone inflation rate stood at 1.9%, just below the ECB’s target.” Now, this piece misses a critical part of the inflation equation—namely, prices surged then as developed economies were working through the pandemic-driven spike in money supply—but we agree things are in better shape than a few years ago, especially on the energy supply front. Keeping a levelheaded perspective amid volatility is key to long-term investing success. For more, see last week’s commentary, “Stay Calm Amid the Middle East Storm.”