What’s Driving the Recent Volatility? A Quick Guide

The Federal Reserve has been very clear about its intentions to move more aggressively in fighting inflation. It currently defines “more aggressively” as a likely series of 50 basis point rate hikes, beginning with the May Federal Open Market Committee meeting. This will mark the first time in 22 years that the Fed has doubled the normal 25 basis point increase.

In remarks at a panel discussion at the IMF on April 21st, Chairman Powell reiterated that it is appropriate “to be moving a little more quickly” on rate hikes. He also indicated that he believes that financial markets are “acting appropriately generally,” meaning that they are adjusting to the expectations of higher rates.

Markets are forward-looking, so prices today reflect what markets think will happen in the future. A good example of this is mortgage rates: The average rate on a 30-year fixed-rate mortgage was 5.29% as the last week of April opened. For contrast, in early March, it was 3.76%.

Markets are having trouble interpreting this information. The problem is that so far, we’ve heard the Fed’s intentions, but without corresponding data showing whether or not rate hikes are working, markets can’t assess the likely path. And that leads to volatility.

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What’s the Fed Up To? Rates, Inversions, and Quantitative Tightening

The U.S. Treasury yield curve inverted last week. An inversion is when the shorter-term yield in a pair of U.S. Treasury maturities is higher than the longer-term yield, reversing or inverting the normal relationship. The significance of a yield curve inversion is that inversions have a history of predicting recessions.

The yield curve inverts because investors believe that the economy will slow in the future. The Fed attempts to control inflation by increasing interest rates, which makes business investment more expensive. Markets appear to think that the Fed will overshoot with rate increases, which will stifle rather than slow economic growth. The Fed will then have to begin decreasing rates again.

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A Plan for Managing Stock Sales: 10b5-1s and SEC Rules

Corporate insiders at publicly traded companies are privy to information that can have a major impact on the share price, such as a Federal Drug Administration (FDA) approval or rejection of a new drug. As a result, corporate trading policies restrict the number of days corporate insiders can buy or sell shares. Often, these policies limit the number of open trading windows to less than 60 days per year.

Overall, insider trading restrictions include blackout periods and exposure to material, non-public information (MNPI).

These trading constraints hamper corporate executives’ ability to manage their holdings, posing a stock concentration risk within their overall investment portfolios.

There is a solution to this problem: Rule 10b5-1

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GMB Episode #126: Pulling the Wisdom From Jeff Bezos’ Investor Letters With Steve Anderson

 

It’s an undeniable fact that Jeff Bezos did some exceptional work to develop Amazon into the e-commerce giant it is today. What if you could discover Amazon’s secrets and translate them into your business? Our guest today took on the task of analyzing every investor letter addressed by Jeff Bezos to Amazon shareholders dating back to 1997. Steve Anderson, Co-Founder & CEO at Catalyit™, and the author of the international bestseller, The Bezos Letters, joins us to dive into the 14 principles that created the Amazon that we know today.

 

 

Show Notes

[02:52] Summary of Letters – Steve starts the conversation with a synopsis of the letters, as well as what we can take away from them as we manage our own businesses.

[05:08] Beginning of Amazon – Steve explains Jeff Bezos’s background, how his childhood inspired him, and how he ended up launching Amazon.

[11:14] Becoming a Tech Giant – Steve dives into the growth of Amazon from its IPO in 1997 to current day.

[24:38] Four categories– Steve discusses the four categories mentioned in his book, and provides an excellent explanation of the 14 principles.

[31:44] High-Velocity Decisions – Steve explains how Jeff Bezos used a unique decision-making process to accelerate Amazon’s growth.

[45:56] Amazon’s Culture – Steve expresses his thoughts on Amazon’s culture.

[54:40] Steve’s Background – Steve shares his background, his career as an entrepreneur, and how he came to produce his phenomenal work.

 

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March Market Commentary: In Like A Lamb, Out Like a Lion?

March Recap and April Outlook

Ukraine’s fierce response to and subsequent repulsion of Russian troops surprised everyone, not least Vladimir Putin. As March came to a close, negotiations were beginning to be more realistic, and the evidence on the ground was that Russia was retreating and reassessing.

The Federal Reserve held the monthly FOMC meeting and raised the key short-term interest rate by 25 basis points. What wasn’t expected was Fed Chairman Powell’s subsequent remarks about the pace of rate increases. Powell has worked to be transparent and proactive in communicating the Fed’s intentions.

The change in the pace of rate increases was clear in his language that “There is an obvious need to move expeditiously to return the stance of monetary policy to a more neutral level, and then to move to more restrictive levels if that is what is required to restore price stability.”

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Cash Flow Planning When You’re Thinking About Retirement

Pre-retirement planning is one of the most challenging stages of your financial journey. You’re still fully engaged in your career, but you’re also looking ahead to a not-distant future when your life and your source of income will radically change.

Retirement means you’ll be making choices about where you want to live, what your retired life will look like, if it will include work, travel, charity, a hobby – all the things you always wished you had time for will now be yours to choose from.

But you’re also going to need to ensure you have enough saved to fund the retirement you want, and that the income stream you’ll be able to generate from all your sources of income in retirement is tax-efficient.

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Planning for 2022: The IRS Has Increased Several Key Deductions and Exemptions

The spike in inflation we’ve seen this year has impacts beyond having to pay more for goods and services. The IRS uses consumer price inflation (CPI) to determine certain increases to exemptions and deductions for federal tax purposes. These are automatic and calculated from the rise in CPI. That means that the increased inflation this year may actually end up saving you money. While the changes are for 2022 and you won’t be paying the associated taxes until 2023, it’s a good idea to be aware of the new limits.

You may be able to make changes as you go that can help you maximize the benefit. For example, the amounts for Flexible Spending Accounts (FSAs) and the commuter benefit increased, so you may want to have more taken out of your paycheck. This saves you money by paying with pre-tax dollars.

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GMB Ep #124: Managing Burnout As An Entrepreneur With Bunny Young

 

As an entrepreneur, wearing too many hats can quickly lead to burnout. This week on Grow Money Business, we talk about how and why it is so important for entrepreneurs to monitor their mental health and wellbeing. Bunny Young, a business consultant, former therapist, and third-generation entrepreneur joins us today to discuss what burnout it, how to prevent it, and some valuable lessons she has learned along the way.

 

 

Show Notes

[02:40] Levels of Burnout – We start the conversation with different levels of burnout and how to cope.

[05:38] PTSD –Bunny shares some signs that suggest we might be experiencing post-traumatic stress disorder.

[10:17] Burnout & PTSD – Bunny compares the signs & symptoms of burnout against that of PTSD and shares how businesses can help their staff approach mental health in a positive way.

[14:00] Preventing Big Burnout – Bunny shares her thoughts on how we can prevent a small burnout from snowballing into a big burnout.

[18:00] Workweek Patterns – Bunny gives her thoughts on why our centuries-old 40-hour workweek is no longer efficient and how entrepreneurs can make it better.

[26:00] Making Good Decisions – Bunny shares her advice for making objective and logical decisions while experiencing burnout.

[31:28] Business Background – Bunny is a third-generation entrepreneur. We talk about the businesses her parents and grandparents developed.

[38:31] Bunny’s Journey – Bunny shares her own entrepreneurial journey, and some of the career pivots she made along the way.

[53:15] Consulting – Bunny talks about her consulting firm and how they help family-centric small business owners spend more time with their loved ones.

 

Resources

GMB Ep #123: Tax Efficient Crypto Gifting With Pat Duffy

 

The world of cryptocurrency is innovative and ever-expanding. In today’s episode of Grow Money Business, we are joined by Pat Duffy, a cofounder of The Giving Block. The Giving Block is a platform that enables non-profit organizations to receive cryptocurrency donations. Throughout the episode, Pat and Grant dive deep into the tax benefits related to crypto donations, and discuss how The Giving Block is changing the future of charitable giving.

 

 

Show Notes

[03:14] The Giving Block – We start the conversation with a brief look at what The Giving Block does and how it helps donors and non-profit organizations.

[07:10] The Process – Pat walks us through the process of what happens when someone interested in crypto gifting signs up with The Giving Block.

[10:00] Donor Advised Funds – Pat explains the process of donating via a Donor Advised Fund.

[16:33] Why Crypto? – Pat shares his take on some of the reasons why non-profit organizations may want to take crypto donations.

[19:05] Barriers – Pat discusses some of the challenges non-profit organizations face when starting to accept crypto donations.

[27:30] Getting Traction – Pat shares with us what it was like at the beginning of his service and what it took to get enough traction for the service.

[31:30] Business Model – Pat shares with us how the business model of the Giving Block works and some of the areas the platform will be expanding into in the near future.

[36:52] Managing Growth – Pat dives into their strategy of managing their growth.

[42:54] Shift4 – The Giving Block was recently acquired by the payment processing solutions company, Shift4. Pat shares what opportunities and possibilities this acquisition will open up.

[49:10] Tips for Donating – Pat shares some advice for those who own crypto assets and want to make a crypto donation.

 

Resources