New York, NY. August 19, 2021. Weaker than expected earnings and economic data are raising concerns among investors. As the Delta virus continues to spread, many companies are rethinking back-to-work programs and consumers are becoming more cautious when it comes to spending. Investors are focused on what is next for central-bank policy. Recent data from the Commerce Department showed that consumer spending at U.S. retailers was down significantly in July.
TKSmartworth.com by Tom Kutzen looks at money markets and the changing shape of capital markets to understand the impact changing economic data will have on personal wealth. Recent reports indicate that the Fed may ease up on stimulus measures. Yet small cap stocks have declined despite recent rebounds; home-builder confidence is at its lowest level since July 2020 thanks to higher construction costs; and oil prices continue to slide.
What does all of this mean to consumers?
· Tapering of funds from the Fed will have an impact on interest rates – influencing borrowing power. While COVID and supply chain bottlenecks complicate the market recovery, everything will really rest on how much cash the Fed adds to the system. Short term interest rates are expected to have the most impact on spending power and savings.
· The bottlenecks for consumer supplies are not widespread but highly concentrated within the automobile and housing materials causing an increase in the cost-of-goods. Consumers may want to consider delaying purchases or renovations until the market is able to refill the pipelines.
· Consumers can expect a 10-15% rise in apparel costs according to industry predictions as demand outpaces supply – particularly during the back-to-school rush. Retailers may offer fewer discounts as their own access to inventory is challenged.
· The financial assets that resign as savings for those on retirement as well as endowments and pensions will have to ride out the impact on the stock market decline. Some are predicting the market will only experience a correction before stabilizing. However, investors should consider the potential for another black swan market event where an unexpected event has a disastrous impact on the market as COVID did in 2020.
ABOUT TKSMARTWORTH:
Developed by finance expert, Tom Kutzen, TKSmartworth shares a highly informed view of the capital markets, finance issues and financial literacy based on forty years of experience in the financial markets, working with family offices, managing bank portfolios, risk, and product development. The goal is to help others develop the skills necessary to further their own financial education and economic success.
ABOUT TOM KUTZEN:
Tom has more than forty years of experience in many markets, managing banks, portfolios, risk and product development. He has established new markets in emerging countries, served as a consultant for countries in developing markets, advised financial institutions, developed and defeased financing for public housing, built new capital markets in Asia, served on the Asset and Liability Committee for banks, managed risk desks and portfolios. Blending the experience of Treasury management in banking, risk management and economic theory with a focus on finance to improve capital markets, Tom has made a direct and positive impact on both emerging and developed economies.
Tom is now sharing his years of experience in the capital markets with individuals and organizations outside the financial services industry to help them develop the skills necessary to further their own financial education and economic success.