The Markets
Financial markets appear to have pre-election jitters.
The United States election is less than two weeks away. The candidates are neck and neck. The outcome remains uncertain. And expectations for volatility have been rising, with the CBOE Volatility Index (VIX) finishing last week at 20.33.
“When the VIX goes north of 20, Wall Street pays attention because that level signals heightened volatility,” reported Connor Smith of Barron’s.
One reason for heightened volatility may be concerns about the election. Ian Salisbury of Barron’s explained, “There are plenty of theories about how particular stocks will fare, depending on next month’s outcome. It isn’t hard to see why. The candidates have tried to curry favor with voters by championing or attacking favored industries, and sometimes individual companies. Vice President Harris has promised to raise the corporate tax rate, a move that could cut into corporate earnings, and Democrats are widely seen as tougher on antitrust issues, a potential hurdle for Wall Street banks looking to capitalize on pent-up [merger and acquisition] activity. Trump, meanwhile, has threatened hefty new tariffs, which could help U.S. manufacturers but hurt multinationals. He’s even threatened individual companies like John Deere over plans to move manufacturing facilities abroad. The good news? Investors can mostly shrug the campaign rhetoric off and focus on stocks’ fundamentals.”
So far, third-quarter earnings reports have been strong. Regardless, stock market investors became significantly less bullish last week, according to the AAII Investor Sentiment Survey. The survey asked investors whether they think the stock market will move higher (bullish) or lower (bearish) over the next six months.
- Bullish sentiment declined from 45.5 percent the week of October 16 to 37.7 percent last week. (The historic average for bullishness is 37.5 percent.)
- Bearish sentiment increased from 25.4 percent to 29.9 percent. (The historic average for bearishness is 31 percent).
- Neutral sentiment also increased from 29.2 percent to 32.4 percent. (The historic average is 31.5 percent.)
Bond investors also have been adjusting their expectations. Since mid-October, the yield on the benchmark 10-year U.S. Treasury note has trended higher. At the start of the month, the 10-year note yielded 3.74 percent. Last week, its yield rose from 4.07 percent to 4.23 percent.
“The rise is likely a reflection of the fact the Federal Reserve will cut interest rates fewer times than investors had thought after September’s Federal Open Market Committee meeting, a result of inflation being above its target and a job market that has grown faster than expected. Also, Donald Trump’s chances of winning the presidential election have risen in the past few months, according to RealClearPolitics. His policies include fiscal spending and tariffs, both of which create inflation and throw cold water on the idea that the Fed will cut rates many times. While the economy could continue to grow, tariffs, for their part, not only lift prices, they destroy demand,” reported Jacob Sonenshine of Barron’s.
Ben Levisohn of Barron’s offered some advice to anyone getting swept up in pre-election jitters. “The truth of the matter is that reading the financial market tea leaves is far from straightforward…In fact, investing with your politics is one of the worst ways to lose money—or miss out on gains.” If you have concerns about market volatility or the possible effect of the election on your portfolio, get in touch. We’re happy to talk with you about your concerns and your portfolio.
Last week, the S&P 500 Index and Dow Jones Industrial Average moved lower, while the Nasdaq notched a seventh week of gains. Yields on longer maturities of U.S. Treasuries moved higher over the week.
| Data as of 10/25/24 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | -1.0% | 23.1% | 40.7% | 10.0% | 15.8% | 13.5% |
| Vanguard Total Intl Index (Foreign Stocks) | -2.3 | 9.2 | 24.9 | 1.5 | 6.2 | 5.2 |
| Total Bond Market (U.S. Dollar Bonds) | -0.9 | 2.2 | 11.0 | -2.0 | -0.1 | 1.5 |
| Gold (per ounce) | 0.7 | 31.4 | 37.7 | 14.8 | 12.5 | 8.3 |
| Bloomberg Commodity Index | 2.0 | 1.6 | -4.6 | -1.8 | 4.8 | -1.5 |
S&P 500, Vanguard Total International Stock Index, Vanguard Total Bond Market Index, Gold, and Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized. Sources: Yahoo! Finance; MarketWatch; morningstar.com; djindexes.com; London Bullion Market Association. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly.
DO YOU TALK ABOUT MONEY? A lot of important events and holidays are coming up in November. There’s Election Day, National Calzone Day, No-Shave November, the International Day for Tolerance and Talk Money Day.
That’s right! On November 8, everyone is encouraged to put their fears aside and begin talking with other people—spouses, partners, roommates, friends, adult children, and younger children—about money. It’s not going to be easy—money talk is tough for many people. Sixty-two percent of Americans who participated in a 2023 survey said they did not talk about money. Those who did have financial conversations generally conversed with a spouse or partner, reported Kamaron McNair of CNBC.
There are many reasons people avoid financial conversations. They may:
- Believe it is impolite to talk about money.
- Worry that discussions will be awkward.
- Fear being judged for their choices.
- Think their money is no one else’s business.
The issue is less prevalent among younger people than it is among older people, according to CNBC. “…56 [percent] of millennials and 49 [percent] of Gen Zers say they’re having financial conversations on the regular, compared with just 38 [percent] of Gen Xers and 22 [percent] of baby boomers…Talking about money can help young people increase their financial literacy as they learn from and teach their friends. But it’s equally important for younger people to bring up financial topics with their elders—or at least their more experienced peers—especially when it comes to making big decisions,” reported McNair.
While breaking down the money-talk barrier may be challenging, the rewards can be significant. Financial discussions can improve decision-making, strengthen relationships, and help children develop sound money habits. Our goal is to help the people we serve make financial decisions that help them live the lives they want to lead. If talking about money is a difficult hurdle, get in touch. We can help facilitate these important discussions.
Weekly Focus – Think About It
Medicare Open Enrollment
For 2025, Medicare coverage open enrollment is from October 15, 2024 through December 7, 2024. Medicare Advantage open enrollment is January 1, 2025 through March 31, 2025. During the annual enrollment period (AEP), you can make changes to various aspects of your coverage:
- Switch from Original Medicare to Medicare Advantage
- Switch from Medicare Advantage to Original Medicare (plus a Part D plan and possibly a Medigap plan)
- Switch from one Medicare Advantage plan to another or from one Medicare Part D (prescription drug) plan to another
- Drop Part D coverage altogether
- Enroll in a Part D plan – if you did not enroll in a Medicare Part D plan when you were first eligible. A late enrollment penalty may apply.
If you wish to enroll in a Medicare Advantage (Part C) plan, you must meet some basic criteria:
- You must be enrolled in Original Medicare (Medicare Part A and Part B).
- You must live in the service area of a Medicare Advantage insurance provider that is accepting new users during your application period.
- You do not have End Stage Renal Disease (ESRD).
There are also some changes coming to Medicare in 2025. As a result of the Inflation Reduction Act that was passed in 2022, there are a few noteworthy changes being implemented beginning January 1, 2025, including:
- There will be a $2,000 annual cap on prescription drug costs in Medicare Part D. This change affects only those with Part D plans and does not apply to out-of-pocket spending on Medicare Part B drugs. The $2,000 cap will be indexed to the growth in per capita Part D costs, allowing it to possibly rise each year after 2025.
- Each Medicare prescription drug plan, including Advantage plans with drug prescription programs, must now offer all patients the option to pay the out-of-pocket prescription costs in monthly installments. While there is a monthly limit on spending, this is meant to allow patients to spread out high costs through a year. Monthly payment plans are not automatically applied, patients must enroll themselves.
- Medicare Advantage policyholders will now receive a midyear notification of unused supplemental benefits in July. This personalized notification will hold a list of all supplemental benefits the policy owner has not used, the scope and out-of-pocket cost for claiming each one, and instructions on how to access said benefits. There will also be a customer service number to call for more information with the goal of allowing policy owners to more easily access the additional supplemental benefits that come along with Medicare Advantage.
If you need help navigating your coverage options, please let us know, as we have partnered with several local professionals who may be able to assist you in selecting the plan that works best for you and your needs.
Best regards,
Waterford Advisors
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* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or broker/dealer.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.
Sources:
https://www.cboe.com/tradable_products/vix/ (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/10-28-24_Cboe_VIX%20Index%20Charts_1.pdf)
https://www.barrons.com/livecoverage/stock-market-today-102324/card/the-dow-keeps-falling-the-market-s-fear-gauge-is-near-a-key-level–349PmzqKaFkDhC1aYtSc?siteid=yhoof2 (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/10-28-24_Barrons_The%20Dow%20Keeps%20Falling_2.pdf)
https://www.barrons.com/articles/portfolio-stress-test-election-4218808a?mod=hp_LEDE_C_1 (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/10-28-24_Barrons_Dont%20Rule%20Out%20a%20Market%20Panic_3.pdf)
https://www.aaii.com/sentimentsurvey (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/10-28-24_Historical%20Sentiment%20Data_5.pdf)
https://finance.yahoo.com/quote/%5ETNX/history/
https://www.barrons.com/articles/stock-market-danger-zone-tariffs-b2bb22e6?refsec=the-trader&mod=topics_the-trader (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/10-28-24_Barrons_Stock%20Market%20Enters%20Danger%20Zone_7.pdf)
https://www.barrons.com/articles/stock-market-trump-harris-election-61b41129?refsec=up-and-down-wall-street&mod=topics_up-and-down-wall-street (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/10-28-24_Barrons_Market%20is%20Afraid%20of%20Election%20Day_8.pdf)
https://www.barrons.com/market-data (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/10-28-24_Barrons_Data_9.pdf)
https://www.calendarr.com/united-states/calendar-november-2024/
https://nationaltoday.com/talk-money-day/
https://www.cnbc.com/2023/05/10/americans-arent-talking-about-money-it-could-hold-you-back.html
https://www.brainyquote.com/quotes/george_bernard_shaw_385438