Ep. 290 Launch Financial- 10-Year Treasury Yield Hits 19-Year High

Um, a very volatile market. We had last week, um… I think the Dow was, was way down. Obviously, we talked about this, uh, on the Snaps. Wednesday, the Federal Reserve raised interest rates for the first time. Ash, you remembered this more than me, but, um, July… I’m going off of memory of a very long, uh, few days, but I think it was July of 2023, you said? But, uh, we can fact-check that.

But, um, thought that that was- July 2023. Good memory Wow. Holy cow. July 2023, first interest rate hiking. Market was worried. Wednesday, as we know, uh, Dow dropped over 600 points. As we talked about on the Snaps, had a slight rebound Thursday, recovered half of where it was. Um, and then a huge surge yesterday.

We have a very mixed market this morning as we are recording. Um, the futures had trimmed the losses, uh, again, on the Middle East- News. We’ve been talking about this for I don’t know how many weeks now, but market is very driven by the interest rate market as well as the oil market. So oil was down all the way to $91 based on rumors that, uh, the Iranian government will open the Strait of Hormuz, allowing, uh, traffic of, uh, oil tankers.

Uh, saw a crazy diesel price, something, uh… The, the nationwide average is $6 and some change. In California it’s $8, so the price of gasoline continues to rise. Uh, we’ve been talking about this, and then of course s- on the Fed’s mind, seriously, we see interest rate traders on its mind too as the 10-year crossed 5%, its highest level since ’07 I believe, which is a very long time.

And, uh, we’re seeing that push and pull dynamic, uh, between, uh, those two inputs, the drag on the consumer’s wallet and then impacting, uh, the consumer spending. So, uh, crazy market. Um, and then we’re also, uh… I wanna just touch quickly because, uh, the breadth of the market, meaning that the advances over the decliners is the weakest it’s been in a very long time, uh, under the hood.

So another discussion on concentration risk. I know we’re talking about the markets in general on a macro level, but w- under the hood there’s been a lot of damage to individual companies. So, um, maybe we should pound the table a little bit on concentration risk, um, and kind of what we help to do and uncover.

So if you do work at a publicly traded company, had worked at a publicly traded company or Just a general individual investor who has accumulated a significant amount of concentrated stock. Uh, we have some solutions that are very appealing coming up, 351 exchanges, exchange funds, and some other donor-advised fund end of the year ideas.

It’s gonna be all the rage, uh, I think, uh, between now and the end of the year. Um, I’ve talked a lot, and, uh, we’ll pass the mic over to Ash to get her view in real time on kind of where we are. Uh- Yeah, I think that was a great recap. I think interesting you were talking about concentration risk, and I think that that was a great point.

I guess that kind of sparked my thoughts too, which is of like the content, but the other side of having, um, equity and concentration is understanding your budget. We have a lot of clients, um, that come to us and they get paid in equity compensation with their salary, and maybe that their base salary isn’t enough to kind of maintain their annual household budget.

And so kind of strategies there to unwind that. So there’s lots to think about as it come… as it relates to concentration Equity compensation, concentration risk. So I think great points there, and I think that’s why it’s super important to work with a financial advisor, especially when there are some complexities as it relates to tax strategy, diversification, concentration risk, and just your overall budget.

So making sure and making smart decisions to plan for your family and just your overall budget. That was one of the items we wanted to talk about later, which is kind of just like planning ahead. Holidays are around the corner and kind of a great time to revisit your budget after s- unusual summer spending, and then kind of this lull period before the end of the year and holiday spending and travel and all of that kind of picks back up.

So that’s great points on the equity compensation and piece like that. We also– You touched on just, like, the impact that we’re seeing all of this economic data kind of trickle down to the consumer’s wallet. We’ve seen kind of since the start of the Iran war price increases. So, um, food and energy prices are definitely still surging higher.

So always like to hear from you all, um, on what you do think is impacting your wallet. I’m always intrigued when I’m seeing the gas prices like you mentioned. So every time I’m passing one, it’s trickling higher each time. And then I guess talking about affordability, but housing, we’ve t- been talking about that over the last few weeks, impact that interest rates are having on those of you who are in the housing market.

Um, to afford the median priced home in the United States today, you now need an income of hundred and twenty-six thousand, which is a record high according to that stat, which was interesting. Um, so that’s a forty-seven percent gap, near the highest on record. So interesting kind of to see where prices are, um, this affordability gap, and we’re– I think that’s also a great topic to connect with a financial advisor before seriously considering a home purchase, taking a look at interest rates, what you’re currently paying versus what you would be paying if you are looking to move.

So lots of planning items, I think, and lots that the, this economic data we’ve been discussing really impacts the consumer, and that’s what kind of we like to always bring together, I guess. Yeah, great points. And I guess Fed Chair Warsh is also thinking about bringing those together as he’s moderating, uh, monetary policy and, uh, thinking about the next move for the Federal Reserve.

Lots of comments, uh, uh, on inflation rearing its ugly head back. So, um, maybe we should end with what we’ve been talking about for a while. Markets were up big yesterday. Quarter end is around the corner. I think we’ve been talking about this now for 12 straight weeks. But take a look at your asset allocation, concentration risk, all the things.

Interest rates moving up means, uh, some of those, uh, big banks, uh, have not raised their rates yet from last week. Some have significantly higher than the 0.25%. So, um, we’re still seeing a lot of people in cash earning zero. Uh, we should be in the mid threes or higher. We’re seeing three-year treasury bills in the low 4% range, and of course, we talked about 10-year treasuries around 5%.

So this dynamic about the risk-free rate and the risk that you might wanna take, whether you’re in retirement or, or just starting out, of course, that’s why we customize all of our investment portfolios to each individual. But, um, as you’re getting statements at quarter end, uh, we’re getting a tremendous amount of inquiries of people who wanna just have a look at these things and project where their retirement would be.

I always joke that, um, all these baby boomers have way more money than they ever thought they would, given the market strength, and maybe they need to pare back some risk. So, um, take a look there. We also had, um- Some content I think that Ashley wanted to, uh, discuss, uh, before we, uh, wrap Yeah, touched on a little bit earlier, but, um, I know we’ve been talking about tax planning for the last few weeks as well.

This is a great time of year. Few paychecks kind of left in the year, especially if you do get paid monthly. Um, I just- a few to make- a few checks to make those changes, and that might be impactful to your 2026 return. So even though it does seem like now is not the time for tax planning, it really is. And so that’s always– we always joke with our financial planning clients this time of year that this is actually the best time to work together because there’s lots to discuss as it relates to tax modeling, planning, and all of that.

And then I think we touched on this a little bit last week, but preparing for open enrollment season as that is right around the corner. And coupled with that, just taking a look, uh, taking stock at your insurance coverages, so life insurance, property insurance, auto insurance, seeing kind of what you’re paying for those, if you’ve had any life changes over the past year, making sure that you are revisiting to not only see that your coverage is adequate for your life, your family, but also the price you’re paying is competitive, um, to maybe what else is out there.

And then as we’re talking about open enrollment season, making sure that you’re optimizing everything, um, your company has to offer. And so there might be– If your life has changed, there might be some options that you overlooked in the past, and that might be a great kind of option for you as we head into kind of the, the back few months of the year.

So let us know as always, info@chairmanwealth.com, if you have any questions. Um, we’re doing lots of planning, and there’s lots of kind of financial topics this time of year to touch on. So let us know if you have any questions, any items you want us to talk on about next week or in the next few episodes.

And Brad, I’ll let you, uh Close it out. Wow. All right. Well, we’ll close it out on, uh, the cost of living for seniors. Take a look at the COLA adjustment based on the last CPI. So your tar- if you’re collecting Social Security, um, it looks like you’re gonna get around a 3.5% adjustment next year, so another thing to plan for.

Um, and other than that, I think we covered a lot of ground. So thank you for listening. Uh, hope you guys have a great week, and, uh, I guess next Tuesday will be the last episode of the quarter. The, the year is rolling by. And, um, I don’t know, October is around the corner. It is freezing in DC Metro, and summer is officially over at 68 or whatever degrees it was this morning.

So, um, let’s brace for the fall season and all the good things, and, uh, we will talk to you next week. Talk to you guys soon.

All opinions expressed by the hosts and their guests are strictly their own and do not reflect the opinion of Sherman Wealth Management. Clients of Sherman Wealth Management may maintain securities discussed on the podcast. Sherman Wealth Management LLC is a registered investment advisor. Advisory services are only offered to clients or prospective clients where Sherman Wealth and its representatives are properly licensed or exempt from licensure.

For additional information, please visit our website at www.shermanwealth.com