On Our Minds

Equity markets moving higher

The equity markets continue to move higher on news of steady economic growth and the receding COVID virus. The S&P 500 Index has grown in each of the first seven months of the year and when this has occurred historically, it has led to further gains through year-end. Recent economic indicators are demonstrating slower and more stable U.S. domestic growth and that has inspired optimism for future earnings.

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DO I NEED A COLLEGE SAVINGS PLAN?

As a parent, if you’re not rich and you’d like to save your kids from incurring a huge debt burden, you need a plan. The good news is there are more options available to help than ever before. [To help you plan, Englewood Bank & Trust offers a college savings calculator on its website.]

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Economy enjoys stable growth

Economic indicators are proving that consumers and businesses are fueling the economy with pent-up demand on spending. Consumers are reacting to the vaccinations with robust spending on vacations, furniture, automobiles and homes, while businesses are trying to ramp up production and services to meet the need. With GDP growing at 6.5% and now back to pre-pandemic levels, this pace is not sustainable and should decelerate in the coming quarters. This does not foreshadow a recession: the economy is returning to steady 2-3% sustainable growth with stable employment and lower inflation. GDP growth would have been stronger if supply chains, home building, and product delivery had not been suppressed by inventory and labor shortages.

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PLANNING YOUR RETIREMENT

As retirement approaches, experts say, maximize your income by eliminating unnecessary expenses. Carefully review how you spend your money and see if you can reduce or cut certain expenses.

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WITH INTEREST RATES LOW, GROWTH STOCKS ARE COMING BACK.

Welcome to the Roaring ’20s

The S&P 500 Index gained 8.1% for the second quarter and 14.4% year-to-date despite concerns over Federal Reserve policy, fiscal spending and the spreading delta variant of COVID. Most investors see an improving economy with continued low interest rates being positive for corporate earnings. Small cap stocks, which are mostly leveraged to an improving domestic economy, are leading the market higher. The best performing sectors were energy, financial, healthcare, and materials as value and cyclical companies are perceived to have more inflation-induced pricing power. The reflationary and cyclical trade into financials, industrials, basic materials, and travel-related companies is beginning to wane, however, as earnings expectations are set astronomically high. This will make the second quarter earnings period more challenging for those companies that miss high expectations. In addition, most commodity prices appear to have peaked. Growth stocks, particularly large cap technology stocks that are known for more consistent earnings, are coming back into favor as interest rates remain lower for longer.

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HOW SHOULD I PREPARE TO PURCHASE A HOME?

Finding a real estate agent you can trust

Real estate agents are often a terrific resource for getting suggestions regarding a number of home-buying issues. They will know which mortgage lenders are trustworthy and who does the best job of completing the process in a timely fashion.

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WHAT BUSINESS OWNERS NEED TO KNOW ABOUT RANSOMWARE

Ransomware attacks are nothing new, but there has been a major surge since the COVID-19 pandemic. Cybercriminals are using the fear and uncertainty of the pandemic to send malicious emails purporting to be from a legitimate source, such as the WHO, Centers for Disease Control and Prevention, Get My Vaccines, etc.

These emails appear genuine, but when you or an employee click on embedded link, your network locks up and those responsible hold all your date for ransom.

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Investable funds fuel financial markets

The S&P 500 index was up slightly in the month of May due to growing investor confidence in higher 2021 corporate revenues and earnings. With the receding COVID pandemic, consumers and businesses are emerging from social-distancing protocols and accelerating their spending. This strong growth in demand for goods has led to inventory shortages in many cases. Temporary delivery delays for raw materials and components are constraining global growth. Employment is expanding, however, which means goods manufacturing should improve and service industries should gain momentum.

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Plan to protect your financial information during hurricane season

Hurricane preparedness is on everyone’s mind this time of year, and with good reason. Being near the water makes Englewood particularly vulnerable. I’m sure most residents understand hurricane preparedness when it comes to protecting themselves and their loved ones in terms of shelter, safety and supplies. FEMA (Federal Emergency Management Agency) and the National Hurricane Center have posted some important operational guidelines.

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Revenue accelerating in some sectors

Most first-quarter corporate earnings reports have been meeting or beating expectations and this has raised the confidence that equity valuations are not excessive. The S&P 500 Index is trading at a reasonable 22x Price to Earnings multiple, but earnings estimates are being actively raised by analysts who see stronger revenue and profit growth in the second half of 2021. Financial, industrial, energy and basic materials companies are showing considerable revenue acceleration, expense control and order backlogs. Earnings from Apple, Alphabet, Amazon, Facebook, Microsoft and Qualcomm were all above expectation and guidance was strong for the year ahead. Both growth and value stocks are rising, but the pervasive microchip shortage is constraining production at some cyclical companies like Caterpillar and Ford. Small Cap and Mid Cap stocks continue to lead the market, while the service sector, especially travel and leisure, is gradually recovering.

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