As a successful high school cross country runner, Will Michener learned the importance of discipline along the road to achieving a goal. It was not about instant gratification or winning the first race, but how his ongoing hard work paid off at the end of the season. This mindset has served Michener well in his three years of wealth management planning at Wambolt & Associates.
“One of the most gratifying aspects of my job is helping clients set goals and create customized action plans to achieve them,” says Michener. “From the start, clients realize we are here to help, not judge. With a clear direction, finances don’t seem as scary.”
Michener has a particular enthusiasm for educating clients about alternative investments in private markets. For accredited investors – those with a certain level of income and assets – investing solely in public markets can be unpredictable and have unwelcome tax implications. An advantage of private markets is that they are noncorrelated and not susceptible to the volatility of public markets.
“While public equities, real estate, and lines of credit can be variable, private equity, real estate, and lines of credit generally remain stable or perform better,” Michener explains. “The private space offers investors greater choices with nearly 62 times more private companies available than public companies. For many of our clients, it makes total sense to integrate private investments with public equities to achieve a balanced portfolio and realize tax efficiencies.”
Educating clients of all ages about how they can make their money work for them is a particular passion for Will. He is concerned about the financial “literacy gap” he’s observed among his own age group and the hesitancy to invest based on the lasting impression of the 2008 market crash.
“A lot of people in my generation do not understand that investments are ‘the everyman’s greatest wealth builder,’” he says. “Because of some of the socio-economic factors they’ve experienced, like the spike in housing prices, many believe that buying a home is unattainable and not something to save for, they see retirement as a long way off, and the stock market carries a negative connotation. I try to encourage them to save now for a healthy payoff down the road.”
Will has invested in his future by enhancing his wealth management expertise. He has obtained his Series 65 license and is spending a good part of his weekends “hitting the books” in preparation for his Certified Financial Planner examination. Outside of work, Will enjoys hiking and skiing. A self-proclaimed “foodie” has taken on the challenge of working his way through the Michelin Guide.
An Evergreen High School graduate who earned his bachelor’s degree in finance from Valparaiso University in Indiana, Will is grateful to be working in a team-centered environment. “Our firm is unique in that it gives young associates a voice, and opportunities to be involved with clients from Day One,” Michener says. “The team supports us through a mentor program and there is a strong, common belief that we are all working for the same goals. We root for each other as we help clients cross the finish line.”
A stronger than anticipated jobs report reduced chances of a Fed rate cut in June as projected by analysts. Strong labor dynamics tend to foster underlying inflation for longer periods of time, thus influencing the Fed’s decision on rate decreases. Yields on shorter term U.S. Treasury bonds rose in March as expectations for a spring or summer Fed rate cut dissipated.
The Federal Reserve signaled that it will likely be appropriate to lower rates at some point this year, with some Fed officials expecting at least three rate reductions in 2024. Markets were anticipating the first rate cut to have occurred in March, yet did not materialize due to the Fed’s concern surrounding continued inflationary pressures.
Inflation angst affected markets in March as inflation remained a concern, hindering the Fed from executing a rate cut which had been expected earlier in the year. Over the past year, prices rose the most for transportation services, eating out, and housing. Stubbornly high prices on certain goods and services have stalled any immediate efforts by the Fed to commence its rate reduction strategy.
A number of central banks worldwide are expected to cut rates starting this summer, before the Fed embarks on its rate reduction plans. Slower economic growth and lessening inflationary pressures are prompting lower rates throughout Europe to sustain economic momentum. The European Central Bank, the central banks of England, Canada, Australia, New Zealand, and Switzerland are all anticipated to begin lowering rates this summer and through the end of the year.
The Baltimore bridge collapse highlights the fragility of the nation’s infrastructure and the need for proactive contingency planning and maintaining diversified routing options. A critical component of the nation’s shipping transit, the Baltimore Port is the largest U.S. port by volume in handling farm, construction machinery, and agricultural products. It is also the busiest U.S. port for automobile shipments, moving more than 750,000 vehicles in 2023, according to data from the Maryland Port Administration.
Florida passed a law this past month that prohibits minors under the age of 14 from having social-media accounts, regardless of parental consent. The legislation is aimed at curbing social-media access for minors and requires social-media platforms to cancel accounts and delete all content on the request of parents and minors. The law is set to become effective and enforceable on January 1, 2025. Should other states adopt similar restrictions, the impact on social-media platforms may pose a challenge.
The unemployment rate dropped to 3.8% in March, down from 3.9% in February, signaling a slightly stronger job market than expected by analysts. Concurrently, wage growth slowed in March to an annual growth rate of 4.1%, down from 5.9% two years ago. A slowdown in wage growth can be good for companies looking to mitigate labor costs yet derogatory for employees and their spending power.
Three key economic indicators rose in the first quarter, gold, oil, and the U.S. dollar. Gold hit an all time high of over $2,300 per ounce, while oil (West Texas Intermediate) reached over $90 per barrel, both indicative of continuing inflationary pressures and global geopolitical tensions. The U.S. dollar also rose driven by a stable U.S. economy and by the demand for a secure currency influenced by tensions in Europe and the Middle East.
Shrinkflation, a term being used more frequently in the press, is when companies sell a smaller or lesser amount of a product, but for the same price. The dynamic has become common from food products to cars, where consumers are getting less yet still spending the same. Higher production costs, including raw materials and labor, have forced companies to either raise prices or shrink product portions to maintain profitable margins.
Sources: Maryland Port Administration, ECB, Federal Reserve, Labor Dept., EuroStat, U.S. Treasury
Various factors are contributing to sustained high gas prices, which are expected to add to price pressures heading into the summer months. Traditionally, gasoline prices move higher as vacation travelers hit the road during the summer months. Transportation companies, railroads, and airlines also see enhanced activity during the summer season.
This summer, however, may produce higher prices than usual, as continued supply constraints, shipping issues, and increased international demand for U.S. oil and gasoline driven by the Russian invasion of Ukraine the Middle East conflict. The EIA reported that the average price of a gallon of regular gasoline rose to over $3.50 per gallon in March nationally.
Rising gasoline prices can become a burden for both consumers and companies. Not only are consumers spending more of their income on fuel, companies also pass along the higher costs of fuel to consumers. Higher fuel prices tend to filter down to the consumer since the cost of food, transportation, and travel are all affected by rising fuel expenses.
There is also the prospect of lower fuel prices. Historically, rising fuel prices eventually hinder economic growth, thus slowing industrial and consumer activity and lessening demand for fuel. Many economists believe that a recession would also curtail demand for fuel, thus bringing fuel prices lower.
Sources: U.S. Energy Information Administration (EIA)
The 2023 tax season, which began January 23, 2024, has so far seen over 90 million federal tax returns filed as of the end of March. The IRS tracks and monitors the number and status of returns in order to estimate tax revenue and filing timeliness. Refunds are also tracked, projecting the amount of funds owed to taxpayers. Through the end of March, there had been over 60 million refunds issued to taxpayers, with an average refund in the amount of $3,050. IRS data also reveals that the average refund so far this year is roughly 5% larger than it was for tax year 2022.
In tax year 2022, the Federal Government collected more than $4.9 trillion in total receipts, processed over 262 million returns and issued more than $641 billion in tax refunds. Budget estimates from the Federal Government, project an estimated $4.8 trillion in total receipts for tax year 2023.
Sources: IRS, Congressional Budget Office, Whitehouse.gov
A strong U.S. dollar is becoming a decisive factor for U.S. travelers heading overseas. Up nearly 3.5% year to date, the surging U.S. dollar is expected to maintain its value as demand for the greenback remains enduring. When traveling to other countries, an elevated U.S. dollar versus other country currencies, can make a European trip that much less costly. As of the end of March, the Euro is down nearly 8% versus the U.S. dollar, making travel to any Euro denominated country cheaper than the summer of 2021.
Here at home, the strengthening dollar has also made imported goods into the United States more affordable, which become less expensive for American consumers as the dollar rises. These lower import prices help mitigate inflation in the U.S. allowing consumers to spend less on certain goods yet spend more on leisure and travel.
Sources: https://fred.stlouisfed.org/, Bloomberg, Commerce Department