Recently, I shared insights on Target Date Funds (TDFs) for BankRate.com. The key takeaway is that these investments may carry more risks than they initially seem. You can read the full article here.
Indeed, it is feasible. That is, unless the Dodd-Frank Wall Street Reform and Consumer Protection Act introduces complexities.
The Federal Reserve has acknowledged a slowdown in economic recovery over recent months, as stated in the FOMC statement released yesterday. They also noted that inflation has “trended lower in recent quarters,” and they anticipate that price pressures will likely remain “subdued for some time.” To combat a) rising deflationary pressures and b) support economic growth, the Fed plans to implement two strategies. First, it will maintain the Fed funds rate at a target range of 0 to 25 basis points for an “extended period.” Secondly, it will reinvest proceeds from its extensive mortgage and agency debt portfolio into longer-term Treasuries to keep long-term rates low. However, the crucial question is whether these measures will be enough to counteract the recent decline in economic momentum. The consensus appears skeptical about their adequacy.
If you’re seeking another reason to question the already precarious recovery prospects in the labor market, the latest report on second-quarter worker productivity delivers just that.
The Federal Open Market Committee will convene tomorrow for its regularly scheduled meeting on monetary policy. While no rate hike is anticipated, there is considerable discussion regarding the possibility of additional quantitative easing, creating a buzz among market analysts…
►Dow Jones:
Disappointing growth and persistently high unemployment may compel Fed officials to decide whether to further stimulate the economy through a debt-buying program, according to James Hughes, a market analyst with CMC Markets. “Whether this happens remains uncertain, but market reactions could be significant. This could signal that officials are recognizing economic issues and are responding proactively,” Hughes noted. “Conversely, further evidence of an economy in distress might provoke a steeper decline in equity markets.”
►Bloomberg News:
Treasury two-year yields are nearing historic lows amid speculation that the Federal Reserve might resume bond purchases this week to protect the U.S. economic recovery.
There are economic recessions and then there are true economic RECESSIONS. Our current encounter with the darker side of the business cycle certainly fits the latter definition. The challenge lies in effectively promoting sustainable growth. A portion of the solution involves identifying the factors that led to this downturn, which may suggest potential remedies. However, according to Nobel Prize winner Edmund Phelps in a recent New York Times op-ed, the conventional wisdom from economic theory today is flawed.
The July jobs report yielded mixed results, as we discussed last Friday. What are experts saying? Here’s a brief overview…
►Seattle Times:
“If substantial job growth isn’t achieved by year-end, the economy could face serious challenges,” remarked Bill Cheney, chief economist at John Hancock.
►San Francisco Chronicle:
“While a double-dip recession seems unlikely, it cannot be entirely dismissed,” noted Sung Wohn Sohn, an economics professor at California State University Channel Islands.
U.S. unemployment remained steady at 9.5%, and nonfarm payrolls decreased by 131,000 last month, according to a government report released this morning. While not ideal, this figure warrants closer examination; July experienced a reduction of 143,000 temporary census workers. Focusing on the private sector, nonfarm payrolls actually increased by 71,000 in July. Although an improvement, this number is still insufficient to instill confidence that the economy is on a sustainable growth trajectory.
►Retailers report lackluster sales for July as back-to-school season approaches
Cautious consumer spending translated into uneven sales performance across national retailers in July, according to data released Thursday, signaling possible challenges for the back-to-school season.
►German Industrial Production Unexpectedly Declines
Industrial output in Germany, Europe’s largest economy, unexpectedly fell in June, attributed primarily to a downturn in investment goods such as machinery and trucks.
Has there been any improvement in money management? How can we truly measure this? These and similar questions are explored in my article featured in the August 2010 edition of Financial Advisor magazine: “Searching For Progress: Financial innovation is under fire. Failing to beat the market is only one reason.”
