Ecclesiastes 3
1 For everything there is a season, and a time for every matter under heaven:
2b a time to plant, and a time to pluck up what is planted;
3b a time to break down, and a time to build up;
5a a time to cast away stones, and a time to gather stones together;
6 a time to seek, and a time to lose; a time to keep, and a time to cast away;
7 a time to tear, and a time to sew…
Something has changed! A Global down turn is underway; it can be seen in the Industrial statistics, the”Yield Curve” Spreads, the Baltic Dry Index. The slowdown can be seen in declining Home Mortgage Applications and increasingly higher Auto loan delinquencies; much, much higher credit card debt with slower repayments. Not surprisingly, the Spring Real Estate market in many regions of the US are exhibiting slowing sales when Property sales should be seasonally expanding. These are all signs of an aging Business Cycle.
This happens in Free Markets; it happened in 2010, 2012, and a longer decline in 2015. Each decline was met with Global Central Bank interference in the form of massive Liquidity injections via purchases in the Equity Markets and massive purchases of all forms of Bonds and Debt Instruments. Maybe a not so “Free market”.
Something has changed! Instead of ZIRP (zero interest rate policy), rates are rising! Instead of Massive Global Central Bank purchasing in a declining market, the Federal Reserve is actually selling! In April of 2017, the Central Banks were purchasing at the rate on $1.7 Trillion Dollars; tapering in April 2018 to an alleged big fat ZERO! The ECB is still caught supporting the European Markets as is the Bank of Japan for the Japanese Markets. The simple reason is that no else is willing to enter theses markets; no one entering at the current reduced and manipulated rates!
Something has Changed! Without the Financial Credit Pulse of coordinated Global Central Banks, Volatility and RISK have reappeared. The support has been removed and The Federal Reserve has announced not only are they NOT purchasing, but they are selling; $8 Billion Feb 5, 2018 alone. It is time to Pay Attention!!!
Your Wealth is at Risk! Americans 55 years and older have a 70% of their Nest Egg in the Stock Market and 20% in the Bond Market; rising rates devastate Bond Funds! Those approaching retirement age are not “in it for the long Haul!” There is not enough time to recoup losses before the funds are needed. There are times to be Aggressive and times to be Conservative; the Fed has transparently announced their intentions. This may be a time to be very conservative. In fact, one does not need to be fully invested 100% of the time. Without support, the Markets are free to act the way Markets are suppose to act. The next downturn could be EPIC!
Something has changed! Your Future is at stake! Now might be a very appropriate time to review your goals and concerns with your Financial Professional. Maybe an “Exit Strategy” should be developed with a goal to transfer into different asset classes.
