Transcript: Hello. I’m Ken Moraif, Senior Retirement Planner at Retirement Planners of America and you may notice that the background behind me is not my usual office and that’s because I’ll be traveling over the next several weeks. And the background will probably change every time you see this video each week, but you know how they say the show must go on and, so, I’m going to endeavor to make the backgrounds at least nondescript enough that you can pay attention to me.
So, this is the market alert recap for the week ended August 2nd and we had two very important things that happened last week. One was, of course, the Federal Reserve announcing that they were going to lower interest rates and then secondly right after that President Trump announced that he’s going to increase the tariffs on China by 10 percent. And, so both of those kind of happened on Thursday and Friday and, so we saw the market basically holding its own, seeming to be like ready to go up on the news of the Federal Reserve, but not. All of the sudden the President and the Federal Reserve Chairman did not tell us what we wanted to hear, or at least what the market wanted to hear and we saw the market go down right after that on Thursday and Friday.
So, let’s examine those independently. The first one is the Federal Reserve’s announcement. And, basically what Federal Reserve Chairman Powell said was yes, we are going to lower interest rates, but no, don’t think that this is the beginning of a trend. This may be a one and done and so, don’t place your bets that we’re going to keep doing that for the foreseeable future. So, this is not what the markets wanted to hear because the market wants free or cheap money, wants to see a trend, and if it’s just a one and done, then that’s not what we were asking for. We wanted more and, so, that was not the news that they wanted.
The other thing, of course, is the China tariffs and President Trump’s escalation of what we’re now calling a trade war. We believe that this is now no longer a tiff or a negotiation. This has escalated. And, so, we view that the Federal Reserve lowering interest rates provided stimulus to the economy which therefore enabled President Trump to look at increasing tariffs because those tend to have a dampening effect on our economy. So, the Federal Reserve gave stimulus. He took that and said, OK, China, we’re going to increase your tariffs.
So, those two combined caused we believe the selling that we saw on Thursday and Friday and it was pretty strong selling. It was a down week. Do we see this as a permanent condition? No, we don’t. We actually don’t think that this is going to escalate to the point of becoming a recession and a bear market and all those kind of things. And, as we’ve chronicled for you in previous videos, we believe that President Trump wants to have the China issue as part of his re-election campaign. So, he has no motivation to solve this, to get it over with anytime soon, so we believe it’s going to be prolonged and continue into next year. And, so, because of that it’s going to eventually get resolved. When it does, we believe the markets will rise. The Federal Reserve lowering interest rates is a stimulus. So, six months, a year from now, we still see the S and P being higher, the stock market being higher than it is today.
So, we believe we should be fully allocated into our equity positions, into our stock positions, and basically for you, if you’re watching this, then presumably you are someone who is over 50, who is retired or retiring soon, and we specialize in retirement planning, that’s who, we work with people that are within five years of retirement or that five years after that ten year period, that’s the period that we really want to work with people in. And, if you are in that zone, then we believe you should be invested, but only at the risk level that is appropriate for you and to determine that we encourage you to visit with one of our retirement planners to look at your entire financial picture. There are lots of decisions you need to make, Social Security, when, how, Medicare, income during your retirement, do you have enough to retire, do you have your game plan in place, all those kind of things. You know, we have two goals for our clients. The first one is, of course, we want you to have financial peace of mind. We don’t want you to worry about all this stuff. And, then secondly, we want your money to last as long as you do. Okay. So, we want your money to keep going until you, we want you to outlive your money, let me put it that way. And, so, if we accomplish those goals, then we’re very happy campers. So, if you’d like to learn more about us, our website is rpoa.com, rpoa.com. OK, so thank you for watching this video and we’ll talk again soon.