So far, Apple (NASDAQ:AAPL) has mostly been able to avoid the effects of President Trump’s trade war, as its products have been excluded from tariffs on Chinese imports. CEO Tim Cook is on relatively good terms with the White House, which likely contributed to the exclusions. Unfortunately for the global economy, the trade war continues to escalate, and Trump might include Apple with the next round.
German auto and truck maker Daimler AG (NASDAQOTH:DDAIF) cut its 2018 profit expectations, warning that new tariffs on vehicles exported from the United States to China are likely to hurt sales of the high-profit Mercedes-Benz SUVs it builds in Alabama for global markets.
President Donald Trump’s decision to impose tariffs on European steel and aluminum comes at a particularly delicate time for major U.S. defense contractors Boeing (NYSE:BA), Lockheed Martin (NYSE:LMT), and Raytheon (NYSE:RTN), with each company vying for at least one of several multibillion-dollar procurement deals in Germany.
March’s prices edged down 0.1% on a big drop in gasoline prices, but this will be reversed in April. Inflation is still headed up this year, to a 2.6% rate (compared with 2017’s 2.1%), reflecting more expensive gasoline and overall higher costs. Gasoline outlays are headed up because of lower inventories of crude oil as demand perks up. The dollar’s lower value will also keep prices of other goods and commodities climbing this year, as many are imported.
Medical-care price inflation will hit 2.8% this year after 1.6% in 2017, which was unusually low. Prices of non-housing services will increase 3.1%, compared with 1.8% last year. New-car leases have become more expensive as car companies adjust to lower-than-expected end-of-lease values. And auto insurance rates are climbing substantially as the industry responds to higher costs for repairing expensive features on newer vehicles.
Not everything will see rising inflation this year. Food prices will continue to bump along at a 1.4% rate. Shelter costs will rise 3.2%, about the same as last year. Apparel prices are retreating from their post-Christmas price surge. Prices of new motor vehicles will be flat, after accounting for quality improvements. Prices of used cars and trucks are softening again, indicating that post-hurricane replacement demand has abated.
The higher inflation rate this year means that the Federal Reserve can stick with its plan of gradual interest rate hikes. The Fed is expected to raise rates a quarter of a percentage point in June and December, and then three to four times next year.
Moody’s lead retail analyst Charlie O’Shea didn’t sugarcoat his outlook last year regarding retail store closings in 2018. He plainly said, “I think the early part of next year will be pretty bad … I think it will be tough.”
If you’re upset about the Equifax data breach and want to get in on a class-action lawsuit against the company, you don’t have to do anything at this point. You—along with nearly 148 million others affected by the breach—would automatically be part of any class-action lawsuit, unless you opt out and sue on your own.
Inflation is growing, but at a moderate, not runaway, pace. It is normal for inflation to pick up as the economy expands. The strong January report was pushed up by unique factors that are not likely to occur again, such as unusually cold weather in the Southeast and the end of holiday discounts for clothing.
Everybody talks about the possibility of a bear market, but few seem interested in doing anything about it.
Despite the kind of national and global uncertainty Wall Street traditionally despises, this bull market keeps charging along. Investors don’t want to get out too soon and risk missing out on more gains. Some have become even more aggressive over the past year.
Still, there’s always that niggling knowledge that what goes up must come down … so people worry.
One of my favorite Warren Buffett quotes is that investors should be “fearful when others are greedy and greedy when others are fearful.” But what is one supposed to do when others are both fearful and greedy?
Here are a few ways you can safeguard your nest egg before the next downturn arrives.
1. Develop an income plan.
If you’re in or near retirement, do you know what your income sources are and when you’ll tap them? Most retirees rely on three or four basic income streams: Social Security, a pension and/or tax-deferred retirement account and maybe some personal savings. If you don’t have a pension or your guaranteed income won’t be enough to cover your basic lifestyle needs, you might want to look at creating your own guaranteed income plan with an annuity.
Annuities are guaranteed because they are backed by the financial strength of the insurance carrier. And if all or most of your retirement and personal savings are tied to the market, think about setting aside a few years’ worth of income in cash or very stable investments. That way, you’ll be ready to ride out the rougher years.
2. Plan your investments appropriately.
It’s daunting, but not devastating, if the market dips while you’re still working. You still have your paycheck to count on, you’re still putting money into your retirement account, and you have plenty of time to recover. When you’re close to or in retirement, it’s a little more intimidating. Your recovery window is smaller — but it isn’t non-existent. If you retire at 67, you likely will still need money in 15 or 20 years. If you have money left over once you’ve covered your basic income needs, you can invest it more aggressively for those later years — but you should do it with a long-term view.
Talk to a financial adviser about your risk tolerance, and know yourself: If you can’t handle a bear market emotionally or financially, it’s best to stick to more conservative investments in retirement.
3. Know your risk.
We often have an irrational fear of things that have a low probability of actually hurting us. When we swim in the ocean, for example, we fret about sharks — even though shark attacks claim only one American life each year on average. Cows claim 20 American lives in an average year, yet most people don’t fear going to a farm. If you’re losing sleep over what could happen to your nest egg in a bear market, find out if your worries are warranted. A financial adviser can stress test your portfolio and illustrate how it would have held up during the tech bubble of 2000 or the mortgage crisis of 2008. He or she also can show you how long it would take to recover from a similar downturn.
Investors always want to know when the next bear market will occur. The answer, of course, is no one knows.
What you can anticipate with some accuracy, though, is how much money you’ll need in retirement and when you’ll need it. A comprehensive retirement plan can help you make the most of what you have and — just as important — help you prepare for the worst.
You’re proud of the nest egg you’ve built in your IRA and 401(k), but are you prepared for the tax bill that will come with it when the time for required minimum distributions arrives? Here are four ways to ease that pain. Read more
Strong September and August inflation was likely temporary. Energy prices bumped up because of gasoline supply disruptions from Hurricane Harvey’s impact on Texas, but that effect should be temporary. And price increases excluding energy remain modest.