The Economy, Inflation, and a New Partnership

in Market Commentary by

This week, the 10-year U.S. Treasury note yield passed 3% for the first time since early 2014, as concerns around the impacts of inflation heat up.

Some of the particularly visible publicly traded companies such as Google, Facebook, Amazon, and Visa had great earnings reports this week. These reports have left some questioning whether company earnings growth will be able to continue at such a strong pace. Specifically, Caterpillar issued commentary that their 31% earnings growth in the first quarter might be the highlight of their year.

Interestingly, Kim Jong Un, the leader of North Korea met for peace talks with South Korea’s president Moon Jae-In the Korean DMZ (de-militarized zone). Both leaders crossed into their counterpart’s countries, marking the first time a member of the Kim family has ventured into South Korean territory since the Korean War.

Weekly Returns

S&P 500: 2,669.91 (+0.15%)
FTSE All-World ex-US (VEU): 54.88 (-0.02%)
US 10 Year Treasury Yield: 2.959% (-0.03%)
Gold: $1,324.10 (-0.89%)
EUR/USD: $1.2131 (-1.29%)

Major Events

  • Monday – Alphabet’s earnings report showed strong sales growth and reported a net profit of $9.4 billion in the first quarter.
  • Tuesday – Caterpillar, producer of heavy equipment, commented that their 31% sales increase in the first Quarter was likely the “high water mark” of the year.
  • Wednesday – Alight Solutions, formerly Aon Hewitt, announced partnership with Personal Capital and Alliance Bernstein, to introduce WealthSpark™.
  • Thursday – The Wall Street Journal reported that Wells Fargo is undergoing an examination by the U.S. Labor Department of its practices related to pushing 401k participants to moving their retirement savings into more expensive products.
  • Friday – Kim Jong Un, the leader of North Korea, met for peace talks with South Korea’s president Moon Jae-In.
  • Friday – Amazon’s earnings report resulted in a substantial price increase for the company, which raised the price of its “Prime” membership to $119 a year.

Our Take

Investors seem to be struggling with whether or not the signs of a strengthening U.S. economy mean good or bad times are ahead. As we’ve mentioned before, this seems a bit ironic. While it’s certainly been a long time since we’ve seen a bear market, the argument can also be made that corporate earnings continue to remain strong. Rather than try to predict next week’s market fluctuations, Personal Capital remains dedicated to a long-term focus, with broad diversified portfolio allocations as a hallmark for many of our clients.

Inflation has also been a major topic of interest both internally here at Personal Capital, and with our clients. It’s certainly possible that inflation continues to increase as unemployment remains low, and the Fed continues its path to normalizing rates. How this one factor in many impacts the U.S. and global economies remains to be seen. Suffice it to say, we’ve been awaiting increases in inflation for some time now.

Finally, we are excited to announce this week that we have partnered with Alight Solutions (formerly Aon Hewitt), a leading provider of benefits administration and HR services to 50% of Fortune 500 companies, and AllianceBernstein, a leading global investment management firm. Personal Capital will offer our award-winning financial tools, portfolio recommendations, and financial planning software to American workers through employer-sponsored retirement plans.

Through our partnership, Alight will provide plan participants with personalized financial advice through a custom Personal Capital dashboard. This new solution is called WealthSpark™, which you can read more about here.

If you’re interested in exploring whether Alight’s WealthSpark™ is an option within your employer’s retirement plan, please feel free to check with your benefits department.

Contact a Financial Advisor

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Paul Deer, CFP®

Paul Deer, CFP®

Paul is a Certified Financial Planner® and serves as both a Manager and Financial Advisor at Personal Capital. He has been educating and assisting clients with important investment decisions for nearly a decade.

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