June 2020
Each month, Wellspring's wealth strategist and advisors will share news and articles to shed light on the current economy, financial markets, and common tasks for maintaining a well-rounded and resilient personal financial plan.

Click on the links below to learn more.
Economic Data

June 1 - Manufacturing output (ISM PMI) report
June 3 - Service output (ISM non-PMI) report
June 5 - Employment and unemployment figures
June 10 - Fed updates
June 16 - Retail sales report
June 16 - NAHB Index (housing market index) report
June 30 - Consumer confidence report

  • This month will be critical as states across the U.S. look to reopen their economies to spur business activity. Initial data reflected an increase in service and manufacturing output for the month of May, signaling that April may have been the bottom of the economic freeze in response to COVID-19. However, Q1 2020 data was not favorable with household and government spending unable to buoy up economic activity. Consequently, marked the start of a recession. Whether an economic turnaround for the quarter can be achieved remains to be seen.
  • The June 5 employment data will reveal weather unemployment rate will level off or continue increasing. Since 1948 when the U.S. began recording employment data the unemployment rate has never been as high as it is today. Adding, the current double digit unemployment rate may continue to persist until a vaccine is developed and made readily available.
  • The lack of economic activity weighed heavily across businesses' bottom line results for the quarter ending March 31, 2020. The information technology, consumer staples, and real estate were the few sectors that eked out positive growth and during lock down appear to continue that pattern. Other segments of the economy continue to look for relief.
  • The outlook is that monetary and fiscal policy will push up inflation. Food prices increased since shelter-in-place order, but CPI has declined subsequent to the plunge in the energy sector. In the short term, deflationary pressure is expected.
  • Federal funds target rate remains between 0%-0.25% with the Fed offering unlimited support to economic activity and to fulfill its goal of maximum employment and price stability. More news from the FOMC leading to and on June 10.
Financial Markets

JPMorgan Chase & Co. identified three investment themes:
  • U.S. equity investors should turn their focus to quality and total shareholder yield although yields may be under scrutiny as more companies cut dividends and reduce buybacks.
  • Quality is a repeating theme for investors in fixed income with core bonds leading the conversation in offering steadiness amid volatility.
  • Valuation of international equities make this asset class an attractive long-term growth opportunity.

Gemmer Asset Management LLC put together a post with various visual charts for some perspective during the current volatility.

Frances Donald, Global Chief Economics for John Hancock Investment Management, shared her insight.
Personal Financial Planning

2019 tax filing is delayed to July 15. In addition, IRA contributions were extended to July 15 as well.

In this article for Forbes by Leon LaBrecque, "Down Market? It’s Roth Time!" , the author discussed the benefits of a Roth IRA contribution in the current climate. Furthermore, he mentioned the other approach in accessing a Roth IRA through a conversion. A more in depth discussion was written by William Baldwin also for Forbes on Roth IRA conversion, "Roth Strategy After The Secure Act: Calculate Your Benefit" .

More on retirement accounts, when Congress passed the CARES Act in response to COVID-19, one of the provisions eliminated required minimum distributions (RMD) in 2020. For retirees age 70.5 in 2019 that has since moved to age 72 starting this year under the SECURE Act, RMD can be suspended. For those that received their distribution already there may still be avenues to reverse the withdrawal. Consider reaching out to the investment provider and custodian about the option to reinstate distribution received. Alternatively, recipients of a RMD (excluding inherited IRA) may exercise the 60-day rollover and redirect distribution to the same or another IRA. The benefits of forgoing RMD this year is preservation of retirement investment market value during financial market uncertainty and avoid income tax on withdrawal. If other streams of income (e.g. earned income, Social Security benefits, investment income, pension) adequately meet spending needs it may be worthwhile to consider not taking RMD this year.

In personal financial planning, the profession is much broader than making sure clients save enough for retirement. A personal financial plan is interdisciplinary that means drawing knowledge from multiple areas of education, studies, and practice and integrating together to achieve a desired outcome. One area is life insurance as examined in this article by Kim Natovitz for AALU, "5 Things Clients Should Be Focusing On With Their Advisors" .

Lastly, retirement planning has not changed a whole lot despite Michelle Singletary's article for The Washington Post titled, "Forget What You’ve Heard. Here are the New Rules for Post-Pandemic Retirement." Nevertheless, the author does well in concisely outlining some of the rules of thumb for anyone to consider when approaching their own unique planning needs.
Phone: (408) 435-1668

For additional inquiries, please email us HERE .

By accessing any links above, you will be connected to a third party web site. Please note that Wellspring Insurance Network dba Wellspring Global Insurance Solutions and Wellspring Consulting is not responsible for the information, content or product(s) found on third party web sites. Securities and Investment Advisory Services Offered Through M Holdings Securities, Inc. A Registered Broker/Dealer and Investment Adviser, Member FINRA/SIPC. Wellspring Insurance Network
dba Wellspring Global Insurance Solutions and Wellspring Consulting is independently owned and operated. File #3102941.1