Financial Advice, Planning and Guidance.

The best time to plant an oak tree was thirty years ago.
The second best time is today.

Reaching Your Financial Goals

Our Consultative Approach is a time-proven method that focuses on your needs, your goals and your priorities. Isn’t that a better idea?
Learn More

Financial Advice and Strategies

Active money management is more than just a good idea: it is a responsibility. Are we the right partner for your retirement goals?Learn More

Planning. It's Really Not So Complicated

When you finally do figure out what to do with the rest of your life…you’ll probably want the rest of your life to start immediately. How about today?Learn More

Guidance: In Every Client Relationship.

At Denk Strategic Wealth Partners, our insight offers the ‘How’ and the ‘Where’…but only after your vision tells us the ‘Why’.Learn More

Weekly eLetter 5/29/2020 — Unemployment Numbers Bullish For Investors!

Based on recently updated data it appears that the ‘official’ US Unemployment rate in April was 14.7%, and yes, that’s the highest since the Depression, although data from that long ago isn’t as accurate as today’s data. Whether that number is accurate or not, it’s a really high number. Our expectation is that the May number will be even higher when it’s announced on the 5th of June.

This is terrible news for our country for a myriad of reasons. GDP is lower because fewer people are working and contributing to the economy. State and Federal unemployment benefits increase deficits, and tax revenues (because people are not working) are lower. In addition, many workers see the assets on their personal balance sheets dropping, and debts increasing.

On the other hand, we’ve heard various media people comment that they expect the fastest economic rebound EVER, and we’re beginning to see it now, so while big unemployment numbers are horrible for many reasons, they are Bullish for stock prices. (Note: Bullish is not necessarily the same thing as ‘good’.) The current ongoing upward march of stock indexes is great for those who are invested in stocks, but not so great for those who wished they had invested at lower prices. Bottom line; something ‘bad’ (unemployment numbers) can still be ‘Bullish’ (for stock prices.)

Of interest, historically the S&P500 Index* has bottomed between 4 and 12 months ahead of the worst point for unemployment rates. And after an economic recession is a fact it is generally understood by all that it will, eventually, end. Importantly, stock investors become optimistic sooner than the hiring managers do. A more important point is that high unemployment rates tend to be followed (historically now) by several months of rising markets.

If some of this appears contradictory, don’t worry. It actually does make sense: lower number of people working and lower GDP should mean lower company earnings. And because company earnings (or expected earnings) are fundamentally the most important factor in stock prices, one might guess that stock prices would continue downward.

But on the other hand (that two-handed economist again) more unemployment has tended to give us a much more accommodative FED, and that’s certainly the case at this time. When the COVID panic unfolded the FED dropped its target rate down to 0-0.25%!! In addition, the FED ramped up QE4 at the fastest rate EVER in their history. The result has been extremely stimulative to the ongoing market rebound, and we believe that the FED will continue to stimulate markets until it is clear to most everyone that our economy has turned over to the upside, which we believe will be sooner than later. After all, this is not your grandfather’s recession. It is in fact the first and only self-imposed recession in history. It can therefore, at least to a large extent, be ‘un-imposed’. The Fed action then is different than normal. It is not intended to kick-start the economy, as much as it is to offer a bridge over troubled water.

So for the immediate future, we anticipate the FED stimulus will continue to aid in pushing up our markets. Fingers crossed!

…read more