Displaying items by tag: volatility

Thursday, 22 September 2022 05:20

Charles Schwab Warns of More Volatility This Year

In a recent Business Insider article, Charles Schwab is warning that stocks could see more volatility through the rest of this year, as we head into what the firm considers a weak earnings season. The company believes that more companies could miss earnings estimates in the following quarter, using FedEx as an example. The transportation firm slashed its earnings guidance last week in what is expected to be a sign of things to come for the rest of the S&P 500. In a note on Monday, analysts stated, "We believe the weakness in expected earnings growth is early in its trip to an ultimate negative (year-over-year decline) destination." Analysts also noted that the rate at which S&P 500 companies beat earnings expectations fell to 5% last quarter. This compares to over 20% in the middle of 2021. The company noted that the trend could be even lower in the third quarter as earnings reports come in. Excluding the energy sector, Schwab estimates that earnings growth in the S&P 500 will shrink by 2% over the third quarter, down over 11% from June.

Finsum:Analysts atCharles Schwab are warning of more stock volatility as we head into a weak earnings season.

Published in Wealth Management

COVID was one thing, but what about reconfiguring the economic landscape?

Among treasurers, the escalating significance of ESG related objectives reflected exactly that, according to gfmag.com.

Today, companies are looking at pressure to adopt ESG principles from stakeholders squarely in the eye, the site continued. The consequence of not embracing, defining and delivering on those initiatives? Potentially allowing the competition to slip through its fingers. And that means more than a diminished reputation or the perception of failing to d the right thing. In the face of market volatility, investments and companies with ESG profiles that rock outdo others, studies show more and more.

Meantime, in light of an uptick in interest among investors in ESG topics, regulators have been burning the midnight oil to come up with consistency and transparency surrounding ESG claims, according to acacompliancegroup.com.

A gaggle of firms also are taking a swing at establishing themselves apart from their peers by committing to, for example, climate and sustainability. 

There will be an awareness of the surge in activity related to the FCA on ESG issues among firms with UK operations. Since the Taskforce on Climate-Related Financial Disclosures has come into effect during the past year, the FCA’s created a division to oversee ESG-related issues. It clarified its strategic direction and focus areas for ESG issues.

Tim Rowe, manager in the FCA’s Sustainable Finance Hub, noted that the FCA is laser focused on five “Ts” for its ESG strategy: transparency, trust, tools and transition. 

Published in Eq: Financials

According to the findings of the Advisor Edition of State Street Global Advisors’ Inflation Impact Survey, the vast majority of investors who are currently working with a financial advisor, believe their advisors’ insight and guidance are valued more today during the current period of market volatility and rising inflation. The survey revealed that approximately three-quarters of investors have discussed inflation with their advisors and how inflation will impact their investment goals in both the short and long term. 90% say they value their financial advisors’ knowledge and guidance even more during uncertain times, and 86% believe their advisor has helped them remain confident during the current period of rising inflation and market volatility. The data follows the initial findings of State Street’s Global Advisors’ Inflation Impact Survey that showed inflation-induced stress and anxiety is influencing investor behavior with short-term budgeting and long-term financial goals.

Finsum:State Street’s Inflation Impact Survey revealed that investors are placing a higher value on their financial advisor’s guidance during times of heightened market volatility and inflation.

Published in Wealth Management
Monday, 12 September 2022 04:22

Market Volatility Led to Lower RIA Compensation

Before the pandemic, advisors and their staff were enjoying elevated compensation levels. But once the pandemic occurred, advisors suddenly needed to take stock of the financial health of their businesses. While the market downturn in 2020 didn’t last long, its effects led firms to become more conservative with their expenses. The continued volatility in the market resulted in firms looking to increase profit margins and aggressively cut costs. Rent and office expenses were the first to be cut, however, the largest expense by a considerable margin was non-owner compensation. According to an article in City Wire USA written by Damian Lo Basso, managing partner, and CFO at Journey Strategic Wealth, the years 2020 and 2021 were the first years since the financial crisis that many firms kept salaries and bonuses flat. In addition, some firms are now tying up to 50% of team members’ bonuses to overall firm performance.

Finsum: Due to the effects of the pandemic and ongoing uncertainty in the market, advisor teams are seeing their compensation being tied to firm performance.

Published in Wealth Management
Monday, 12 September 2022 04:11

September. Did someone say volatility?

When it comes to September, stocks have a track record of not exactly rocking – much less rolling. For the 30 year period, average returns chime in at -0.34% and -0.26% for the 15-year period, according to forbes.com. The five year period: -0.92%.

And it just keeps getting better with the month in a category of its own as a period when the market held down the rear, drooping on average in every time period.

Now, consider that along with the fact that, already, the year, stoked by factors such as flaming inflation, bulging interest rates and a recession keeping nearly everyone on edge has, you might say, been crackling with volatility. So, how could investors react? Why, they might go shopping for a placeholder for their considerable assets.

Fed chair Jerome Powell, addressing this year’s Jackson Hole Economic Symposium, acknowledged that to stave off growth, it’s probable rates will remain on the high side, not exactly comforting to households and businesses, according to talkmarkets.com.

Trying to read the tea leaves, there are market watchers who believe Powell means he’s no longer homed in on a soft landing. Rather, his focus might on a “growth recession,” as economists characterize it. A growth recession, of course, loosely is marked as a period when the economy’s headed north, yet so slowly that it’s putting a crimp in the volume of available jobs.


Published in Eq: Total Market
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