Weekly Observations for 4/6/2018 — A Line in the Sand

Welcome to April! I hope your taxes are done and you can sit back and relax this weekend.

For the past two weeks, the U.S. stock market has essentially moved sideways and persistently bounced along a line known as the 200-day moving average — the same line it just barely touched when the decline started in early February.

There are a large number of investment strategies that will make changes if an asset class moves above or below this line, so it’s an important level for many market participants. So important, in fact, that every time it touches this line someone “in charge” makes a statement to avoid breaking the line. Last week it was the White House backing off of Amazon; and this week the new White House economic advisor, Larry Kudlow, making a statement trying to soften the administration’s stance on tariffs.

It’s a line in the sand that is worth paying attention to, if for no other reason than the fact that it’s a line many investors pay attention to. These things have a way of becoming self-fulfilling one way or the other.

Also in the past couple of weeks, we have seen a continued and accelerating increase in the interest rates we are receiving on cash reserves. After years of near-zero yields on bank accounts and money-markets, yields have climbed up to around 1.45% for government money-market funds, and it is not difficult to find 1.5% on FDIC-insured savings accounts.

If you haven’t revisited the rates you are being paid on your cash reserves, now would be a good time to check since many banks are slow to adjust their rates upward.

Thank you so much for all the well-wishes as Rebecca and I celebrated our 20th wedding anniversary two weeks ago! Although we were greeted by a heavy snowfall (it also snowed on the day we were married!), we had a wonderful time celebrating us and made some great memories together. I hired a photographer to trail us for a few hours — here is one of our favorites…

Have a great weekend! And as always, please don’t hesitate to contact me with items you need to discuss or if there is anything our team can do to serve you.

Sincerely,
Kenneth