Solid Gains

Stocks rallied, at the end of May, on renewed confidence in the economic recovery, lower inflation worries, and rising comfort with Fed officials talking about the potential for easing of its monthly bond purchases. Technology, communication services, and reopening stocks were among the market leaders.

Investor sentiment was buoyed late in the month by an encouraging jobless claims number and the unveiling of a Republican infrastructure proposal. A somewhat hotter-than-expected inflation indicator did nothing to dampen optimism as stocks added to their gains ahead of the three-day Memorial Day weekend.^1,2

Jobless Claims Reach Pandemic Lows

In a sign of further recovery in the labor market, the number of initial jobless claims fell to a pandemic low, continuing the downward trend in worker layoffs. New jobless claims totaled 406,000 for last week, well below the pandemic high of nearly 1.5 million, though still above the 2019 weekly average of 218,000.²

Buffet and Powell Talk Inflation

What does it mean when two of the most powerful voices in American financial life seem to be saying two different things?

In one corner, we have the “Oracle of Omaha,” investor Warren Buffett. As one of the nation’s richest people and most frequently sought opinions on business matters, he’s a voice that gets a great deal of attention. He says that prices are going up.

“We are seeing very substantial inflation,” Buffett told his shareholders in May. “We are raising prices. People are raising prices to us and it’s being accepted.”³

In the other corner, Federal Reserve Chair Jerome Powell sees a slightly different story. While it’s true that prices are up, for now, the economic recovery is in progress and it might be a mistake to see inflation as a guest long overstaying its welcome.

“One-time increases in prices are likely to only have transitory effects on inflation,” Powell said. He later added, “It will take some time before we see substantial further progress.”⁴

While economic recoveries always take a bit of time, it can certainly test the patience of any investor, even one like Buffet who has lived through many economic ups and downs. 

Seasonal Stock Returns

You've maybe heard the old adage "Sell in May and Go Away." This saying comes from the seasonal performance of the stock market over time. As you can see in the chart below, The stock market has historically performed better between November 1st and April 30th, than it has from May 1st to October 31st. These time periods are comically referred to as from "Turkey to Tax" and "Mommies to Mummies." Of course, with all market statistics, there is no guarantee of this happening in any given year.

Part of being an investor is knowing about trends and statistics like this, while also knowing that you can't always depend on data from the past to predict the future. 

Increasing Cognitive Function: Can Exercise Help?

Most of us understand that moving our bodies is a necessary component of taking care of our health.  It helps us sleep better, manage stress, maintain a healthy body weight, keep our muscles strong (especially as we age) and helps us mitigate chronic disease.  Additionally, exercise may help boost cognitive function.

Moderate-intensity exercise can help improve your thinking and memory in just six months, states a February 15, 2021, article in the Harvard Health Publishing at Harvard Medical School.  "There's a lot of science behind this," says Dr. Scott McGinnis, an instructor in neurology at Harvard Medical School. 

Since each of our bodies is unique, science has yet to pinpoint exactly the type of exercise best for increasing cognitive function.  However, it suggests that regular exercise which gets your heart pumping and involves learning new skills or movement patterns, such as tai chi show promise. 

Click this link to read the full Harvard Medical School article: Exercise Can Boost Your Memory and Thinking Skills

Bonus Article:  A Neuroscientist Explains Exactly How Awesome Exercise Is for Your Brain

Mid-Year Financial Checkup

With June officially behind us, it’s time to face the facts: we’re headed toward the second half of 2021. While there’s still plenty of time to enjoy the rest of summer, we encourage you to slow down and check up on your financial well-being.

Take some time to evaluate your financial standings as we prepare for the second half of the year. Remember, we’re always here if you need assistance reassessing or working towards your financial goals.

Review your budget: 

Your spending habits likely look different now than they did in 2020, but did you adjust your yearly budget accordingly? The second half of the year can be expensive, between the holiday season and back-to-school spending. Take some time now to prepare.

Check your credit score: 

If you plan on moving, purchasing a car, or taking out a personal loan this year, you’ll want your credit score in good shape. Your score could have been impacted by recently accrued debt, late payments, hard credit inquiries, identity theft, and more. We also advise your check your credit report for any inaccuracies. You can do this for free throughwww.annualcreditreport.com 

Prepare for the advanced child tax credits: 

If you have children under 17, this is big news! If your qualify, based on your income, you may begin receiving advanced child tax credits in July. 

For 2021, the Child Tax Credit provides a credit of up to:

• $3,600 per child under age 6
• $3,000 per child from ages 6 to 17.

Rather than getting the credit at tax time, a portion will also be sent monthly throughout the year starting in July.

Other dependents—including children aged 18 and full-time college students ages 19–24—can receive a nonrefundable credit of up to $500 each.

Families who qualify, based on income, are expected to receive six installments via direct deposit or mailed check. If you anticipate getting the credit, you may want to talk about smart ways to use the money, such as saving in a 529 college plan. 

Potential Pitfall! 

However, there are some potential tax issues to be aware of! If you tend to owe a small amount of taxes at tax time, you may end up owing a little more. Likewise, if you normally get a small refund, that refund may decrease. This is because a portion of the credit you would normally claim at tax time is being sent to you in advance.

For example, let's say you have one child under the age of 6. Under previous tax law, you would claim a $2,000 credit at tax time. However, in 2021, you are eligible for $3,600. You'll be receiving $300 a month for 6 months, $1,800 total. At tax time, that only leaves $1,800 of credit to use for your tax return when you were used to getting $2,000. There is $200 less in credits for you at tax time which will impact how much you owe or are getting in a refund. The more children you have, the greater this amplifies the potential issue. 

"Great Leaders Live Like Drug Addicts"

From a homeless drug addict to a successful CEO.

This story caught the attention of the owners at GTS Financial. During a team meeting, we watched this TED Talk and reflected on the three principles the speaker presents. As transparency is one of our core values, these principles resonated with us.

These three principles saved the speaker from death and set him apart as a leader. They are small enough to fit in your pocket, yet big enough to change your life. The best part is that anyone can take these principles and immediately implement them after watching this talk.

Click below to listen to this insightful presentation.