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Economy & Market Expectations

RL139 — Economy & Market Expectations

On the Retirement Lifestyle Show, Roshan Loungani, Erik Olson, and Adrian Nicholson assess the current economic and market landscape and how your investment expectations should evolve. They discuss what a strong dollar means for the economy, Bond interest rate risks, and how the Ukraine conflict is affecting the U.S economy.

[02:30] Overall Macroeconomic Outlook of the Markets

[05:45] The Fed is Increasingly Subject to Political Pressure

[08:05] What is a Fed Pivot?

[11:21] What The Strengthening of the Dollar Means

[15:18] How the Conflict in Ukraine is Affecting Europe and the U.S

[18:06] Energy Stocks in the S&P 500

[21:10] The U.S is Headed Towards a Recession

[24:17] The #1 Role of Your Financial Advisor

[28:05] 20-Year Treasury Vs. S&P 500 and NASDAQ

[28:58] Bond Interest Rate Risk

[32:28] Stocks Expected to Drop Even Further

[37:40] Incentives to Owning Bonds

[39:48] How to Spot the More Lucrative Stocks During This Down Market

[45:40] What Are You Buying?

[48:50] We Are Now in a Stock Pickers Market

[51:30] Parting Thoughts

For more links and the full show notes keep scrolling down!

Roshan Loungani can be reached at or at 202-536-4468.

Erik Olson can be reached at or 815-940-4652.

Adrian Nicholson can be reached at or at 703-915-8905.

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Full Show Notes:

Interest Rate Risk and Its Impact on Bond Prices

An interest rate risk is the probability of an investment loss triggered by an upward or downward movement in the prevailing rates. For example, if interest rates rise, the value of bonds or other fixed-income investments will decline. So why is the interest rate risks in bonds so consequential to bonds compared to other investment avenues? First, bonds of different maturity rates react differently to interest rate risks. Second, the larger the duration of the longer-term security means a higher interest rate risk for the concerned securities. This is why long-term bonds often offer a maturity risk premium for the added risk of interest rate changes. The expected rates of return on longer-term bonds are usually higher than those of short-term bonds to compensate investors for taking on more risk. However, this risk can be reduced by buying bonds with different maturity rates.

What The Strengthening of the Dollar Means

Inflation, gas prices over the last year, interest rates – everything seems to be on the rise. But the one thing most people have not realized is rising is the strength of the U.S. dollar. The dollar is so strong now that 1 Euro is equal to 1 U.S. dollar, something that hasn't happened in 20 years. So what does this mean for the economy? American investors can now earn higher interest on their investments at home. As a result, investors are liquidating foreign assets and moving money back home. This shift has further led to an increased demand for the dollar and hence a drop in the price of imported goods. Lower import prices are great for combating inflation. However, a strong dollar also translates to exports from the U.S. becoming more expensive and inevitably forcing international companies to source cheaper alternatives elsewhere - which is bad for the stock market.

All opinions expressed by podcast hosts and guests are solely their own. While based on information that they believe is reliable, neither Arete Wealth nor its affiliates warrant its completeness or accuracy, nor do their opinions reflect the opinion of Arete Wealth. This podcast is for general informational purposes only, and should not be regarded as specific advice or recommendations for any individual. Before making any decisions, consult a professional.

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