Wednesday Reading List
As Republicans propose to raise the Social Security retirement age, here’s how benefits may change by CNBC
Despite the headline, both parties have proposals in place to shore up Social Security. Republicans would gradually increase the retirement age (although specifics weren’t provided) and reduce future benefits for high income earners. The Democrats want to subject more of high wage earners individual’s income to FICA. This is in the face of a potential 23% decrease in future payments if nothing is done.
When two popular recession indicators failed 👎 by TKer
The inverted yield curve and the Conference Board’s Leading Economic Indicators have both been signaling a recession for a while, and as we know, that recession hasn’t arrived. Understand that the inverted yield curve has a good track record, but it can sometimes be two to four years early – not that helpful. LEI’s have now flipped positive and some have suggested that there are flaws that need fixing with its framework. I’m not sure if this is true, but the point here is you can’t blindly trade or invest on the heels of signal metrics. They’re a piece of the puzzle, not the whole thing.
Where forecasters expect mortgage rates through 2025 by ResiClub
Where might mortgage rates be heading if you believe the forecasters? By the final quarter of 2025, Fannie Mae expects mortgage rates to slide to 6.0%. Wells Fargo’s model expects 5.8%, and the Mortgage Bankers Association estimates 5.5%.
Fed Keeps Pace Slow on a Bumpy Road to Lower Rates by Charles Schwab Asset Management
The Federal Reserve suggested that interest rates likely will move lower, but perhaps not as quickly as markets had been expecting. The Fed is still expecting a cumulative 75 basis points (0.75%) in rate cuts in 2024, but a slower path of rate cuts in 2025 and 2026.
See also: Powell’s Dovish Stance Sparks Market Optimism by Jeremy Siegel in which he takes “comfort that the Fed will not overreact to the recent quirky and hotter inflation prints [since] Powell indicated that the Fed still thinks the bigger trend is cooling inflation.”
ICYMI: International Investing
Sharing the highlights from my recent conversation with a Chief Global Investment Strategist on international investing, impact of this year’s elections, how to play the manufacturing rebound, why international markets are poised to do well and which ones in particular make sense today and why.
529 to Roth IRA Rollovers – What You Need to Know by Heritage Financial
The SECURE Act 2.0 created a new provision allowing 529 to Roth IRA transfers starting in 2024. This option improves the flexibility of using 529s and may introduce strategic tax planning opportunities. It also comes with several conditions that limit the use of the tactic. We’ve been fielding some questions about this new rule and this post provides the answers.