LIFE Newsletter April 2023
We’re excited for what’s ahead
This year it is important to us to shift to producing content that we resonate with. One of the biggest changes for our Life Newsletter will be highlighting organizations that we will be supporting this year. Each charity we highlight will receive a $500 donation from Abound Financial.
We’re excited to share more about the causes that we’re passionate about and hope they inspire you as much as they inspire us.
Life Lessons
“Wealth gained hastily will dwindle, but whoever gathers little by little will increase it.”
Proverbs 13:11 ESV
Investment Updates
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The STAAC maintains a modest overweight equities allocation. Equity valuations have become less attractive, relative to fixed income, amid higher interest rates but may benefit from falling inflation and a prompt end to Fed rate hikes.
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The Committee slightly favors value-style stocks based on relative valuations, though based on our technical analysis work, the recent trend of growth outperformance may continue in the short run.
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The Committee maintains a slight preference for U.S. stocks over their non-U.S. counterparts despite premium valuations. The economic resilience of Europe is notable, but the U.S. is further along in its inflation fight.
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We recommend a neutral allocation to fixed income, with the modest equities overweight funded from cash.
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The Fed’s determination to keep rates higher for longer caused U.S. Treasury yields to move significantly higher in 2022. Our year-end 2023 target for the 10-year Treasury yield is 3.25% to 3.75%.
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The selloff in the banking sector has provided an attractive opportunity in preferred securities; however, the risk/reward for core bond sectors (U.S. Treasury, Agency mortgage-backed securities (MBS), investment-grade corporates) is more attractive than plus sectors, in our view.
This research material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
Faith in Action
This month we would like to introduce Steve Burdick, Executive Director of College Golf Fellowship, and husband and father of 3.
Family from Left to Right: Katya, Jenelle, Steve, Jessica and Zach Burdick
Steve grew up playing golf with his dad, and it led him to a successful high school and junior golf career. He eventually received a scholarship to play golf for Stanford University from 1991-1995.
After his acceptance to Stanford, Burdick had a pivotal conversation with his youth pastor that changed the trajectory of his life. The pastor asked him, “Steve, if all the success that you’ve had with golf, your scholarship to Stanford, your success in the classroom…if all that success in the world’s eyes was taken away, would you still be content in life?” He realized his answer would probably be no, and over time spent meeting with him he discovered his faith, and learned what the Bible had to say about contentment and peace and placed his trust in Jesus Christ.
At Stanford, Burdick got involved with Athletes-In-Action and College Golf Fellowship, where he met a staff member of CGF who showed him that he could be involved in a ministry specifically serving college golfers. Burdick had an incredible junior year at Stanford, where he won the National Championship. Unfortunately, his senior year wasn’t as successful, and he was unable to defend the title. In the midst of that challenge, Steve realized he needed to lean in and choose to trust God with his disappointment. Despite the setback, Burdick credits his faith in God for giving him true contentment and purpose in life. After graduating, he joined College Golf Fellowship, where he now serves as the Executive Director. He continues to use the game of golf to glorify God and help college golfers grow in their faith.
College Golf Fellowship exists to make disciples by investing relationally with the Gospel of Jesus Christ throughout the world of college golf.
A group of more than 45 college golfers at a CGF retreat in Phoenix, gathered to hear the Gospel and be discipled in their faith.
If you would like more information or are feeling inclined to give to this cause you can find more information here:
Economic Update
The financial markets’ resilient performance during March was striking, despite pockets of uncertainty surrounding the strength of the economy—and not to mention concerns over the durability of the banking system. The ability of the market to navigate nearly two weeks of headline-related risk tested the underlying resolve of the market’s capacity to look ahead.
Moreover, it underpinned our conviction that despite setbacks, including bouts of volatility, we will see the beginnings of a new bull market emerge, especially as the Federal Reserve (Fed) winds down its campaign to quell inflation. By all indications, the Fed is edging closer to its final interest rate hike, which should help bolster both consumer and business confidence.
According to The Conference Board, consumer confidence inched slightly higher during March, reflecting a solid labor market with an unemployment rate of 3.6%—the lowest it has been in over 50 years. In addition, the National Association of Home Builders (NAHB) confidence index continued to climb higher in March, representing the third straight month of improvement. With mortgage rates tilting lower, sales of new homes began to pick up during the month, and many industry experts were commenting that the housing market may be on the cusp of “bottoming out.”
Certainly, the strains in the banking system jolted investor confidence and the market’s positive trajectory, but the quick response from government agencies—particularly the Fed’s lending facility, designed to help banks shore up their balance sheets quickly—helped restore calm in the market. Fed Chairman Jerome Powell echoed the reassuring words of many officials in the U.S. and abroad when he said the U.S. banking system “is sound and resilient with strong capital and liquidity,” and that “deposits are safe.”
Helping to further strengthen support in the country’s financial infrastructure, and ease investor anxiety, was the headline that First Citizens Bank would purchase “all of the deposits and loans” of Silicon Valley Bank, the bank that collapsed quickly and ignited a stretch of fear and panic across financial markets. With the private sector showing the value it sees in the ailing bank, we saw renewed optimism and faith in the overall banking system, and markets in general. First Citizens share price climbed 53% on the first trading day following the announcement, demonstrating the market’s confirmation that the deal made sense—and that the banking sector is safe.
Investors and traders alike were able to continue to find value in the market as stability returned. Investors’ patience was tested yet again, however, when Credit Suisse, a major global bank with a strong presence in the U.S., came under severe pressure. That situation was resolved quickly when Credit Suisse was seemingly instantaneously rescued by merging with its long-time rival, UBS.
Overall, patience and perseverance was rewarded as markets continued to factor in an increasingly realistic scenario of lower interest rates and a weaker U.S. dollar, which helps U.S. exporters compete in the global marketplace and helps soften overall financial conditions globally. It’s also important to keep in mind that it’s very rare for markets to suffer negative returns two years in a row. The unwinding of the technology bubble and the financial crisis that began in 2008 witnessed successive years of negative performance, but they represent anomalies.
The sound foundation of our financial system corroborates our constructive optimism of the upward and long-run trend of markets, despite headlines designed to jar nerves and test our steadfast resolution. As always, please reach out to me with any questions.
Sincerely,
David Laut
CEO, Certified Financial Planner™
O / 916-846-7780
A / 4180 Douglas Blvd. Suite 200, Granite Bay, CA 95746
Important Information
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.
References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.
All data is provided as of January 31, 2023.
Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.
All index data from FactSet.
The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
This Research material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.
Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
Past performance does not guarantee future results.
Asset allocation does not ensure a profit or protect against a loss.
For a list of descriptions of the indexes and economic terms referenced, please visit our website at
lplresearch.com/definitions.
