Broker Check

The Weekly Wealth Report

April 10, 2023

THE WEEK ON WALL STREET

Stocks ended a shortened week of trading mixed amid revived recession fears on Wall Street triggered by weak economic data. The Dow Jones Industrial Average gained 0.63%, while the

S&P 500 slipped 0.10%. The Nasdaq Composite index lost 1.10% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, advanced +0.37%.

FACT OF THE WEEK

On April 10, 1866, the American Society for the Prevention of Cruelty to Animals (ASPCA) is founded in New York City by philanthropist and diplomat Henry Bergh, 54.

In 1863, Bergh had been appointed by President Abraham Lincoln to a diplomatic post at the Russian court of Czar Alexander II. It was there that he was horrified to witness workhorses beaten by their peasant drivers. En route back to America, a June 1865 visit to the Royal Society for the Prevention of Cruelty to Animals in London awakened his determination to secure a charter not only to incorporate the ASPCA but to exercise the power to arrest and prosecute violators of the law.

Back in New York, Bergh pleaded on behalf of “these mute servants of mankind” at a February 8, 1866, meeting at Clinton Hall. He argued that protecting animals was an issue that crossed party lines and class boundaries. “This is a matter purely of conscience; it has no perplexing side issues,” he said. “It is a moral question in all its aspects.” The speech prompted a number of dignitaries to sign his “Declaration of the Rights of Animals.”

As the pioneer and innovator of the humane movement, the ASPCA quickly became the model for more than 25 other humane organizations in the United States and Canada. And by the time Bergh died in 1888, 37 of the 38 states in the Union had passed anti-cruelty laws.

Bergh’s dramatic street rescues of mistreated horses and livestock served as a model for those trying to protect abused children. After Mary Ellen McCormack, 9, was found tied to a bed and brutally beaten by her foster parents in 1874, activists founded the New York Society for the Prevention of Cruelty to Children. Bergh served as one of the group’s first vice presidents.

 

MARKET MINUTE

Recession Fears Resurface
Renewed recession worries dented investor sentiment, and the week kicked off with a weekend announcement by OPEC+ nations of their intention to cut oil production. The prospect of higher oil prices not only revived inflation fears, possibly hurting the chances of a rate-hike pause by the Fed, but it raised concerns over future consumer spending. Stocks weathered the news well but buckled on weak manufacturing and services data in subsequent days. Stocks trended lower again after a lower-than-expected open-jobs number and a slowdown in private-sector hiring. Stocks stabilized to close on Thursday, despite an increase in jobless claims and a pick up in March layoffs.

Cooling Labor Market
A string of labor reports last week reflected signs of a cooling labor market, beginning with an unexpectedly significant decline in the number of open jobs (falling below 10 million for the first time in nearly two years). The JOLTs report preceded payroll processor ADP’s employment report that saw a rise in private sector hiring of 145,000 (short of the consensus forecast of 210,000) and smaller wage gains.

 

FINANCIAL STRATEGY OF THE WEEK

About the U.S. Banking System
With recent headlines about two failed U.S. banks and their ripple effect throughout the banking sector, we want to summarize the latest information on this evolving event. We assure you we are monitoring the situation closely. However, it's important to note that such events can cause short-term market volatility.

On March 10, 2023, Silicon Valley Bank (SVB), the 16th-largest bank in the U.S., headquartered in Santa Clara, California, failed. SVB's customers include small to mid-sized technology companies and private bank customers, some of which are individuals.
On Monday, March 13, 2023, The FDIC transferred all deposits—both insured and uninsured—and substantially all assets of the former Silicon Valley Bank of Santa Clara, California, to a newly created, full-service FDIC-operated 'bridge bank' in an action designed to protect all depositors of SVB. As a result, depositors will now have full access to their money. In addition, customers will be made whole on their deposits through FDIC insurance fees that FDIC -member banks pay to have their customers' deposits insured up to $250,000.

Understanding FDIC Insurance and what it covers
The Federal Deposit Insurance Corporation (FDIC) was created during the Depression of the 1930s to help rebuild Americans' trust in the banking system. During this period, many banks failed, and depositors lost assets. Today, FDIC insurance protection is available and paid for by FDIC member banks to protect their customer's deposits. In the event of a bank failure, the FDIC uses the insurance fund to guarantee bank customers' deposits up to applicable limits.

FDIC insurance covers the following deposit products:
• Checking accounts
• Savings accounts
• Money Market Deposit Accounts (MMDAs)
• Certificates of Deposit (CDs)
• Negotiable Order of Withdrawal (NOW) accounts

FDIC insurance DOES NOT cover non-deposit products such as:
• Stocks
• Bonds
• Mutual funds
• Annuities
• Insurance products
• Crypto assets

This is an important distinction since FDIC coverage does not protect investments.
For investments, it's essential to understand how SIPC protection works. The Securities Investor Protection Corporation (SIPC) offers limited protection to investors. SIPC works to restore investors' assets when a member brokerage firm fails financially. Brokerage firm failures are rare. However, if it happens, SIPC protects the securities, mutual funds, bonds, and cash in your brokerage account up to $500,000.

SIPC protects your investments if:
• Your brokerage firm is a SIPC member (we are).
• You have securities at your brokerage firm.
• You have cash at your brokerage firm to buy securities.

SIPC does NOT protect if:
• The firm is not a SIPC member.
• Against market loss.
• Promises of investment performance were made.
• Your investment is a commodities or futures contract.

Recent market volatility serves as a reminder of the importance of maintaining a diversified investment portfolio that considers a client's risk profile and time horizon. We've taken these factors into account when establishing and maintaining your portfolio. As always, we’re here to answer any questions or help with anything you or your family needs.