Some thoughts and musing on the current state of affairs.
We’re at that time of year where our team has seen most of you at least a couple of times, and outside of any major changes happening in your life right now, we have a pretty good idea of whether or not you’re on track with your financial plan for 2017. Of course, if there are new major changes going on in your life, please, let us know.
Likewise on Wall Street, we’ve gotten a sense of how companies have done and will do for the year, and analysts are starting to look at what they believe is in the cards for these companies for 2018 earnings estimates. From an economic standpoint, we most likely will see new research saying that individual earnings should continue to improve, and that the stock market should continue to move higher, based on where we are in our economy.
In addition, we’ll be hearing from the Federal Reserve in September, as they’ve booked TV time, meaning they actually want to communicate with us in person instead of using meeting notes. I’m anticipating that the topic at hand will be the de-levering of the Federal Reserve’s own bond balance sheet, which they started adding to during the mortgage crisis, and are now at the point of needing to reduce. This is coming at a time when many people are anticipating a rise in interest rates. But, it’s my belief that the Fed doesn’t want to hurt selling that bond portfolio by raising rates, so I don’t believe we’ll see another rate hike in 2017. Furthermore, inflationary numbers say we’re not facing a strong inflation environment, so there’s no need to raise rates. While many point to history and say the cycle is bound to repeat itself, and I agree, it’s like the washing machine in your laundry room: It’s not clear whether we’re on a sheets and towels cycle, or a delicates cycle. How’s that for taking a complicated situation and making it simple?
In other news, we have what’s now a tropical storm in the swamp that is Houston, where the humidity is currently 175 percent. (If you’re questioning my math, I have six million people backing me up on this.) We are all praying for everyone on the Texas coast, and our hearts go out to our friends and family in the area. Our own Kyrk Davis serves in the Kentucky National Guard, and his unit has been called to deploy to aid in the flood relief efforts. Kyrk’s departure will leave a hole in our team for sure, but we are so proud that he will be helping out our Texas neighbors. I’ve also heard from several of you that your family members who serve in our military are being deployed, whether on search and rescue or other relief efforts, and our thoughts, prayers and gratitude are with you all.
One thought that’s often lost during these natural disasters is that they tend to be good for the economy for a few years afterward. Maybe it’s too soon to think about this in terms of Harvey, but it played out this way after Katrina, and this act of God may serve as the launching pad for President Trump to push through his transportation plan. This will also be beneficial for our country as we spend money we don’t have (we have a money tree, right?) to better our bridges, roads, airports, levees, etc.
Speaking of fighting over spending money we don’t have, but that we certainly owe, let’s not forget about the headlines here in Kentucky about our glorious teacher pensions. For years, lawmakers have failed to appropriately fund these, in lieu of other things that were considered more pressing needs for our state.
I’m hoping that the Herald Leader will publish an article sometime that actually shows, over the last three or four decades, what lawmakers have voted to spend that money on, leaving our teachers in the lurch. I’m sure some were things we truly did need to spend money on, and I understand that you cannot rob Peter to pay Paul forever – there are only so many dollars to pass around. That said, pensions are promises, and Kentucky has made that promise to its plan participants. Long-term, I believe we do need to do away with pensions, as every other corporate entity has – they’re simply not affordable for anyone.
But, we still need to keep our promise for those who planned their livelihoods around a pension, keeping in mind that about 20 percent of Kentucky’s teachers are currently eligible for retirement. In reading the newspaper yesterday, Governor Bevin said that if a teacher retires this year in order to “beat” the pension, they should go ahead and retire anyway because they don’t belong in a classroom. I say shame on anyone who blames the victim. Lastly, imagine if you were a North Korean dictator, and despite your best efforts to prove to the West that you’re A) crazy, and B) can launch a ballistic missile any time you please, well, think how ticked off you’d be that Mother Nature – or the great leader of the universe – literally rained 45 inches on your parade! After one day of press, you’re now relegated to the B section while everyone focuses on this guy named Harvey. It’s got to be downright disappointing for poor Kim.
And now, to steal a quote from another guy named Harvey who was a little more likable: That, my friends, is the rest of the story! (Does anyone else miss Paul Harvey as much as I do?)
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