Bi-MONTHLY MARKET ANALYSIS &

ECONOMIC UPDATES

March 7, 2024

Pierce’s Perspective…

The New 65

A record number of Americans are turning 65 this year, more than any other time in history! 65 used to be a more meaningful number. Once a symbolic summit, 65 used to be each hard-working American’s personal Everest, where individuals diligently ascended the arduous mountain we call life seeking to plant their flag at the top and relish the panoramic view of retirement awaiting them on the other side. Times they are-a changin’. There has been a dramatic shift between these 65-year-olds and their parents of previous generations. Our new class of 65-year-olds are redefining what it means to retire. Gone are the days when people hit 65 and begin winding down their life. To this current generation of retirees, it’s time to begin a new chapter of living life. Gone are the days of sitting in a rocking chair knitting, tending to a small garden, or leisurely fishing. A growing number of people in the U.S are seeing this as a milestone to start something new. This generation of retirees are healthier and wealthier than previous generations, which is leading them to this new outlook on their golden years. 4.1 million Americans are turning 65 years old in 2024, which works out to roughly 11,200 per day. This trend will continue to increase every year through 2027. Previous generations peaked at about 10k per year in the past.

WORKING LONGER

65-years-olds are also working much longer than previous generations. Nearly 20% of 65-year-olds were employed in 2023, which is nearly double the amount of people 35 years ago, with nearly 2 out of 3 working full time compared to half that in 1987. These employees 65 years and older are also earning quite a bit more. The average hourly pay is reaching $22 per hour, up from $13 per hour in inflation adjusted dollars. Sadly, many in this age group are working past the age of 65 because they need the income to support themselves or need to build a bigger nest egg because they fear outliving their money in retirement. For the people who did plan properly for retirement, they are working because they enjoy their work and the opportunity for continued learning and social interaction.

MORE WEALTHY

A larger majority of today’s 65 and older retirees are wealthier than previous generations. While there are significant disparities among the opposite sides of the retiree wealth bell curve, the median net worth of those aged 65-74 was $410,000 in 2022, a significant 45% increase from 2010 at just over $282,000. This increase in retirement savings is a thin silver lining coming out of all the quantitative easing that has occurred since the Great Financial Crisis. Some of that 45% increase in net worth reflects the rising values of homes and retirement accounts. Interestingly, not all baby boomers have fared as well. Those retirees 75 years or older only realized a 13% gain in median net worth over the same period. Although today’s 65-year-olds have more to spend, fewer have pensions with protected monthly income. They will have to depend on their savings, investments, and Social Security to last them the rest of their lives, which is gradually getting longer as time goes on. Another factor many 65-year-olds are having to take into consideration is the rapidly rising cost of long term care in their later years.

ACTIVE LIFESTYLES

A larger portion of the 65 and older population reported meeting federal physical activity guidelines of 150 minutes of moderate intensity aerobic activity and strength training every week in 2018 than in 1998 according to the CDC. Staying active can help reduce the risks of falls, cardiovascular disease, depression and Alzheimer’s disease.

LIVING SINGLE

Unfortunately, the divorce rate among the 65 and older population has more than tripled since 1990. This phenomenon cannot be easily explained , but Susan Brown, the co-director of the National Center for Family and Marriage Research at Bowling Green State University in Ohio said it could be partly the result of longevity in our aging population. Today’s population can reasonably expect to live another 20 years, and some might not want to spend it in an unhappy marriage. Sadly, this is leaving many to spend their remaining days alone, or in a shared community because they cannot afford to live on their own.

HIGHER PURPOSE

According to a Harris Poll survey, having purpose matters more than having youthfulness among people 50 and older. Not only does it make people happier, but it can also lower the risk of Alzheimer’s disease, heart disease, and stroke.

Abraham Lincoln once said, “In the end it’s not the years in your life that count. It’s the life in your years.” It appears this new generation of retirees agrees with him. Whatever your purpose may be, seek it, find it, and pursue it. It is imperative to living a happier, longer life in retirement.

~~ Pierce Hanna

Proper Perspective:  In our hectic and often hard to comprehend world, it is very easy to lose perspective. You may agree it is sometimes difficult to see the big picture. The media often doesn’t help with this, but unfortunately instead encourages us to see things in a most negative light. Here is hopefully a pause to gain positive perspective.

“On behalf of Major League Baseball, I am terribly saddened by the sudden passing of Kirby Puckett.”

~~ Bud Selig, 2006

What Happened On This Day March 7, 1850 – US Senator Daniel Webster gives his “Seventh of March” speech.

INDICATORS OF INTEREST:

• Market’s Current Signal: Market in Confirmed Uptrend.  Analysis of the stock market over 130 years of history shows we can view it in terms of three stages – market in uptrend, uptrend under pressure and market correction. I analogize this to a traffic signal’s changing colors from green to yellow and then to red. Since the 1880’s, this perspective has led to investment out-performance relative to market indexes. This is due to trend analysis which determines risk reducing, return enhancing market entry and exit points.

The Stock Market Trend: Market in Confirmed Uptrend. Since November 1 the market has been in a confirmed uptrend. The market’s technical’s and fundamental’s remain solid and support the market’s extended Confirmed Uptrend. The market is now up 13 out of the last 15 weeks.

Here are key market levels as of Monday, February 5:

Recapping Last Week

U.S. equities ended the week higher after a key inflation gauge rose in line with expectations. The Nasdaq Composite index gained 1.7%, finally eclipsing its 2021 high, while the S&P500 added almost 1%. The Russell 2000 jumped nearly 3% and closed at a new 52-week high. Seven of 11 S&P500 sectors were positive, with technology rising 2.5% and consumer discretionary gaining 2%. Bitcoin continued its recent surge, soaring 23% to $63,500 last week and reaching levels last seen during the late-2021 frenzy. Crude oil prices rose more than 4% ahead of OPEC’s anticipated decision in early March to extend production cuts. U.S. Treasury yields eased at the long end of the curve after the core PCE index increased 0.4% MoM and 2.8% YoY in January. The Fed’s preferred measure of inflation continues to trend favorably, with the annual core reading at the lowest level in three years. However, there is still plenty of uncertainty around the path of interest rates as the U.S. economy’s strength persists. Fourth-quarter GDP was revised only slightly lower, to 3.2% from 3.3%, and U.S. consumers continued to dip into savings as prices stayed elevated. The personal savings rate was 3.8% in January, a full percentage point lower than six months earlier. Personal income unexpectedly jumped 1% for the month, while spending decreased 0.1%. In February, U.S. consumer confidence fell for the first time in four months as views on the economy and jobs market deteriorated. ISM manufacturing PMI slumped to a seven-month low of 47.8 as factory production remained subdued. In housing news, U.S. home prices ended 2023 at record highs after high mortgage rates kept inventory low. New and pending home sales lost momentum in January, curbed by cold weather.

Overseas, consumer inflation in Germany declined more than expected, to +2.5% YoY, but CPI in the 20-nation Eurozone was somewhat higher than forecast. In China, manufacturing activity in February contracted for a fifth straight month, pressuring policymakers to initiate more stimulus measures ahead of next week’s annual parliamentary meeting. Japan’s January core CPI gain slowed from the prior month but held at the central bank’s 2% target. Expectations for substantial wage hikes at the March 13 labor-management talks could pave the way for the BOJ to end negative interest rates this spring despite two consecutive quarters of GDP contraction. Finally, Australia’s CPI rose 3.4% in January, below forecasts and unchanged month-over-month.

Current View

From small caps to large caps, from the tech sector to industries outside it, the stock market lifted all of these areas on yesterday. After losing more than 2% over a two-day slide, the Nasdaq avoided a third straight distribution day. The stock market initially rallied amid comments by Jerome Powell hinting that he and fellow leaders of the U.S. central bank are cautiously optimistic that inflation is returning to a more balanced state. His testimony wrapped up this morning. “We want to see a little bit more data so that we can become confident,” Powell told the House Financial Services Committee during the first day of Congressional testimony. “We’re not looking for better inflation readings than we’ve had. We’re just looking for more of them,” he said.

The current uptrend has been as solid as granite. The Nasdaq has rallied 22.7%, from the 13,061 regular-session close on November 1 to 16,031 on yesterday. Stocks are not the only asset class at the bull party. Bitcoin and gold are both there. The largest digital asset was holding near its all-time peak above $69,000 that was reached on Tuesday. That marked the token’s first record high since November 2021. Gold has caught fire in recent days. Yesterday, gold futures hit a new all-time high and at one point surpassed $2,156 an ounce. While some argue that a small dip in the value of the U.S. dollar can drive purchases of gold, the more important message may lie in the prospects for higher inflation. Since gold offers stability and maintains value in times of uncertainty, trading independent of governments and currencies, we should consider what has sparked the recent boost to gold. The 10-year yield made its lowest close since February 6, which in part could be lifting risk assets.

Stock market psychology is showing more positive sentiment. Bullishness among newsletter editors spiked above its near-term peak of 57.1% seen both in early December and at the start of 2024. As noted below, the level of bullish sentiment is above 59%. Noted that at 16% in the bearish read, we are at elevated risks of a market pull-back. The bearish sentiment level is below the 18% in July/August 2023, and just above the 15.3% in July 2021 – both near market tops. This point is worth noting.

• Industry Group Strength:  BULLISH. As of yesterday, 136 out the 197 groups I monitor are up year-to-date. 61 are down.
• New Highs vs. New Lows: BULLISH.  In yesterday’s session, there were 395 new 52-week highs and 98 new 52-week lows.
• Dow Dividend Yield:  BEARISH. The current yield for the Dow Jones Industrial Average is 1.96%. The 10-year Treasury now 4.11%.
• Volatility Index:  BEARISH. Volatility has been volatile. The “VIX” is now 14. The index is also known as the “Fear Index.” It is considered a contrarian indicator and therefore viewed as bullish as it rises indicating investors are becoming more fearful. The VIX:

• Fear / Greed Index: BEARISH.  Investors are driven by two emotions: fear and greed. Too much fear can create a condition of oversold/ undervalued stock prices. Too much greed can result in overbought/overvalued stock prices. The AAII Investor Sentiment Index is now neutral.   BE FEARFUL WHEN OTHERS ARE GREEDY. At 75, the Fear & Greed Index is where it was  two weeks ago.

CLICK VIDEO FOR MORE ON THE “FEAR & GREED INDEX”

How CNNMoney’s Fear & Greed Index works

• Bull / Bear Barometer:  BEARISH. This secondary market indicator should also be viewed with a contrarian perspective. As of yesterday, according to the latest survey of stock market newsletter writers by Investor’s Intelligence (see below), bullish sentiment is 59.4% and the bears came in at 16%. Bullishness has increased as the level of bearishness has decreased over the last 2 weeks. Consider this a contrarian indicator because the crowd is often wrong at market tops and bottoms. In other words, extreme bullishness has been seen near several market tops in the past, while extreme bearishness has been seen at market bottoms.

• Put / Call Ratio: BEARISH. The ratio of put-to-call options is 0.35.  The put-call ratio tracks the mood of what options investors are doing, not just saying. They typically buy puts if they think a stock will decline and calls if they think it will rise. If they’re buying lots of puts, they see the market declining. And if they’re loading up on calls, they’re generally bullish. Historically, market bottoms occurred when the reading spikes to 1.2 or more. Market tops are often made when the reading is 0.6 or less. Note how reliable this is with respect to the February record low coinciding with the market high. Keep in mind this is also a contrarian indicator.

John J. Gardner, CFP®, CPM®.

Blackhawk Wealth Advisors, Inc.

3860 Blackhawk Rd. Ste. 160 Danville, CA. 94506

Phone: 888-985-PLAN · Email: jg@blackhawkwealthadvisors.com

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For my Market Monthly podcast, click on the link below. I provide a review of global stock market highlights over the past month and preview of the month ahead. Forward insights and perspectives are based on current financial market and economic trends with an emphasis on relevant developments in various areas from Fed policy to company earnings announcements.

Blackhawk Wealth Advisors is the parent corporation of Equity Research & Portfolio Evaluation and Blackhawk Asset Management. It’s Chief Investment Officer is John J. Gardner. John is a Certified Financial Planner (CFP®) and Certified Portfolio Manager (CPM®). As an AIF®, John is also an Accredited Investment Fiduciary.

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