News from Jackson Hole, Wyoming leads off this week, where central bankers from across the globe met last week. In addition, the analysts from Charles Schwab provide a market perspective, and an overlooked vehicle for saving for retirement is examined.
No rate change until U.S. has 2% inflation and strong job market. Each year the Federal Reserve and central bankers across the globe meet in Jackson Hole, Wyoming to discuss monetary policy. The gathering is often a place to stake out policy positions. This year, affirming previous communications, Janet Yellen, head of the Federal Reserve, affirmed the central bank will not raise rates until inflation has reached 2% and the U.S. has a vibrant labor market. The unemployment rate itself—long used as the best indicator of the labor market—will be but one indicator of the health of the labor market.
Text of Janet Yellen’s speech entitled “Labor Market Dynamics and Monetary Policy” can be found here:
Schwab Market Perspective: Skittishness—According to Liz Ann Sonders and her team at Schwab, the U.S. economy appears to be strengthening, leaving them optimistic on the longer-term outlook for stocks. Likewise, worries over the Fed and the timing of the first rate hike have increased, but the initial stages of a tightening cycle tend to be positive for equities. They believe the market remains in a longer-term bullish trend and suggest using pullbacks to add to positions as needed. Bull markets typically end when a recession is in the offing, which doesn’t appear to be the case currently.
Health Savings Accounts: An Overlooked Vehicle for Retirement Savings. Health Savings Accounts, or HSAs, are designed to accompany high-deductible health-care plans. Increasingly individuals are opting for high deductible plans instead of traditional insurance and its lower out-of-pocket costs. For people with limited ongoing medical expenses, or those that choose to pay routine medical costs from current cash flow, an HSA can be a great way to accumulate additional retirement savings. It can be a reserve for accelerating healthcare costs toward the latter stages of retirement.
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J. Mark Nickell & Co.
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