Earnings, Market Rotation, and Family Financial Planning

Interviewer: 
Joining us now from Raymond James is Senior Portfolio Manager Kim Inglis. Well, Kim, always great to have you with us. Let's start with the S&P 500. It really hasn't moved much since late May, but there seems to be a lot happening beneath the surface. What does that tell us about the market and a potential leadership rotation?

Kim Inglis:
Yeah. So I mean, obviously, if you're looking at the S&P 500, the index itself if you were just look at it, it looks like it might just be treading water, but as you said, if you, if you look beneath the surface there you'll see that there's been a bit of a shift in leadership. So obviously, no big surprise that as of, you know, the last while, it's been the tech stocks that have been dominating things, particularly those that have been involved in AI. but more recently, we've seen some leadership and more broadening happening in other areas of the market that have been outperforming. So things like financials, industrials, transportation, even small caps have been outperforming. And what I would say with this is that it's obviously a market rotation. and I would say that that's actually very healthy for the markets, 'cause if you think about it you know, you don't wanna have a situation where you have just a handful of companies you know, dominating. You would... It's much better to have broader participation in the market that's much healthier and more durable. So I think for investors, it's important to remember to kind of look beneath the index because that's a more true gauge of the actual health of the market.

Interviewer:
Mm-hmm. And second quarter earning season is now underway. What will you be watching most closely over the next two weeks, Kim?

Kim Inglis:
Yeah. So definitely watching earnings. I think that'll be the mover of the markets over the next several weeks here. In terms of expectations, analysts are expecting about a 22% year-over-year earnings growth for S&P 500 companies so that's pretty good. Obviously you know, in terms of sectors that they expect, they expect it to be more energy, tech, materials that'll be the stronger names there is what the analysts are expecting. You know, what I'll be watching there is to see, you know, is the market rotation that I just talked about, is that still happening, or is it gonna be a, you know, a resumption of tech being the shining star? You know, the other thing that obviously I, along with many others, will be watching is the tensions in the Middle East, the geopolitical situation happening there. You know, every time you turn around it seems to have an uptick again unfortunately, and so when that happens, oil prices tend to then go back up. So the thing that you wanna watch for is if oil prices stay high obviously that then puts inflationary pressures on things which then makes it harder for central banks to lower rates. So those are the main things I would be watching for right now.

Interviewer:
And of course, summer's a great time for families to slow down. How can parents use this as an opportunity to teach their children about money?

Kim Inglis:
Yeah. So summer's a great time to talk about financial literacy. You know, your kids are stuck with you all summer. You might as well. You know it... But in more serious nature, is that research actually shows that you know, if you're teaching financial literacy to your kids it can really start forming good habits as early as seven. You know, it can stick with them as early as seven, which is pretty impressive. One thing that parents can do is instead of just purely giving an allowance, they can encourage their kids to save part of that, and then maybe what the parents do is match the savings aspect of it. That can help them with their overall plan there. But in terms of literacy, what I would do is get them involved in the decision-making. So help them set savings goals, work together towards that, set budgets. Maybe there's a particular summer activity that they really want to do. Help them set a budget. If it's teenagers, presumably they have at least a part-time job so instead of them spending all of it, again, encourage them to save part of that and maybe you do the matching element that I just discussed. And then the other thing that I would say is start teaching them about investing. Maybe make a small investment in a couple companies that they know and show them how to watch it. One thing that parents used to do back in the day is they would actually buy shares in Disney stock, and then they would get the actual physical stock certificate, hang it up on their kid's wall, and then show them in the newspaper the stock prices every day. so of course now you can do that in a more modern sense. But again, choosing companies that they know so they'll be actively engaged and more interested in it, and therefore they'll learn a little better.

Interviewer:
And finally, Kim, let's talk about a goal that many parents have, and that's helping their children buy a home. What should families think about before offering financial assistance?

Kim Inglis: 
Yeah. So it's obviously an absolutely wonderful idea if parents are able to do that as real estate's so unattainable for a lot of young adults. But the problem is that you don't wanna do that you know, to the detriment of your retirement. So before you go making that decision to help your kids with that, you really need to make sure that you have adequate retirement savings, but not just that. You wanna make sure that you also have an emergency fund set aside, and you wanna take into consideration things like unexpected healthcare costs that can really ramp up in your later years. So make sure that you have flexibility within your financial plan for that. So if you go through all of that and, you know, all checks out and you're, you're, you're good to go with that, then the next thing, of course, to do is to decide, you know, is this going to be purely a gift for the child? Is this going to be a form of early inheritance? Is it gonna be a loan? If it's a loan, then make sure that you document that because that'll ultimately help, you know, limit misunderstandings down the road.

Interviewer: 
Well, Kim, always great to have you. Thanks for joining us today, and thank you to everyone out there watching. Once again, that was Kim Inglis with Raymond James. And I'm your host, Jenna Dagenhart, with Asset TV.