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FULBRIGHT FINANCIAL CONSULTING, PA 

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3rd Quarter Ends Well Despite Trade War, Inverted Yield Curve & Political Crisis By Fulbright Financial Consulting PA

Despite months of frightening financial news, the third quarter ended on September 30 with the stock market only 1.6% off its all-time record high. Including the bear market plunge suffered last Christmas, when the stocks lost 19.8%, the Standard & Poor’s 500 over the last 12 months , showed a return of +2.2%. In the first three quarters of the year, the S&P 500 returned 19%, overcoming a rising tide of fear about the trade war with China, an inversion of the yield curve, a growing chorus of recession predictions, and political crisis. What’s it mean? How does it affect investing? It’s notable that the stock market did not drop on worries about the China trade confrontation or the political crisis — two of the major stories in the news now. The three major stock market drops in the past year were all related to Federal Reserve Board actions. Since the Fed backed off its forecast for rising rates and inflation in January, consumer spending and income have been about as strong as they have ever been in post-War American history! So don’t despair over the various crises and keep an eye on the Fed’s actions in extending the longest economic expansion in modern history in 2020 and beyond. Please contact us with any questions or to set up a meeting, and don't hesitate to share this video with people who might benefit from my work.

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No Recession But A Slower Pace of Growth By Fulbright Financial Consulting, PA

The latest data indicate the economy is not falling into a recession but is growing slower. If it feels like a snail’s pace, you should probably get used to it. The growth potential of the economy is the sum of the change in the working age population plus the change in productivity. That’s straightforward math. What’s it mean? Let’s break down the equation. Here’s the productivity side of the equation, the actual and expected change in the annual rate of productivity from 1948 through 2029. Productivity growth of the U.S. labor force has been in a slow decline over the decades. CBO, a non partisan research arm of the federal government, forecasts average annual gains in productivity lifting slightly to 1.9% through 2029. On the labor force side of the equation, the working age population exploded after world war 2 in the baby boom and peaked again in the late 1970s. Over the decades, growth in the labor force has gradually slowed, and it’s expected to continue to slow over the next decade. The consensus forecast of economists for a 1.7% growth rate for the next five quarters is indeed slower than previous decades, but it should come as no surprise. On the bright side, consumer spending and wages remain strong, and no recession is expected. And productivity in recent years has been much stronger than expected and accelerated sharply in recent months, and if the trend continues, the snail’s pace could get a surprise boost. Please contact us with any questions or to set up a meeting, and don't hesitate to share this video with people who might benefit from my work.

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Fickle Financial Headlines Brighten By Fulbright Financial Consulting, PA

Last Friday, after the Census Bureau reported that retail sales, which drive 70% of U.S. economic growth, rose four-tenths of 1% in August, headlines abruptly turned positive. The retail data quelled growing concerns reflected in the press about the inversion of the yield curve, the 11-month plunge in manufacturing sector activity, the trade-war with China, and a global economic slowdown hurting the U.S. economy. Retail sales increased by four tenths of 1% in August over July driven by a surge in auto sales. Total retail sales in August were 4.1% higher than in August 2018, which is a strong jump considering the low inflation rate of about 1.8%. For the three-month period from June through August 2019, retail sales were up 3.7% from the same period a year ago, showing momentum slowing only slightly. Stock market volatility increased lately. Independent economist Fritz Meyer says declines of 2% have been occurring nearly once a month. The spate of spikes in volatility started in May 2018, recurred in a 19.8% plunge in December 2018, and two more spikes in fear struck in May and August 2019. All of the spikes in fear came after Federal Reserve pronouncements on interest rate policy and none were related to the U.S.-China trade or other fears in the headlines. Please contact us with any questions or to set up a meeting, and don't hesitate to share this video with people who might benefit from our work.

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Europe's Growth Problem and Your Portfolio By Fulbright Financial Consulting, PA

Aging populations are reshaping the world’s largest economies; it’s caused a global savings glut and is driving current U.S. financial economic conditions. The demographic trends are behind the U.S. yield curve inversion and stock market volatility, but rarely make headlines in the financial press. Here are the facts. Germany’s working age population is shrinking, as is all of Europe’s, Japan’s and China’s, too. In contrast, the U.S. working age population is expected to grow in the years ahead. With the world’s largest economies home to a growing population of retirees, demand for secure retirement income is driving prices for sovereign bonds higher. The glut of savings from income-starved retirees is chasing the certainty of government guaranteed bonds, driving prices higher and yields down. Exacerbating the bond market problem, Germany, the world’s second largest supplier of sovereign bonds after the U.S., has been issuing fewer bonds to avoid burdening its growing population of retirees with paying down government debt. Shrinking the supply adds to the upward pressure on sovereign debt prices and depresses yields. In addition, rising likelihood of a recession in Germany, has forced its central bank to keep interest rates low to stimulate growth. This confluence of the demographic and economic slowdown has boosted demand for U.S. Treasury bonds, driving prices on long-term bonds higher and yields lower. With the yield on a three-month T-bill at 1.99% higher than the yield on a 10-year Treasury bond, at 1.5%, the yield curve is inverted — as it has been for much of 2019. For the past several decades, yield curve inversions were rare and usually were followed within 18 months by a recession. So the current inversion has spread fears of a U.S. recession and caused increased volatility in the stock market in recent months. Retirement income investors may want to consider how lower yields on fixed income allocations in their portfolios might affect them in the years ahead, because the change in supply and demand for sovereign debt is being driven by long term demographics. Significantly, the yield curve inversion is caused by bond market supply and demand and not U.S. economic fundamentals. The baby-boom spawned an “echo” baby-boom generation and that makes the growth path of the U.S. comparatively favorable to the other major world economies. Please contact us with any questions or to set up a meeting, and don't hesitate to share this video with people who might benefit from my work.

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Having A Great Life with Zack Friedman and Ed Fulbright on Mastering Your Money Radio

One of my favorite movies is “A Wonderful Life”. It is a Christmas Classic starring Jimmy Stewart. It is about man who believes he has been wasting his life in a bank and everyone was getting ahead in life but him. He thought this until an angel shows him all the wonderful things he has in his life. Do you need an angel in your life to show you what you are missing? I believe it may be a purpose and happiness.

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Reality Gap Widens By Fulbright Financial Consulting, PA

Stocks have been more volatile because the difference between perception and reality of financial economic conditions is growing wider. The S&P 500 — the key benchmark of America — is supposed to price shares after discounting everything — the Federal Reserve’s policies, politics, inflation, and population trends. When fundamental facts grow harder to discern, stocks grow more volatile, and that’s what’s been happening lately, especially with the widespread misperception of the yield curve inversion. A yield curve inversion is when the yield on 10 year US Treasury Bonds is less than the yield on three-month T Bills. Since the 1960s, when investors thought the 10-year long term outlook for bonds looked worse than the three month outlook, inverting the yield, recessions usually followed 12 to 18 months later. While the recent inversion of the yield curve is perceived as evidence a recession is on the way, the reality is very different. The inversion of the yield curve currently is being driven by negative interest rates in Europe. Negative yields in Europe and Japan — an unprecedented condition in the largest economies in the world — is a new thing and it’s not widely understood.

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A Prudent Perspective On Recent Volatility By Fulbright Financial Consulting, PA

After the yield curve inverted on Wednesday, August 14, financial headlines turned grim. ”Longer-term rates below shorter term rates are a clear signal from bond investors that they think the United States economy is on the downswing, that its future looks worse than its present.” But this widely-held view in the financial press may be relying more on the yield curve than they should. In the past, when the yield curve inverted, it was because investors saw fundamental economic measures slowing down, but that’s not happening now.

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Financial Independence Retire Early Part 2 with Paul Merriman and Ed Fulbright on Mastering Your Money Radio

Part 2 of Do You Want To Retire Early? F.I.R.E. is an acronym. It stands for Financial Independence Retire Early. There's a growing movement of people who are practicing FIRE principles and retiring decades earlier than expected as a result. Smart, often middle-income earners are using a simple formula of high savings rates (50-70% of their incomes) + frugal living (minimalism) + low-cost stock index fund investing (Warren Buffett’s standard investment advice) in order to reach financial independence within short, usually around 10-year periods of time. For obvious reasons, FIRE is sometimes referred to as “the ultimate life hack.” This large and growing community has an ever-increasing cadre of 100+ high-traffic bloggers, most of whom chronicle their FIRE journeys and publish details of their methods, and report their actual personal financial information along the way. It’s a fascinating voyeuristic genre with an alluring punchline: retire early and pursue your true passions! There is more and more journalistic coverage of FIRE. Just search Google News for “early retirement” or “early financial independence” and you’ll find almost daily coverage of this fascinating phenomenon. Joining us for our discussion on Do You Want To Retire Early? is who is calling in from his Seattle Washington WA office . Paul Merriman is a nationally recognized authority on mutual funds, index investing, asset allocation and both buy-and-hold and active management strategies. Now retired from Merriman, the Seattle-based investment advisory firm he founded in 1983, he is dedicated to educating investors, young and old, through weekly articles at Marketwatch.com, and via complimentary eBooks, podcasts, articles, recommendations for mutual funds, ETFs, 401(k) plans and more, at Paulmerriman.com . He has 3 Complimentary Ebooks “First Time Investor: Grow And Protect Your Money,” “101 Investment Decision Guaranteed To Change Your Financial Future,” And “Get Smart Or Get Screwed: How To Select The Best And Get The Most From Your Financial Advisor.” WELCOME BACK TO MASTERING YOUR MONEY, PAUL MERRIMAN

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Tale of Two Economies By Fulbright Financial Consulting, PA

It’s not the best of times, nor the worst. But the latest data is a tale of two of U.S. economies. From a record-high level in September 2018 of 61.3%, manufacturing activity has plunged, and the latest monthly data shows it slipped further in July. This data series is designed to signal a recession when it falls to less than 50%. At 51.2%, the manufacturing economy inched closer to indicating a recession could be on the horizon. Meanwhile, the survey of purchasing managers at non-manufacturing companies, those in the service economy, declined to 53.7% in July. It has also plunged from a record level in September, but it’s still well within its normal range. It’s much more important and it’s indicating growth is ahead.The “Service Economy” is not growing like it did during the tax-cut fueled peak of September 2018, but it’s doing okay. Continued growth is confirmed by the survey of 60 economists conducted in early August by The Wall Street Journal. The consensus forecast of 60 economic professionals for the next five quarters is for an average quarterly growth rate of 1.8%. That may seem paltry compared to the 3.1% growth rate in the first quarter, but it aligns with the long-term growth rate expected by the non-partisan Congressional Budget Office. With the service economy expected to grow slowly through 2020, the manufacturing sector is more vulnerable to higher tariffs on U.S. exports to China. The tale of two economies is an epoch and the drama affecting manufacturing draws headlines but is not so important to the epoch story of America’s economic growth.

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Financial Independence Retire Early Part 1 with Paul Merriman and Ed Fulbright On Mastering Your Money Radio

Do You Want To Retire Early Part 1? F.I.R.E. is an acronym. It stands for Financial Independence Retire Early. There's a growing movement of people who are practicing FIRE principles and retiring decades earlier than expected as a result. Smart, often middle-income earners are using a simple formula of high savings rates (50-70% of their incomes) + frugal living (minimalism) + low-cost stock index fund investing (Warren Buffett’s standard investment advice) in order to reach financial independence within short, usually around 10-year periods of time. For obvious reasons, FIRE is sometimes referred to as “the ultimate life hack.” This large and growing community has an ever-increasing cadre of 100+ high-traffic bloggers, most of whom chronicle their FIRE journeys and publish details of their methods, and report their actual personal financial information along the way. It’s a fascinating voyeuristic genre with an alluring punchline: retire early and pursue your true passions! There is more and more journalistic coverage of FIRE. Just search Google News for “early retirement” or “early financial independence” and you’ll find almost daily coverage of this fascinating phenomenon. Joining us for our discussion on Do You Want To Retire Early? is who is calling in from his Seattle Washington WA office . Paul Merriman is a nationally recognized authority on mutual funds, index investing, asset allocation and both buy-and-hold and active management strategies. Now retired from Merriman, the Seattle-based investment advisory firm he founded in 1983, he is dedicated to educating investors, young and old, through weekly articles at Marketwatch.com, and via complimentary eBooks, podcasts, articles, recommendations for mutual funds, ETFs, 401(k) plans and more, at Paulmerriman.com . He has 3 Complimentary Ebooks “First Time Investor: Grow And Protect Your Money,” “101 Investment Decision Guaranteed To Change Your Financial Future,” And “Get Smart Or Get Screwed: How To Select The Best And Get The Most From Your Financial Advisor.” WELCOME BACK TO MASTERING YOUR MONEY, PAUL MERRIMAN

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