The move will happen just after Labor Day. After several years of preparation behind the scenes, the merger of our custodian TD Ameritrade Institutional with Charles Schwab will complete its final steps at the end of this summer. We at Blue Spark Financial have been talking to clients about this since 2019, when Schwab first announced it would buy TD. Covid slowed the merge, as is easy to understand. TD is now sending letters to all clients letting them know what to do.

The bottom line is that your accounts’ custodian will change but little else. The Schwab website interface is similar enough that there should be little difference for you when looking at your accounts. Schwab says it will offer the same — or better — great service and low-cost transactions that we knew at TD.

When you get the letter, no action is needed. However, make sure you can access your accounts online at TD’s website, so you will be able to immediately access them after Labor Day at Schwab’s site. Kim can help you with this if you have trouble, reach out to her if you need assistance.

We have done much research over the last few years to ascertain whether Schwab will provide the best service over any other alternatives. We made the decision to remain with the new combined entity. As always, we will continue to do our due diligence to make sure all our third-party providers meet the needs of our clients.

The date for the final move is September 5, so when you log on to your site, you will go to the Schwab website instead of the TD website. We are hoping it will be seamless, as they say. Your account, its history, and its documents will automatically move to Schwab.

History of the Merger (Acquisition)

To be clear, it is not really a “merger,” as Schwab bought TDAI. The deal puts Schwab in league with Fidelity, Vanguard, and Blackrock. The acquisition of TD Ameritrade gives much greater scale to Schwab, which should help it grow and serve clients at lower costs. TDAI itself had earlier grown with the purchase of Scottrade in 2017.

The new combined total is approximately $6 trillion in client assets and 28 million brokerage accounts, Schwab says. The two companies had been operating independently since the 2019 deal. Schwab will work to complete the merger process Sept. 2 through Sept. 5. After the transition date, clients will log in to Charles Schwab going forward.

TD has long been a leader in technology, and Schwab is keeping several components that aid RIAs in their management and trading of client accounts. “Combining the strengths of Schwab and TD Ameritrade will enable the company to invest in enhanced client experience capabilities and further its financial success to the benefit of clients, employees and stockholders,” Schwab says.

Employment

A weekly report from the Department of Labor includes the number of new claims for unemployment benefits under state programs filed by workers who recently lost their jobs, as well as the number of continuing claims filed by those who remain unemployed. This provides an early look at whether the labor market is improving or worsening on a state-by-state and national basis. For example, the week ending March 20, 2021, first-time claims for unemployment benefits fell to 684,000, the lowest level since before lockdowns began in mid-March of 2020.

The ASA Staffing Index from the American Staffing Association tracks weekly changes in temporary and contract employment. Many employers rely on temporary help before hiring additional permanent employees, so staffing agency trends tend to lead non-farm employment by three to six months. As of March 8-14, 2021, there were 11.2% more staffing jobs than there were one year earlier.

Consumer Behavior

The proprietary Johnson Redbook Index captures consumer spending trends based on weekly data from a representative sample of thousands of large general merchandise and apparel retailers. In an encouraging sign, this key index improved 9.4% year-over-year on March 23, 2021.

The reservation app OpenTable – one of my favorites – has been monitoring the impact of COVID-19 on the hard-hit restaurant industry, providing data that provides an indicator of the “openness” of local economies around the world. Daily data shows changes in the number of people dining at restaurants compared with the same day of the same week in 2019. As of March 28, 2021, the weekly average number of U.S. seated diners was still down 29% from 2019, but had bounced back considerably from the last week in February, when the average was 40% below 2019.

Mobility and Travel

Other tech companies developed tools designed to help public health officials and policymakers around the world monitor day-to-day mobility trends with data collected from smartphone apps. Google’s Community Mobility Reports show changes in visits to places like grocery stores, retail shops, and parks. Apple’s Mobility Trends Reports show changes in routing requests (since January 2019) for walking, driving, and public transportation trips, the latter of which have been slower to recover.

The number of people who pass through U.S. airport checkpoints is posted daily by the Transportation Security Administration. On March 21, 2021, a spring-break surge caused the number of air travelers to rise above 1.5 million for the first time in about a year. Still, this total was far below the 2.2 million air travelers on the same Sunday in 2019.

The hotel occupancy rate (released weekly by a group called STR) is another good indicator of the willingness of consumers and businesses to spend money on travel. U.S. hotel occupancy hit 58.9% in the week ending March 20, 2021, the highest level in a year. More importantly, the industry had recovered nearly 85% of comparable 2019 occupancy.

Real-Time Tracker

In May 2020, the Harvard-based nonprofit Opportunity Insights, in partnership with several private-sector providers of high-frequency data, launched Economic Tracker as a free public service. Interactive charts show day-to-day changes in U.S. debit- and credit-card spending, small-business revenue, employment, online job postings, and time spent outside the home. In addition to nationwide statistics, disparities in progress can be broken down by income and industry, as well as by state or metro area.

Fed Indexes

The Weekly Economic Index (WEI), which is published by the Federal Reserve Bank of New York, signals the state of the U.S. economy based on 10 different indicators of consumer behavior, the labor market, and production — they are available daily or weekly. The WEI is scaled to the 4Q GDP growth rate, which means the weekly result is the economic growth that could be expected if current activity continued for a year. For the week ending March 20, 2021, the WEI jumped to 4.14% from -0.33% the previous week.

These estimates are based on current conditions, are subject to change, and may not actually happen. Neither is an official forecast of the Federal Reserve. When investing, as we always say, it’s wise to maintain a long-term approach based on your personal goals, time frame, and risk tolerance, rather than react too quickly to shifting economic dynamics.

Consumer Behavior

The proprietary Johnson Redbook Index captures consumer spending trends based on weekly data from a representative sample of thousands of large general merchandise and apparel retailers. In an encouraging sign, this key index improved 9.4% year-over-year on March 23, 2021.

The reservation app OpenTable – one of my favorites – has been monitoring the impact of COVID-19 on the hard-hit restaurant industry, providing data that provides an indicator of the “openness” of local economies around the world. Daily data shows changes in the number of people dining at restaurants compared with the same day of the same week in 2019. As of March 28, 2021, the weekly average number of U.S. seated diners was still down 29% from 2019, but had bounced back considerably from the last week in February, when the average was 40% below 2019.

Mobility and Travel

Other tech companies developed tools designed to help public health officials and policymakers around the world monitor day-to-day mobility trends with data collected from smartphone apps. Google’s Community Mobility Reports show changes in visits to places like grocery stores, retail shops, and parks. Apple’s Mobility Trends Reports show changes in routing requests (since January 2019) for walking, driving, and public transportation trips, the latter of which have been slower to recover.

The number of people who pass through U.S. airport checkpoints is posted daily by the Transportation Security Administration. On March 21, 2021, a spring-break surge caused the number of air travelers to rise above 1.5 million for the first time in about a year. Still, this total was far below the 2.2 million air travelers on the same Sunday in 2019.

The hotel occupancy rate (released weekly by a group called STR) is another good indicator of the willingness of consumers and businesses to spend money on travel. U.S. hotel occupancy hit 58.9% in the week ending March 20, 2021, the highest level in a year. More importantly, the industry had recovered nearly 85% of comparable 2019 occupancy.

Real-Time Tracker

In May 2020, the Harvard-based nonprofit Opportunity Insights, in partnership with several private-sector providers of high-frequency data, launched Economic Tracker as a free public service. Interactive charts show day-to-day changes in U.S. debit- and credit-card spending, small-business revenue, employment, online job postings, and time spent outside the home. In addition to nationwide statistics, disparities in progress can be broken down by income and industry, as well as by state or metro area.

Fed Indexes

The Weekly Economic Index (WEI), which is published by the Federal Reserve Bank of New York, signals the state of the U.S. economy based on 10 different indicators of consumer behavior, the labor market, and production — they are available daily or weekly. The WEI is scaled to the 4Q GDP growth rate, which means the weekly result is the economic growth that could be expected if current activity continued for a year. For the week ending March 20, 2021, the WEI jumped to 4.14% from -0.33% the previous week.

These estimates are based on current conditions, are subject to change, and may not actually happen. Neither is an official forecast of the Federal Reserve. When investing, as we always say, it’s wise to maintain a long-term approach based on your personal goals, time frame, and risk tolerance, rather than react too quickly to shifting economic dynamics.

You can always count on market swings to challenge your patience as an investor, but these current swings – and the reasons for them – are unprecedented in their speed and depth.

Tune Out the Noise

The media generates news 24 hours a day, seven days a week, and they need to fill all that time. You can check the market and access the news any time and anywhere, and it can be addicting, especially now. This barrage of information might make you feel that you should buy or sell investments in response to the latest news, whether it’s an unexpected pandemic, a large market drop, or a geopolitical event. This is a natural response, but studies show that it’s not wise to react emotionally to market swings or to news that you think might affect the market. We do make changes during times of market stress, of course, but we follow your financial plan and do not react to news with emotion.

“Time in the market” is generally more effective than trying to “time the market.” An investor who remained fully invested in the U.S. stock market over the past 30 years would have received almost triple the return of an investor who missed only the market’s best 12 months. That’s the difference between the gains below.

The markets are volatile and will continue to be. Here’s an illustration about the pitfalls of reacting to economic news: those investors who were spooked on recession fears sparked by an inverted yield curve who sold on August 14, missed out on more than 13% equity market growth during the rest of the year. A yield curve inversion has been a predictor of past recessions, and event rocked the stock market last summer, but despite the headlines, a yield curve inversion is not a guarantee to be an immediate precursor to a recession.

Wise Words

Consider this advice from John Bogle, mutual fund industry pioneer: “Regardless of what happens to the markets, stick to your investment program. Changing your strategy at the wrong time can be the single-most-devastating mistake you can make as an investor.”

This doesn’t mean we don’t buy or sell investments during a crisis, but the moves we make are based on your financial plan, on a sound strategy appropriate for your financial goals and time frame, as well as your capacity and tolerance for risk. A sound investment strategy should carry you through market ups and downs over time. Your portfolio should foremost protect your spending needs in the near-term, so you don’t have to be a forced seller in a down market.

It can be hard to keep cool when you see the market dropping or to control your exuberance when you see it shooting upward. The Returns Quilt below shows the returns of different asset classes over the last 10 years,  and each year a different asset class comes in first. But trying to “time the market” by guessing at future direction of those asset classes may create additional risk that could negatively affect your long-term portfolio performance.

And remember the wisdom of Warren Buffet,”Be greedy when others are fearful, and be fearful when others are greedy.”

• Bull markets never feel like bull markets.
• Bear markets always feel like bear markets.
• Bubbles always feel like bull markets.

In the 2008 Financial Crisis, that inflection point was March 9, 2009. We all remember what happened then. This is different, of course, but there is no reason to think that the markets will go to nothing after the virus has run its course. And I believe we will see positive changes to come out of this crisis in the global economy, and among us as people, that will remain long after.

                       Chart thanks to Capital Group.

We don’t know how bad this is going to be. That’s the scary part. We can wash our hands, wear masks, talk about morbidity percentages, but the extent of the coronavirus – and its impact on the markets – is unknown.

So what to do? We can look at the historical context of previous plagues and pandemics and viruses and their impact. It does help ease our minds to look at the history of pandemics on the global markets, as shown in this chart:

The virus is indeed taking its toll on business across the world, and the markets are reflecting some of that fear. Starbucks closed roughly half of its 4,300 stores in China. Many U.S.-based airlines have canceled flights to the country and others impacted by the virus. Some companies are lowering earnings guidance for 2020, including some of the world’s biggest cruise line operators and consumer-goods makers. Many sporting events and international conferences in the U.S. and elsewhere have been cancelled through the summer as fear of the virus spreads.

However, the coronavirus is also giving a boost to some companies – things you can do inside, like e-commerce, gaming, home entertainment. This is the case for Chinese technology giant Tencent, which operates one of the world’s largest mobile video game and social media platforms.

We are waiting and watching, and washing our hands. We offer video conferences for clients who want to avoid the potential for community spread.

And remember, the markets are influenced in the short-term by emotions, and in the long-term by the strength of company fundamentals and underlying economies.

1. Market-Timing Is Undependable. It is nearly certain that we will experience another recession; the question is only when. I overheard a man last month brag to his friend, “I sold all my stocks on Tuesday” – I just quietly shook my head. In hindsight, that was not likely his best move. But it is a normal human emotion to want to do something. Market history has shown us time and again that seemingly “sure bets” often end up being losers instead. Even at year-end 2018, when markets dropped precipitously almost overnight, many wondered whether there would be nothing but bad news in 2019. As we now know, that downturn ended up being a brief stumble in an up market. Had one sold everything then, they might still be wondering when to get back in and missed out on the gains. The point is that simple market-timing trades, although tempting, usually don’t work toward your long-term goals. In fact, they are more likely to hurt.
   
2. Market-Timing Odds Are Against Us. Market-timing is stressful, and the odds are against us. That’s in part because “average returns” are not the norm, volatility is. Over time, markets have gone up in alignment with the real wealth they generate. But they’ve almost always done so in dramatic fashion, with some of the best returns immediately following some of the worst. By trying to time it by selling out to avoid the downturns, it is essentially betting against the strong likelihood that the markets will then continue to climb as they always have before. That’s a bet against everything history tells us about expected market returns. The important part is positioning your portfolio for your needs, in anticipation of these ups and downs.
   
3. Market-Timing Is Expensive. Whether or not a market-timing gambit plays out in your favor, all trading has real-money costs and implications. To add insult to injury, when investors make sudden changes that aren’t part of a larger investment plan, the extra costs generate no extra expectation that the trades will be in your best interest. Selling positions that have enjoyed much growth can make the tax consequences (in taxable accounts) financially ruinous.
   
4. Market-Timing Is Guided by Instinct Over Evidence. As has been well studied, human brains excel at responding instantly – instinctively – to real or perceived threats. When fears of market risks arise, these same basic survival instincts flood your brain with chemicals that induce you to want to take immediate fight-or-flight action. If the markets were an actual forest fire, you would be wise to heed these instincts. But for investors, the real threats occur when behavioral biases cause emotions to run ahead of their rational resolve. That’s where we come in, to take a cool look at whether making a change is a rational part of your overall financial plan. Changes and trades should stem from your own personal situation and a macro big-picture view, not knee-jerk reactions to daily tweets or news. Talk to us if you are feeling worried about the volatile markets.
   
   Market Chart

If you follow the news, you’ve probably heard references to “the Fed” as in “the Fed held interest rates,” or “market watchers are predicting what the Fed will do next.” So what exactly is the Fed and what does it do? I learned about the intricacies of central banks when I was studying at Columbia Business School, and here are some of the basics.

The Federal Reserve is the central bank of the United States. The Fed was created in 1913 to provide the nation with a safer and more-stable monetary and financial system than what had existed. Today, the Federal Reserve has responsibilities in four general areas:

1. Conducting the nation’s monetary policy by influencing money and credit conditions in the economy with the goal of full employment and stable prices.
2. Supervising and regulating banks and financial institutions to ensure the safety and soundness of the nation’s financial system and to protect the credit rights of consumers.
3. Maintaining the stability of the financial system and containing any systemic risk that may arise in financial markets.
4. Providing certain financial services to the U.S. government, U.S. financial institutions, and foreign official institutions, and playing a major role in operating and overseeing the nation’s payments systems.

Organization of the Fed

The Federal Reserve has three key entities:

• the Board of Governors (Federal Reserve Board),
• Federal Reserve Banks – 12 of them, and
• the Federal Open Market Committee.

The Board of Governors has seven people who are nominated by the U.S. president and approved by the Senate. Each person is appointed for a 14-year term (terms are staggered, with one beginning every two years). The Board of Governors conducts business in Washington, D.C., and is headed by the Fed Chair (currently, Jerome Powell), who is perhaps the most visible face of U.S. economic and monetary policy.
The 12 regional Federal Reserve Banks are responsible for day-to-day bank operations. They are in Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco. Each regional bank has its own president and oversees thousands of smaller member banks in its region.

The Federal Open Market Committee (FOMC) is responsible for setting U.S. monetary policy. When people say markets are anxiously waiting to see what the Fed will do next, they are usually referring to the FOMC. It is made up of the Board of Governors and the 12 regional bank presidents. The FOMC typically meets eight times per year.

Does the Fed Impact the Economy?

One of the most important responsibilities of the Fed is to set the federal funds target rate, which is the interest rate banks charge each other for overnight loans. The federal funds target rate is a benchmark for many short-term interest rates, such as rates used for savings accounts, money market accounts, and short-term bonds. The target rate also serves as a basis for the prime rate. Through the FOMC, the Fed uses the federal funds target rate as a means to influence economic growth.

To stimulate the economy, the Fed could lower the target rate. When interest rates are low, the presumption is that consumers can borrow more and, consequently, spend more. Lower interest rates on car loans, home mortgages, and credit cards make them more accessible to consumers. Also, lower interest rates can weaken the value of the dollar against other currencies. A weaker dollar can make some foreign goods costlier, so consumers might tend to buy American-made goods. An increased demand for goods and services often increases employment and wages. This is essentially what the FOMC did following the 2008 financial crisis in an attempt to spur the economy.

On the other hand, if consumer prices rise too quickly, bringing higher inflation, the Fed can raise the target rate, making money more costly to borrow. Because loans are harder to get and more expensive, consumers and businesses are less likely to borrow, which slows economic growth and reduces inflation.
People often look to the Fed for clues on which way interest rates are headed and for the Fed’s economic analysis and forecasting. Members of the Federal Reserve regularly conduct economic research, give speeches, and testify about inflation and unemployment, which can provide insight about where the economy might be headed. All of this information can be useful for consumers when making borrowing and investing decisions.

Control by Consensus

Blockchain provides all network participants with simultaneous access to a single body of strongly encrypted data. Each individual (or node) can enter new data, but a majority of nodes on the network must verify the addition before it becomes part of the permanent record. Each transaction is time stamped and linked to the prior transaction, forming a series of blocks in a digital chain. This creates an audit trail each time data is changed, helping to ensure the integrity and authenticity of the information. Because no third-party intermediary (or central authority) is needed, transactions can be completed instantaneously and at a lower cost.

Realm of Possibility

A blockchain can be public (open) or private (closed). Any system or business that relies on a database could be a candidate for blockchain-based innovation. A blockchain can also be coded to execute or enforce smart contracts automatically (without an intermediary) when certain conditions are met. Here are a few examples that are already in the pipeline.

• Financial markets. The financial industry is identifying ways in which the technology could be used to protect sensitive data, increase speed, and cut costs for electronic payments, securities trading, and lending. Since 2015, more than 100 financial institutions, trade associations, regulators, and technology partners have joined forces to set up and test a blockchain that could one day become an industry-wide platform.
• Supply chains. Each link in a company’s supply chain could be held accountable by tracing products from origin to store, discouraging tampering and fraud. This could enhance food and water safety, reduce the costs associated with recalls, and help retailers verify authenticity. For example, customers could be assured that their food was raised on an organic farm or that a specific diamond did not come from a conflict zone.
• Medical records. Blockchain systems are being designed to store health data that can be conveniently shared among patients, doctors, hospitals, and insurers while protecting patient privacy.
• Digital rights. Musicians, photographers, artists, and media businesses could more easily monetize, track, and control the use of their creations, which could reduce piracy.

Some other possible uses include public real estate registries, identity verification, law-enforcement activities, digital voting platforms, and securing Internet-connected devices, among others.

A Work in Progress

Businesses and governments worldwide are exploring blockchain technologies as they seek to improve transparency, increase productivity, and reduce costs. As a result, investment in blockchain initiatives were an estimated $700 million in 2018. Numerous industry consortia are working together on business solutions for shared interests, while some individual companies are racing to influence what might become common industry standards.

Despite the heightened levels of interest and investment in blockchain, deployments are still fairly rare, and widespread adoption could be years away. Many businesses have no interest in blockchain or no plans to investigate or develop the technology. Some factors slowing the pace of adoption are governance issues, a lack of regulatory frameworks, and a shortage of professionals with blockchain skills.

In the longer term, however, blockchain could be a transformative and/or disruptive force that creates a new set of winners and losers. Speedy and successful implementation could deliver a competitive advantage to some companies while punishing others that don’t keep up with the pace of change. There may also be some societal costs, including the technology’s potential to displace a large number of human workers.

New technology ventures are often risky. Some blockchain projects may turn out to be viable and profitable, but many others will likely fail. Bad actors are also trying to capitalize on the blockchain buzz by luring people into highly speculative investments and some outright scams.

Single women – those who have never married, those who have experienced divorce, and those who have outlived a spouse – need to take a more proactive approach to growing and protecting their finances, according to a new study.

The Single Women and Money Study found that while the overwhelming majority of single women (97%) believe it is important to be engaged in managing their money, three factors were holding them back from taking action:

1) underestimating their knowledge and experience,
2) neglecting to plan ahead for their financial future, and
3) saving too heavily in cash.

Money causes stress and worry

Women have more financial earning and decision-making power today than in the past, yet, many limit the benefits of that power by shying away from taking control of their financial futures.

More women are choosing to remain single and others take on that sole financial responsibility through divorce or outliving a spouse. The study shows that it is critical that women be actively involved and invested in the financial choices that can allow them to make smart choices.

Single women are less likely to consider themselves knowledgeable than other demographic groups when it comes to saving for retirement, creating a financial plan and investing. This perception may be holding some women back from taking the necessary steps to secure their desired financial future.

While most single women associate their finances with positive sentiments like security, peace of mind and being in control, some also see their finances as a cause for stress and worry, more so than their male counterparts.

Single women were the least likely (28%) to have a comprehensive financial plan in place to help them set savings goals and navigate paying down debt. And, while they worry about unexpected financial hurdles, nearly half (47%) have not put an emergency fund in place to cover three-to-six months of essential expenses.

Single women are also likely not to have other long-term financial protections in place that can be critical in times of necessity. Women who have never married are the least likely to have a number of key safeguards in place, compared to those who have had a partner at some point. But many said they wanted to become better prepared, with more than half saying they need to spend more time on their finances or admitting they don’t spend any time managing their finances at all.

Best practices for women

Make it a priority early to establish strong financial habits. Here is a short list of best practices to get you started:
• Get into the driver’s seat: know what you own, how much you owe, and what your goals are for your money to ensure that your investments are working toward your future.
• Put financial safeguards into place, including a holistic financial plan that is based on your individual situation and goals.
• Know that your investments suited toward your tolerance for risk, and time horizon to save.
• Make it a priority to check-in on your finances at least annually.

Widows share wisdom

Widowed women are more likely than any other group surveyed to say they feel confident about their finances and in control of their money. This positive financial outlook may be connected to early planning. About 65% of widows say they had a financial plan in place prior to losing their spouse, and 80% of those women had worked together with their partner to build that plan.

• Know where all important financial and healthcare information can be found
• Have a will and other estate documents in place
• Make sure beneficiaries are correct and current for all accounts
• Make sure both names are on mortgages, insurance policies, and other accounts
• Don’t delegate financial planning – make sure that you work together

Divorced women more financially free, in control

Major life events can often be a catalyst for action with our finances. Among divorced women, the large majority said they feel more in control of their finances after their divorced (84%) and have more financial freedom than when they were married (76%). Two thirds said they are in better financial shape today, although nearly half (45%) report they have had to cut back their spending to save post-divorce. One quarter applied for or started a new job, and 18% improved their earnings prospects by working toward a new educational degree.

For some, feeling more financially savvy came immediately. For others, this took time: one third divorce said that it took more than a year after divorce to feel financially grounded; roughly 25% said they still don’t feel secure.

When asked what financial choices they would have made differently in their marriage, divorced singles said they wish they had saved more and better educated themselves about how to invest for the long term.

Results of the survey were based on an online omnibus conducted among a demographically representative U.S. sample of 2,260 adults comprising 1,503 single women (including never married, divorced, and widowed), 250 single men, 251 married women and 256 married men 18 years of age and older. The survey funded by Fidelity was completed during the period May 16-23, 2017 by MarketVision Research, an independent research firm.