North American markets today, Friday, viewed several hours before the 9:30 a.m. EST opening appear poised to start on a positive note. The Dow and NASDAQ are firmly in positive territory. The S&P 500 is barely positive at time of writing but appears likely to move further upwards during the morning. Canadian markets are looking positive at time of writing
European markets are open with the CAC 40 in the red while the FTSE 100 and DAX are in positive territory. However, the DAX looks uncertain at time of writing and it could move into the red before the end of the trading day there.
Amongst precious metals, the safe havens of gold and silver are both down.
Amongst currencies the Euro and Canadian dollar are up against the American greenback while the British pound sterling is down. The pound appears likely to be a volatile currency in the short-term with the swings grounded in fear. Yesterday’s gains were completely erased because of news that a National Health Service app ‘pnged’ over a half million people, forcing them into isolation. That lead to fears of a staffing crisis and a threat to the recovery, explains Jeremy Thomson-Cook, Chief Economist at London-based payments specialist Equals Money. “Perhaps more concerning is the real danger that despite all social distancing rules being abandoned from this Monday it may not be too long before we are forced back into lockdown,” he warns.
(The backstory here is our continuing nervousness about the recovery.)
Meanwhile the greenback is showing some strength, Thomson-Cook says. It surged yesterday versus commodity currencies along with other peripheral Asian currencies as news of increasing lockdowns and fears of the Delta variant re-emerged where sensitivity to global trade flows is particularly acute.
After four heavy days of earnings in the banking, brokerage, travel and consumer sectors, today will be less eventful. An important release will be Kansas City Southern’s second-quarter results, expected to show both higher profit and higher expenses. Investors, analysts and even customers will listen for a progress report on the merger between KCS and Canadian National Railway. Meanwhile, United States President Joe Biden and Chairman of the Surface Transportation Board Martin Oberman have both underscored their aim of continued competition in the rail sector and these two railways will have to overcome those objections in order to proceed. They are probably considering that the combined railways would dominate North American rail traffic.
Reflecting optimism in the results, Kansas City Southern closed yesterday at $269.02, up $1.75 on the day although Canadian National Railway closed at $105.12, up $0.06 on the day in New York and $132.24, up $.97 on the day on the TSX.
In previous editions of this column, I have suggested that as the smoke clears from the pandemic and we edge our way back to normal, investors are confronted with a number of serious changes and some of them might have seemed near-unthinkable in the depths of the crisis.
According to a recent report released by the Royal Bank of Canada, the number of retirements and those quitting jobs due to dissatisfaction both dropped significantly during the pandemic. While the focus of the report is more on the potential for labor shortages than individual financial considerations, it posits that retirements will pick up in the second half of 2021 – nearing the 10+ year trend driven by an aging baby boomer cohort. Meanwhile a Deloitte Canada report says that 51% of senior leaders are considering leaving, retiring or downshifting from their current organization or position due to decreased mental well-being amid the coronavirus pandemic.
That being the case, many individuals may have to undertake a compressed version of the retirement glide path.
A coherent glide path amounts to planning for a composite of financial, medical, lifestyle and other areas various areas of retirement.
Ideally an individual starts on the glide path 12-18 months before retirement but as with so many other factors in the recovery, the norm may not be the case and given the findings of the RBC report it may take place (if at all) at a faster pace than desirable.
Generally, it can start with pension income. For those fortunate enough to have a defined benefit plan, that step is relatively easy since it provides for – literally – a defined payment. Those with a defined contribution plan can get an estimated payout well in advance.
Then add in other estimated revenue streams:
- Government plan payouts.
- Any anticipated sources of part-time income such as consulting contracts.
- Payouts from structured retirement funds.
- Available payouts from investment accounts held outside of the pension plan. A calculation by the financial advisor of how much can withdraw each month, given the size of the account, life expectancy and lifestyle needs.
- A conservative estimate of income sources such as online trading
An earlier than anticipated retirement may mean reducing the volatility of the investment portfolio earlier than previously planned. That may mean increasing the weighting earlier of blue-chip financials, income producing assets, cash and near-cash assets or all three of these assets.
It may also mean checking mortgages, credit lines, insurance, employee benefits and other financial arrangements before resigning.
Financial and investment planning for the post-pandemic world is getting complicated.
Al Emid is a financial journalist broadcaster and author. His next book. The 2022 Emid Report on Volatility is scheduled for a Winter release.