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Over the long term, stocks are the way to grow wealth, according to Bank of America. Some $5.43 trillion is in money market funds, as of the week ending June 21 , according to the Investment Company Institute. "That's another way of saying that the S & P 500 is one of the world's best wealth-generating machines ever constructed," she added. Further, financial crises tend to be followed by economic and earnings growth cycles, along with sustained price gains for stocks. "All of the above are powerful structural forces for future long-term earnings growth — and key reasons not to rebalance too far in the direction of money market funds," Sanfilippo wrote.
Persons: Lauren Sanfilippo, Sanfilippo, — CNBC's Michael Bloom Organizations: Bank of America, Investment Company Institute . Retail
The firm walked investors through patterns in interest rates and government spending. From 2008 to last year, ultra-low interest rates and central bank policy made for an era of easy money. They said that will favor value stocks over growth stocks, and will make dividend-paying stocks and alternative investments more appealing. It's also a potential economic challenge, as national debt levels have risen at the same time that interest rates have increased. "We have entered a bull market in state intervention and activism," Quinlan and Sanfilippo wrote.
The Federal Reserve started raising interest rates this March, making all forms of borrowing more expensive and hitting the brakes on economic growth. Experts see 2023 featuring even higher interest rates, still-elevated inflation, rising unemployment, and a tougher job market for workers. American companies are trimming their hiring plans amid soaring interest rates and fears of a near-term recession. The Fed's benchmark rate now sits between 3% and 3.25%, well above the threshold at which rates constrain, not boost, economic growth. Inflation is still running at a 8.2% year-over-year pace, leaving lawmakers incredibly wary of pumping more cash into the economy.
The reshoring trend – or companies shifting parts of their manufacturing and supply chains to different countries – has boomed over the last decade. In 2022, reshoring and foreign direct investment jobs announced coming back to the U.S. is on pace hit a record high of 348,493, according to data from the Reshoring Initiative. The trend also includes companies moving parts of their supply chains or manufacturing to different countries abroad. Investing the trend There are a few ways to play the reshoring trend as it continues to unfold. Analysts covering the space generally recommend picking up stocks in companies that stand to benefit from the trend, as opposed to companies in the reshoring process.
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