Archive for category: HUB Blog

By: Tana Gildea

We all know that identity theft is a problem; we (hopefully) all know to check our credit frequently or to have a credit monitoring service, and we know to guard and protect our social security number and account information. What we frequently don’t think about is minding our children’s credit. More and more thieves look for kids’ information since they know if may be years before the theft is discovered.

According to a Wall Street Journal article in August, 2018, New on Parents’ To-Do List: Checking Children’s Credit History, “One credit reporting company, Experian” estimates such identity theft will affect one in four children before they become an adult.” Wow! 25% of kids—that is eye-opening!

Fortunately, a new law went into effect in September to make it easier for parents to access and freeze their kids’ credit. The law, part of broader banking legislation, also allows adults unlimited, free credit freezes. Yes, freezing your credit can be a hassle if you know you will need credit for a car or home purchase, for example, and it does cut off those awesome, “save 10% when you open an account today” offers at the store, but for kids, it needs to move to the “must do” part of the to-do list!

The Federal Trade Commission has great information at https://www.consumer.ftc.gov/articles/0040-child-identity-theft including “warning signs,” “check for a credit report,” and “repair the damage.” The page offers links to the credit bureaus and the steps to place a credit freeze. Yes, you’ll need to set aside a bit of time to work through all of the steps, but it will be much less painful than if you find out about an issue at a time when your child needs to start using their credit!

And, speaking of using their credit, when is the right time to help your child establish credit? Sooner is probably better once they turn 18, but you want to do it an a way that helps them build a good score. For my kids, their teen checking accounts helped them create a good score as they were careful about not over-drawing, and we set up a fail-safe to cover any “oops” events. A WSJ article in August, 2018, How College Students Can Build a Good Credit Rating, suggests:

• Add them as an authorized signer on your card (assuming you have good credit and set clear rules!)
• Start them off by applying for a gas or retail card which has lower limits and may be easier to get.
• Use a service such as Rental Kharma or ClearNow if they are paying rent off-campus in college. These services will report to credit bureaus.
• Have your child sign the car loan (with you co-signing most likely) and make the payments while you cover the insurance and maintenance. Even if you are giving them the funds for the payments, it helps them build credit.
• Use a secured credit card; yes, you must have cash on deposit but fronting $500 may be worth it to get them established.

Regardless of how your kids finally do establish credit, teach them the importance of monitoring and protecting their credit — there’s an app for that!

Our CIO Stephanie Lang appeared on CNBC’s Squawk Box this morning where she talked about the Fed’s ability to steer the economy.

Click Here to See Full Interview

By: Ross Bramwell

The topic of a yield curve inversion has been at the forefront of financial news this week and we wanted to share our thoughts. As highlighted in our October e-mail to clients, we have seen significant volatility in both stocks and bonds over the course of the past several months. This has been driven by a variety of factors including the U.S./China trade war, signs of economic slowdown in some foreign countries, and even some leading signs of a potential slowdown here in the U.S. As a result, we have seen the Fed indicate an unexpected change in course recently when Fed Chairman Powell suggested that we are “near neutral interest rates.” This would be a dramatic shift from previous comments that suggested the Fed was planning on raising interest rates several times between now and the end of 2019.

Following the recent statements, the upward trend in longer-term interest rates reversed, and we have seen a significant decline in the 10-year Treasury rate. This week many news outlets are covering the fact that a few points on the yield curve have “inverted.”

Typically, long-term rates are higher than short-term rates because the market expects future economic growth. The yield curve has inverted when shorter-term rates are actually higher than longer-term rates, meaning a slowdown is expected. A yield curve inversion is often seen as a sign of a pending recession, so it stands to reason that the media would make the most of a headline when we have our first yield curve inversion since the financial crisis.

 

However, we want to point out a few key things to remember about a yield curve inversion as this phenomenon will probably continue to make headlines through 2019:

• The part of the yield curve that is currently inverted is the area between the 2- and 3-year Treasuries with the 5-year Treasury, as the 5-year Treasury is now yielding slightly lower than the 2- and 3-year Treasuries (see chart above).

• An inverted yield curve is an often watched recession indicator, but the most common indicator on the yield curve is the 2-year Treasury yield with the 10-year Treasury yield, which is currently not inverted.

• Prior recessions have been preceded by an inversion of the 2-year and 10-year Treasury yields, but the recession has been on average 18-24 months after the inversion occurred (see the chart below).

 

There have been false positives as well with inversions at certain points of the yield curve so it is not a perfect indicator. We will continue to monitor the underlying economic data. While the current changes are definitely worth noting, we do not believe it should create any knee-jerk reactions in our investment allocations as we do not see the current inversion as a sign of a pending recession.

If you have any further questions please reach out to a member of your service team.

 

Disclosures: The following includes our opinions and forward looking thoughts and analysis as of December 4, 2018 and are not a guarantee of future investment results. This presentation includes third party sources which we believe are reliable but have not been independently verified. This is not an offer to buy or sell securities and is for informational purposes only.

Our CIO Stephanie Lang appeared on CNBC’s Squawk Box this morning to discuss the state of the markets.

See the Full Interview Here