THE WEEK ON WALL STREET
Stocks drifted lower as a week of mixed earnings reports and resurgent worries over Fed monetary policy dragged on investor sentiment. The Dow Jones Industrial Average slipped 0.17%, while the S&P 500 declined 1.11%. The Nasdaq Composite index lost 2.41%. The MSCI EAFE index, which tracks developed overseas stock markets, dipped 0.30%.
FACT OF THE WEEK
On February 15, 1950, Walt Disney’s animated feature Cinderella opens in theaters across the United States.
The Chicago-born Disney began his career as an advertising cartoonist in Kansas City. After arriving in Hollywood in 1923, he and his older brother Roy set up shop in the back of a real-estate office and began making a series of animated short films called Alice in Cartoonland, featuring various animated characters. In 1928, he introduced the now-immortal character of Mickey Mouse in two silent movies. That November, Mickey debuted on the big screen in Steamboat Willie, the first fully synchronized sound cartoon ever made. Walt Disney provided Mickey’s squeaky voice himself. The company went on to produce a series of sound cartoons, such as the “Silly Symphony” series, which included The Three Little Pigs (1933) and introduced characters like Donald Duck and Goofy.
Cinderella, based on another Brothers Grimm fairy tale, was chosen for its similarity to the Snow White story. The film’s immediate source was Charles Perrault’s French version of the fairy tale, which tells the story of a young girl whose father dies, leaving her at the mercy of her oppressive stepmother and two unsympathetic stepsisters. As in Snow White, Cinderella gets the help of a few friends–in this case singing mice and birds as well as a Fairy Godmother–to escape the prison of her servitude and win the heart of Prince Charming. Along the way to its happy ending–a Disney trademark–the film featured lively animation sequences and enduring songs like “A Dream is a Wish Your Heart Makes” and the Oscar-nominated “Bibbidi-Bobbidi-Boo.”
Six years in the making, Cinderella became one of Disney’s best-loved films and one of the highest-grossing features of 1950. As with Snow White and other classic animated features, the studio held periodic re-releases of Cinderella in 1957, 1965, 1973, 1981, and 1987, keeping its popularity alive among new generations of moviegoers.
MARKET MINUTE
Rally Stalls
Stocks struggled last week, weighed down by rising bond yields, a firming U.S. dollar, geopolitical tensions, and generally unimpressive corporate earnings reports. Perhaps the most consequential overhang was the potential direction of monetary policy. Initially, traders were relieved by comments made by Fed Chair Jerome Powell earlier in the week that he had not struck a more aggressive tone following the strong employment report released after the Federal Open Market Committee (FOMC) meeting. The relief was short-lived, however, as anxieties over future monetary policy resurfaced, exacerbated by comments by one Fed governor who suggested restrictive monetary policy would be necessary for a few years to tamp down inflation.
Powell Repeats Himself
Investors were particularly eager on Tuesday to hear Powell’s first comments following the strong employment report the previous Friday. The concern was that the surprise job number would change Powell’s outlook coming out of the last FOMC meeting. Powell instead repeated his post-FOMC meeting remarks, which were that a disinflationary trend was underway, and there remained a distance to travel before the measures taken tamed inflation. The Fed would be data-dependent in making future rate decisions. Powell also pointed out that the robust job growth showed why it might take so long to reduce inflation to the Fed’s target level.
FINANCIAL STRATEGY OF THE WEEK
Some people approach buying a car like they approach marriage, “‘til death do us part.” Others prefer to keep their options open, trading in every few years for the latest make and model, the most cutting-edge technology, or the highest horsepower. Whichever describes you best, we all face a similar decision when it comes to acquiring a car: finance, lease, or pay cash.
When shopping for new vehicles, about one-quarter of consumers choose to lease, while the majority choose to finance. From an investment perspective, which choice is best? That depends on your lifestyle, cash flow, and personal preferences. For many, paying cash for a car is the simplest way to get one. When you drive off the lot, you own the vehicle outright and are free to do whatever you want with it. You face no penalties or mileage restrictions, and you have no monthly payments. However, you have paid cash for a vehicle that is expected to depreciate over time.
Financing a new car requires a smaller initial outlay of money, usually 20% or more of the vehicle’s value, in the form of a down payment. When you drive off the lot, the bank owns the car, not you. As with most loans, you make monthly payments of principal and interest with the promise of eventual ownership. The amount of your payment depends on a variety of factors, including the value of the car, the length of the loan, and the interest rate offered by the lender. Car dealers sometimes will offer “no money down” or low annual percentage rate loans, which can make financing more manageable.
If you like to have a new car every few years, leasing is an approach to consider. Leasing a car is like renting an apartment. You pay a monthly fee to use the car for a specific amount of time, usually two to three years. Monthly payments are typically lower than when you finance since you are paying for the depreciation on the car while you drive it. In certain situations, lease payments may also have tax considerations. However, there are caveats to leasing. For one, a lease typically stipulates the number of miles you are permitted to drive during the course of the lease. At the end of your lease, you may face penalties if you have exceeded the total number of miles in the contract.
Whatever your relationship with your car, it may eventually come time for a new one. Familiarize yourself with your options. You may find that changing your strategy makes sense in light of your lifestyle or financial situation.
As always, we’re here to answer any questions or help with anything you or your family needs.