Where Does Your Income Fit?
More than half of U.S. taxpayers showed relatively low income in tax year 2021, with a small percentage in high income brackets.
The recent bank failure announcements from Silicon Valley Bank (SVB) have raised security questions concerning FDIC deposit insurance. Attached is an article about deposit insurance and other types of insurance for banking and credit union accounts.
Additionally, we provide a summary of the Silicon Valley Bank failure. Silicon Valley Bank serviced clients with an industry-focused customer base. Most deposits were for technology companies operating in the venture capital markets. Depositors with large operating cash balances held at the bank started to withdraw funds over concerns that losses on the bank's bond portfolio would have a detrimental impact and prevent them from being able to withdraw their funds, which started a chain reaction causing the bank to sell its bond portfolio to cover the withdrawals. Ultimately, the FDIC stepped in to make depositors whole, thereby liquidating the bank assets. FDIC covers deposits at financial institutions up to $250,000 per bank and covers checking, savings, and CDs. With the events at SVB last week, the FDIC is now covering deposits of any size. Although a temporary stopgap, it assures the public that their funds are safe. It is concerning when you read about bank failures; however, these are isolated situations that do not apply to most banks. This situation differs from what was experienced by the financial system in 2008 & 2009 because it is localized with two institutions and is not a systemic credit and liquidity issue. Banks are well-capitalized and in a healthy position to honor clients' withdrawals and general banking requirements.
Government Money Market funds are in healthy financial positions. Although the FDIC does not insure money market funds, Northern Trust-managed funds, which we use in our client portfolios, have maintained their Net Asset Value of $1 per share with ample liquidity. We hope you take comfort in knowing we are monitoring this situation closely.
Harbour Trust & Investment Management Company is pleased to announce the recent additions of Steven Skalka and Matthew Hollander.

While cutting his teeth in the management trainee program, Steve quickly found his passion in the investment management field. In addition to constructing investment portfolios, Steve routinely met with clients and prospects.
When Steve isn't at work, he actively makes community presentations on a wide array of financial topics. He also volunteers as a youth softball coach and is involved in a multitude of school and church activities.

50% Chance of a Recession in 2023
Steve Skalka, chief fiduciary officer with Harbour Trust Investment Management Company, delivered a rapid-fire overview of equity, inflation, and economic data.
“Are we in a recession? That’s what we hear over and over again,” Skalka said. “We have negative economic growth forecasted for the first two quarters of the year in the U.S. During the pandemic, overstimulation led to inflation and the end of easy monetary policy. Supply and demand led to inflation. Four primary supply bottlenecks that escalated inflationary pressure were products (think semiconductors), transportation, labor, and energy. Some relief is projected on the product front moving forward in areas like agricultural products and primary metals.”
“Good news is that prices are showing signs of coming down. Some relief is also showing on the transportation front. But labor remains an issue,” he said. “We have more job openings than people willing to take those jobs. Fewer workers equal higher wages. Energy is also an issue, as it impacts everything. Hostile energy policies have led to a drop in infrastructure investment.”
“When fighting inflation, we have to look back at history. Ultimately what finally put the brakes on inflation before is the increases in interest rates, a recession, and a fed pivot. The Fed pivoted too fast in the late 1970s and inflation took off again. It took a second recession to put the brakes on inflation. That’s why we think the Fed is not going to pivot again too quickly. Inflation will go down, but the Fed’s probably got some more moves to make.”
“Realistically, there’s about a 50% chance of a recession in 2023,” Skalka said. “On the equity side, earnings decline during a recession. But there are pockets of opportunity. Energy and defense contractor stocks have done well, for example. Also, higher-quality stock bands are doing better.”
“The good news is that here, locally, our area might be a standout. In these instances, you probably don’t want to be on either coast. The exodus from Illinois has brought about a lot of changes here,” Skalka added.
See Skalka’s presentation here.
Full Article: https://buildingindiana.com/optimistic-outlook-mostly/