Legislation introduced in 2020 and then expanded and codified earlier this year has strengthened access to qualified retirement savings plans for businesses and employees. It has also complicated the use of such plans as part of an estate planning strategy.

Below we provide a high-level summary of the relevant legislative actions and regulations, implications for both plan participants and their beneficiaries, and strategies to adjust to these changes in an optimal manner. We discuss each of these topics in more depth in our note, available here.

As we approach the midpoint of the year, uncertainty has rattled the markets and much has changed in a short six months. From a business cycle perspective, we are either in a mid-cycle slowdown digesting the normalization of interest rates, or we are approaching a contraction in economic activity. Our market cycle dashboards remain in positive territory, but we are closely monitoring trends and probabilities that might cause them to turn bearish. So much uncertainty persists that one must carefully weigh the probabilities of each outcome. Given the datapoints we received from the Fed this week, we are re-underwriting our Stress Test Scenarios to be able to explain better the potential outcomes from here and to determine appropriate portfolio positioning and action. You should expect to hear from your advisor with more details in the coming weeks.

The Federal Reserve raised the Fed Funds rate by 50 basis points in May. This rate hike did not have a major impact on equity and bond returns for the month. The US Economy added 390,000 jobs in May surpassing estimates of 318,000. The S&P 500 started May with a sell-off but in the last week of the month rallied 6% to finish up 0.18%. The Nasdaq had a similar late-month rally, but ended the month in negative territory, down almost 3%. Volatility is lower than it was last month but remains higher than it was at the start of the year. Core PCE increased 4.9% (YoY) in April, which is the lowest level since December 2021. Value equities continue to outperform Growth equities this year and US Large Cap continues to hold up better than US Small Cap through the past month and year. Quality balance sheets will be easier to defend against rising rates. The Fed confirmed in May that we can expect at least two more 50 basis point rate hikes in the coming months, and they will also release their annual stress test of the banking system later this month, which will give us insight as to how banks are performing in this new environment.