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Budget deficit is down; many stocks, too, so take a trip

By Dian Vujovich

There’s so much going on in the world of money that it’s hard to make heads or tails of what’s really happening. Or, whether or not we should be concerned. That said, the short answer to that is ‘It all depends’ as the making and managing of money all boils down to one word: You.

If stock markets at home or abroad were all to collapse right now in front of you, those with a huge stash of cash hidden all over the place probably wouldn’t be all that bothered. Or inconvenienced. On the other hand, if you’re living paycheck to paycheck, the stress and worry related to the dwindling of your hard-earned and saved assets could kill you. Then again, if you’re living on a wing and a prayer, you’re probably relying on that prayer thing to pull you through. More about the wings in a minute.

While that all may sound goofily simplistic, there aren’t two of us who have the same amount of money or assets in our investment portfolios to manage. And no two of us who feel or think exactly the same way about the management of money in our lives. Money is as simple and complicated as that.

Given that introduction, here are few financial and money-based realities to think about:

• Re the big picture: The Congressional Budget Office’s (CBO) expects the deficit this year will be $60 billion less than it was projected to be in March: $426 billion. This is the sixth year in a row in which the deficit has declined as a percentage of gross domestic product (GDP) since 2009.

And, if current laws regarding taxes and spending remain pretty much the same going forward, the CBO projects that real GDP will grow by 2 percent this year, 3.1 percent in 2016 and 2.7 percent in 2017. In 2018 and 2019, growth estimates are projected to be 2.2 percent.

•Re interest rates: If those kinds of growth rates turn out to be true, quivering about the what-if’s regarding rising interest rates isn’t worth worrying about. Rates could inch up but that’s not likely to happen this year or in 2016, an election year.

And then there is this delightful tidbit from David Bianco, Deutsche Bank’s equity strategist, “We see a better chance of landing men on Mars before a full normalization of nominal and real interest rates, especially 10-year yields, to historical norms.”

•Re stocks. From BlackRock’s global strategist, Russ Koesterich, CFA: “As we have seen in recent years, in a world where the Fed keeps rates anchored at zero, stocks benefit, if only because they compare favorably to cash and negligible bond yields.”

Koesterich also said in his Weekly Commentary Overview that he doesn’t believe a “ U.S. recession is on the horizon, but it is becoming clear that the U.S. is not immune to the global slowdown. “

•Re wings. If any of that news makes you want to get out-of-town, now is the time to book your travel.” This early week in October is when prices are dipping the most before they head back up as we get close to the holidays,” said Jeanenne Tornatore, senior editor for Orbitz.com, in a CNBC New York interview.

If history is a reliable guide, today Oct. 6 is the day to find the best priced flights on Thanksgiving Day flights; flights for Christmas are likely to be the best purchased on Oct 9 and New Year’s holiday flights best bought Oct. 10.

Keep in mind that the airline ticket purchase market is as fickle as those within the stock, bond and interest rate markets.

As always, it’s a world of financial surprises and no guarantees.

To read more articles, please visit the column archive.

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