Now What: A Guide to Retirement During Volatile Times

How will the market respond to this week’s Fed announcement?

by ken | 07:39 in |


How will the market respond to this week’s Fed announcement?

Markets closed mixed this week as stocks experienced a period of lackluster trading. While the Dow and Nasdaq indexes eked out gains, the S&P 500 notched its first loss in five weeks, driven lower by some earnings misses. For the week, the S&P 500 lost 0.03%, the Dow gained 0.1%, and the Nasdaq gained 0.71%.[i]

Markets have had a good run near historic highs, so it’s not surprising to endure a slow week halfway through earnings season. Thus far, more than 50% of S&P 500 companies have reported in, with 68% beating earnings expectations, above the historical rate of 63%, and 56% topping revenue estimates. If remaining earnings reports are in line with estimates, earnings will be up 4.1% from second quarter 2012; one year ago.[ii] Overall, revenue growth seems to be below historical trends as businesses continue to struggle with weak global demand.

On the economic front, consumer confidence soared to its highest level in six years, which could point towards higher consumer spending during the important back-to-school retail season.[iii] Jobless claims rose last week, largely due to factoring retooling and seasonal variations, but it appears that the labor market is stable, if not gaining momentum. On the positive side, several automakers have altered their annual shutdown schedule in response to increased vehicle demand, so we will hopefully see a few more factory jobs show up in next month’s data.[iv]

Looking ahead, analysts will be closely monitoring the economic data released this week, which includes reports on consumer confidence, GDP, as well as the July Fed FOMC meeting announcement. Economists don’t expect much to change at the FOMC meeting, but analysts will still pore over every word of the announcement for insight into future Fed moves.

 

As always, in times good or bad, exciting or dull, we are ever watchful – always keeping an eye on the assets you have entrusted to our care. Thank you for giving us the opportunity to provide you with financial guidance. We hope you have a great week!

                                                                              

ECONOMIC CALENDAR:

Monday: Pending Home Sales Index, Dallas Fed Mfg. Survey

Tuesday: S&P Case-Shiller HPI, Consumer Confidence

Wednesday: ADP Employment Report, GDP, Employment Cost Index, Chicago PMI, EIA Petroleum Status Report, FOMC Meeting Announcement

Thursday: Motor Vehicle Sales, Jobless Claims, PMI Manufacturing Index, ISM Mfg. Index, Construction Spending

Friday: Employment Situation, Personal Income and Outlays, Factory Orders

 


Notes: All index returns exclude reinvested dividends, and the 5-year and 10-year returns are

HEADLINES:

New home sales reach five-year highs. Despite higher mortgage rates, sales of newly built homes surged in June to the highest level since May 2008. The monthly increase beat economists’ expectations and indicates that the housing market still has muscle.[v]

Durable goods orders rise in June. Orders for long-lasting manufactured goods rose 4.2% last month, following a significant May increase, indicating U.S. factories are doing well. The increase was driven in part by increased business spending that signals that companies are expecting future demand to increase.[vi]

Chinese manufacturing slows. China’s manufacturing activity fell to an 11-month low in July, damaged by weak global demand and reduced factory orders. Manufacturing is a key component of China’s economy.[vii]

Eurozone economic activity picks up. One measure of European economic activity showed an increase in July, for the first time since January 2012. While economists are pleased by the result, several warned that the outlook for the Eurozone economy remains weak.[viii]




“A wise man can learn more from a foolish question than a fool can learn from a wise answer.” – Bruce Lee

 

Protect Your Inheritance with the Alternate Valuation Date

Taxes can take a hefty bite out of an inheritance. Typically, the fair market value of a decedent’s estate (and the amount of tax owed) is determined on the date of death. However, the executor can choose an alternate valuation date of six months after the date of death if it will decrease both the gross amount of the estate and the estate’s tax liability, thus increasing the inheritance. Any property disposed of within that six-month period is valued on the date of sale. If the estate is not subject to estate tax, then the valuation date is the date of death.

 

 

enough so as to get it out of the trap, as less lift is usually easier to manage the putt than too much of it.




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. Securities offered through Aurora Capital Member FINRA/SIPC.

Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

Diversification does not guarantee profit nor is it guaranteed to protect assets

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ. The DJIA was invented by Charles Dow back in 1896.

The Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of stocks of technology companies and growth companies.

The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indexes from Europe, Australia and Southeast Asia.

The S&P/Case-Shiller Home Price Indices are the leading measures of U.S. residential real estate prices, tracking changes in the value of residential real estate. The index is made up of measures of real estate prices in 20 cities and weighted to produce the index.

The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.

Google Finance is the source for any reference to the performance of an index between two specific periods.

Can the market continue to set records?

by ken | 07:59 in |


Can the market continue to set records?

Markets closed mixed for the week again, logging new highs for the S&P 500 and the Dow, while the Nasdaq lost ground due to some earnings misses. So far, Wall Street is experiencing its best month this year since January, buoyed by reassurances from the Fed and generally positive economic data. For the week, the S&P 500 gained 0.71%, the Dow increased 0.55%, and the Nasdaq lost 0.35%.[i]

 

Fed Chairman, Ben Bernanke, testified before the House and Senate last week and reemphasized his role as the Fed’s chief soother. His comments were very much in line with previous speeches, underlining that the Fed will base quantitative easing decisions on incoming economic data. While asset purchases may indeed be pared back by the end of the year, the program could also be left unchanged should economic data prove to be less than positive.[ii]

 

As if to underscore the delicateness of the economy, housing data released concurrently with Bernanke’s speech seemed to be in favor of leaving asset purchases where they are. June housing starts missed expectations, largely due to a 26.2% decline in multi-family units. The MBA Mortgage Refinance index hit a two-year low, indicating that rising interest rates may be cutting into loan applications.[iii][iv] Even so, single-family starts are still up 11.5% from a year ago, and we are wise not to get worked up over every bit of fluctuation in the data.

 

Second quarter earnings season is in full swing, and the news is mixed. Of the roughly 20% of S&P 500 companies that have already reported, 65% have beat earnings estimates, and 51% have beat revenue estimates. Corporate managers have done a good job of managing investor expectations ahead of earnings season, so that even moderate results look positive. However, revenues are still down as compared to last quarter, indicating that many businesses are struggling with demand. Interestingly, companies that depend on domestic revenue sources are doing better than those that depend on foreign demand.[v]

 

For the first time in weeks, the Fed will keep a low profile ahead of the FOMC meeting on July 30 and 31, and earnings data will dominate headlines as we head into the second quarter’s busiest reporting period. About a third of the S&P 500 companies are due to report, including heavy hitters like Apple, McDonald’s, Facebook, and Boeing.[vi] While positive earnings beats could cause the market rally to continue, volatility is likely and it is also possible that mediocre data could cause a pullback in the short term.

 

 

 

 

ECONOMIC CALENDAR:

Monday: Existing Home Sales

Wednesday: PMI Manufacturing Index Flash, New Home Sales, EIA Petroleum Status Report

Thursday: Durable Goods Orders, Jobless Claims

Friday: Consumer Sentiment

HEADLINES:

Motor city runs out of gas. The city of Detroit declared bankruptcy, becoming the largest city in the U.S. to seek Chapter 9 protection from creditors. The bankruptcy process will define which creditors (including unions) will be able to compete for the city’s limited settlement resources.[vii]

China implements lending reform. In an effort to fight tight credit conditions, China’s central bank announced reforms that removed controls on the rates banks may charge clients on loans. Under the new rules, banks can lower rates as low as they like to attract lenders.[viii]

Jobless rate rises in 28 states. Highlighting the bumps in the road toward economic recovery, the latest Labor Department report shows that jobless claims fell last week in only 11 states. Jobs data is notoriously unreliable in July as seasonal factors can cloud estimates; analysts will pay closer attention to the less-volatile monthly claims number.[ix]

Fed report shows Atlantic coast factory activity up. The Philadelphia Federal Reserve Bank said factory activity in eastern Pennsylvania, southern New Jersey, and Delaware rose to its highest level in more than two years as employment and shipping activity increased.[x]

 

“When one door of happiness closes, another opens, but often we look so long at the closed door that we do not see the one that has been opened for us.”

– Helen Keller







If you travel while doing charity work, you may be able to deduct some of your travel costs. According to the IRS, here are five things you should know:

 

1.     The charity must be an IRS-qualified tax-exempt organization.

2.     You cannot deduct the value of your services, only unreimbursed travel expenses.

3.     The deduction only qualifies when charity is the purpose of the trip, not recreation or vacation.

4.     You must have real duties and responsibilities in order to deduct travel expenses.

5.     Deductible travel expenses may include:

• Air, rail, and bus transportation

• Car expenses

• Lodging costs

• Meal costs

• Taxi fares or other transportation costs between the airport or station and your hotel.


 

 

 

Share the Wealth of Knowledge!
Please share this market update with family, friends, or colleagues. If you would like us to add them to our list, simply click on the "Forward email" link below. We love being introduced!

 

If you would like to opt-out of future emails, please reply to this email with UNSUBSCRIBE in the subject line.

Insert your broker/dealer disclosures here. i.e. Securities offered through Aurora Capital Member FINRA/SIPC.

Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

Diversification does not guarantee profit nor is it guaranteed to protect assets

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ. The DJIA was invented by Charles Dow back in 1896.

The Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of stocks of technology companies and growth companies.

The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indexes from Europe, Australia and Southeast Asia.

The S&P/Case-Shiller Home Price Indices are the leading measures of U.S. residential real estate prices, tracking changes in the value of residential real estate. The index is made up of measures of real estate prices in 20 cities and weighted to produce the index.

The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.

Google Finance is the source for any reference to the performance of an index between two specific periods.

Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

Past performance does not guarantee future results.

You cannot invest directly in an index.

Consult your financial professional before making any investment decision.

Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.

 

. Neither the named representative nor the named Broker dealer or Investment Advisor gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.

 

By clicking on these links, you will leave our server, as they are located on another server. We have not independently verified the information available through this link. The link is provided to you as a matter of interest. Please click on the links below to leave and proceed to the selected site.

 

 

The market is at record levels, what’s next?

by ken | 10:26 in |


The market is at record levels, what’s next?

 

Markets rallied strongly for another week, posting their second best weekly performance of the year and sending the S&P 500 and Dow indexes to new highs. Earnings reports and calming words from Fed Chairman Ben Bernanke contributed to the market surge. For the week, the S&P 500 gained 2.96%, the Dow grew 2.17%, and the Nasdaq gained 3.47%.[i]

 

Second quarter earnings were in focus last week, and banks led the way. JP Morgan Chase (JPM) and Wells Fargo (WFC) both beat earnings expectations with in-line revenues, setting the bar for the rest of the financial sector.[ii] On the other hand,

United Parcel Service Inc. (UPS.N) gave a weak profit outlook, citing economic conditions as one reason for the lack of optimism. Overall, analysts at Thomson Reuters expect earnings to grow 2.8% and revenue to grow 1.5% in the second quarter.[iii]

 

Markets reacted positively to some reassurance from Ben Bernanke’s speech Wednesday; the chairman pushed back against the idea that the Fed would definitely begin tapering asset purchases in September. He commented that current unemployment levels may be overstating the health of the job market and that rates may be kept low even after the 6.5% unemployment threshold is reached, should conditions merit. The June FOMC meeting minutes showed some dissension in the Fed ranks, underscoring the fact that some officials believe that the Fed should start tapering sooner than Bernanke may like.[iv] Either way, investors appear to have gotten their heads around the idea that tapering will definitely happen at some point in the future.

 

We’ve got a big week ahead as investors will be closely watching earnings to either confirm or deny the sustainability of the rally. It wouldn’t be unusual to see some consolidation after such a strong run, but management teams have done a good job of setting investor expectations low and some earnings beats are expected. If earnings reports remain positive, we might see the rally continue, though some volatility is likely. Investors will also be closely watching the Fed as Ben Bernanke testifies before the House Financial Services Committee and Senate Banking Committee on the state of the economy.

 

ECONOMIC CALENDAR:

Monday: Retail Sales, Empire State Mfg. Survey, Business Inventories

Tuesday: Consumer Price Index, Treasury International Capital, Industrial Production,  Housing Market Index

Wednesday: Housing Starts, Ben Bernanke Speaks 10:00 AM ET, EIA Petroleum Status Report, Beige Book

Thursday: Jobless Claims, Ben Bernanke Speaks 10:00 AM ET, Philadelphia Fed Survey

 
 
 
 
 
 

HEADLINES:

Chinese central bank to keep credit growth steady. China’s central bank pledged to fight tight credit conditions through a mix of policy tools. The credit crunch, which has worried financial markets, was caused by factors such as fast credit growth, regulatory requirements, and a crackdown on loans between banks to cover deposit requirements.[v]

U.S. monthly budget surplus largest on record. Rising tax revenues, public spending cuts, and Treasury repayments helped the government post a surplus of $117 billion in June. Unfortunately, the improving budget picture may sap Congress’ urgency to negotiate a budget deal that would raise the federal borrowing limit.[vi]

Unemployment claims rise, seasonal factors likely. The number of Americans filing new claims for unemployment benefits rose slightly to a seasonally adjusted level of 360,000. However, the reading was likely clouded by seasonal factors like scheduled factory closings.[vii]

Consumer sentiment slips. A June reading of consumer sentiment fell short of estimates, indicating consumers are worried about the future. While consumers are still confident about the present economy, they appear to be concerned about how rising interest rates, higher mortgage rates, and increased volatility in the stock market will affect the economy later this year.[viii]

 

“Do not anticipate trouble, or worry about what may never happen. Keep in the sunlight.” – Benjamin Franklin

 

 

Share the Wealth of Knowledge!
Please share this market update with family, friends, or colleagues. If you would like us to add them to our list, simply click on the "Forward email" link below. We love being introduced!

 

If you would like to opt-out of future emails, please reply to this email with UNSUBSCRIBE in the subject line.

Insert your broker/dealer disclosures here. i.e. Securities offered through Aurora Capital,” Member FINRA/SIPC.

Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

Diversification does not guarantee profit nor is it guaranteed to protect assets

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ. The DJIA was invented by Charles Dow back in 1896.

The Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of stocks of technology companies and growth companies.

The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indexes from Europe, Australia and Southeast Asia.

The S&P/Case-Shiller Home Price Indices are the leading measures of U.S. residential real estate prices, tracking changes in the value of residential real estate. The index is made up of measures of real estate prices in 20 cities and weighted to produce the index.

The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.

Google Finance is the source for any reference to the performance of an index between two specific periods.

Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

Past performance does not guarantee future results.

You cannot invest directly in an index.

Consult your financial professional before making any investment decision.

Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.

. Neither the named representative nor the named Broker dealer or Investment Advisor gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.

 

By clicking on these links, you will leave our server, as they are located on another server. We have not independently verified the information available through this link. The link is provided to you as a matter of interest. Please click on the links below to leave and proceed to the selected site.

 

 

 

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