Now What: A Guide to Retirement During Volatile Times

How long will this market correction last?

by ken | 10:19 in |


How long will this market correction last for?

 

Markets slid considerably last week after investors were rattled by a confluence of events in emerging markets. For the week, the S&P 500 fell 2.63%, the Dow sank 3.52%, and the Nasdaq dropped 1.65%.[i] What were the international events that fueled the sell off?

Chinese manufacturing activity contracted in January for the first time in six months, according to one important survey. While there are probably some distortions in the numbers due to the Chinese New Year holiday, the data indicates that all may not be well with one of China’s most critical sectors. [ii] 

Political unrest in Turkey and financial turmoil in Argentina also stoked investor fears about these countries’ ability to maintain order.[iii] Concerns about developing economies are being heightened by the Fed’s tightening of its easy money policies, which could hurt emerging markets. Loose monetary policy has helped keep interest rates low around the world. Countries that have relied on low borrowing costs to spur economic activity could face a period of painful readjustment to the new reality.[iv]

Investors seeking higher returns have also poured money into developing markets in recent years. The central bank’s tapering process now has investors scrutinizing the weak fundamentals that underpin many developing countries’ markets and wondering if their economies can stand on their own. If they pull their money out, developing economies could be hurt by damaged currencies, falling standards of living, and potential social unrest.

Fourth quarter earnings reports also drove some volatility last week. So far, results have been a mixed bag, with slightly more than half of the S&P 500 beating estimates. Of the 102 S&P 500 companies that have reported in, 63% have achieved earnings above expectations, as compared to 67% over the previous four quarters.

The takeaway: If any of last week's headlines rob you of sleep, try to remember that it's routine for economies and equity markets to cycle. While the selloff is troubling to some, it may also have created some opportunities to cherry pick investments with good upside potential at attractive prices. Investors buying the dip could spur another rally; disappointing data or a Fed surprise could cause the contraction to deepen. Whichever way markets move, we’ll be keeping our eyes on the trend and working to position our clients for long-term success.

 

ECONOMIC CALENDAR:

Monday: New Home Sales, Dallas Fed Mfg. Survey

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

Wednesday: EIA Petroleum Status Report, FOMC Meeting Announcement

Thursday: GDP, Jobless Claims, Pending Home Sales Index

Friday: Personal Income and Outlays, Employment Cost Index, Chicago PMI, Consumer Sentiment

 

HEADLINES:

2013 existing home sales highest in 7 years. U.S. home resales rose in December after falling for the previous three months as low interest rates and continuing demand pushed up sales. Despite the loss of some momentum, 2013 was still an excellent year for the housing market.[v]

Weekly jobless claims creep up. While the number of Americans filing new unemployment claims inched upward last week, the overall trend suggests slow improvement in the labor market. The four-week moving average, a less volatile measure, fell 3,750 to 331,500 new claims.[vi]

Oil prices climb on cold weather. U.S. oil rose on expectations that cold weather would cause demand for heating oil to surge. Frigid weather also caused natural gas prices to surge to a multi-year high.[vii]

U.S. manufacturing growth slows in January. Falling new orders caused a slowdown in manufacturing growth for the first time in three months. Even so, the overall rate of growth remains robust.[viii]

 

 

 

Quote of the week

‘I ask you to ensure that humanity is served by wealth and not rule by it’

Pope Francis

Around the World …

U.S GDP is slowly moving up as consumers are starting to spend more and manufacturing is making a comeback

China GDP is moving down as high debt and lower manufacturing is a drag on growth

Japan government predicts a 1.4% GDP, which is low considering the trillions that, is being added to the economy in the form of stimulus.

The Stock Market Almanac says: that if the market is down in January, there is a high correlation that it will be down for the year

Did you know?  That oil prices are unchanged from a year ago according to Page One financial

It’s the economy ‘stupid’: overall economic diffusion index for the US increased again last week. We are convinced the US economy is OK. Source ISI

Just the facts Ma’am: The most a social security recipient will receive in 2014 at the age of 66 is $2642 per month. Source MFS

 

 

 

 

 

 

 

 

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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 Dow Jones Corporate Bond Index is a 96-bond index designed to represent the market performance, on a total-return basis, of investment-grade bonds issued by leading U.S. companies. Bonds are equally weighted by maturity cell, industry sector, and the overall index.

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.

These are the views of Platinum Advisor Marketing Strategies, LLC, and not necessarily those of the named representative, Broker dealer or Investment Advisor, and should not be construed as investment advice. 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.

 

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Why has the market been directionless in 2014?

by ken | 09:50 in |

Why has the market been directionless in 2014?

Markets ended the week mixed as markets responded to some lackluster Q4 earnings reports. For the week, the S&P 500 lost 0.20%, the Dow gained 0.13%, and the Nasdaq gained 0.55%.

Earnings reports contributed to the volatility investors saw in markets last week. Though earnings season is still young, companies seem to be beating revenue expectations but missing on earnings, a reversal of the trend we saw in previous earnings seasons. So far, reports suggest that revenues were up 0.5%, and 67% of reports have beaten expectations, which is a positive sign. On the other hand, the profit picture isn’t as rosy. It seems that the effects of the government shutdown, a shortened holiday shopping season, and deep discounting trimmed profits last quarter. 

On the economic front, the weekly job report shows that unemployment claims fell for the second week in a row, suggesting December’s dismal results may be temporary.  Consumer sentiment slipped in January, weighed down by lowered expectations among lower and middle-income families, who are worried about jobs and income growth.  Though the Fed has been largely silent ahead of their late January FOMC meeting, it’s likely that they are carefully weighing the data to determine next steps when Janet Yellen takes the reins in February. If overall economic data remains positive, the Fed could announce another round of tapering at the next meeting.

In Washington, the Senate finally approved a $1.1 trillion spending bill that will fund the government through the current fiscal year-end and quells fears of another government shutdown.  Though the Treasury debt limit is still suspended until February 7, once the suspension expires, the Treasury will run out of money by the end of February. Hopefully Congress will avoid last-minute drama that could hurt confidence in the economy and quickly come to a bipartisan agreement.

Looking ahead, investors could see some more volatility around high profile earnings reports from major blue chip companies following the Monday holiday. While positive reports could result in a resumption of the 2013 rally, the volatility investors are experiencing can be described as the kind of correction we may expect to see after a sustained rally. With little economic news to move the markets as a whole, the individual forward expectations of each company will move stocks one by one, making it difficult to predict a trend.

ECONOMIC CALENDAR:

Monday: U.S. Markets Closed for Martin Luther King Jr. Day
Thursday: Jobless Claims, PMI Manufacturing Index Flash, Existing Home Sales, EIA Petroleum Status Report
.
HEADLINES:
Housing starts drop in December. After months of sizzling growth, groundbreaking on new homes fell 9.8% in December, the largest drop since April 2013. The decline was less than economists expected and was largely driven by the volatile multi-family homes segment. For 2013, housing starts increased by 18.3%.

U.S. industrial output surges in Q4. Industrial output rose at its fastest clip in 3-½ years, growing 6.8%, the largest quarterly increase since 2010. Factory output and overall industrial production rose in December, a positive sign for the economy in 2014.

Global economy expected to grow in 2014. According to a Reuters poll of economists, the world economy will grow 3.6% in 2014, as compared to 2.9% in 2013. While developed economies will do better this year, some emerging markets may struggle with fiscal reform and deflation.

Dollar rallies on economic data. The dollar surged against a basket of currencies, pushing the euro to a seven-week low after positive economic data suggests the Fed may stay on track with tapering measures.

“It is amazing what you can accomplish if you do not care who gets the credit.”
– Harry S. Truman


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.
. 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 Dow Jones Corporate Bond Index is a 96-bond index designed to represent the market performance, on a total-return basis, of investment-grade bonds issued by leading U.S. companies. Bonds are equally weighted by maturity cell, industry sector, and the overall index.
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.
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.

Why are the market's mixed this year?

by ken | 08:45 in |


Why the markets are mixed this year?

 

Ken’s TV interview last week on thestreet.com

http://www.thestreet.com/video/12203164/make-munis-a-part-of-your-retirement-strategy.html

 

Markets stalled in the first full week of 2014, with major indices ending on a mixed note. For the week, the S&P 500 gained 0.6%, the Dow lost 0.2%, and the Nasdaq rose 1.03%.[i]

 

Friday’s December Employment Situation report showed that job growth slowed significantly in December, adding just 74,000 new jobs. This was well below consensus estimates, which expected a number in the neighborhood of 200,000 new jobs. At odds with the dismal jobs data, the household survey showed a very large drop in unemployment, causing the headline unemployment number to fall to 6.7%, very close to the Fed’s goal of 6.5%.[ii]

 

Markets reacted nervously to the unexpectedly negative data, which is completely out of line with the generally positive labor trends of the past weeks and months. One way for unemployment to drop even as job growth declines is for people to quit searching for jobs, thus dropping out of the labor force. In December, the labor force participation rate dropped to its lowest in more than three decades. However, labor force participation jumped in November, so it’s possible that the December data is a statistical outlier.[iii] Divergences between the two surveys do occasionally happen and economists usually wait a month or so
Text Box:

 for revisions to be made that straighten out the data.

 

Bottom line: we’re getting very close to the Fed’s threshold rate of 6.5% unemployment, but the overall labor market is still weak. Given this weakness, the Fed will probably need to clarify its tapering plans and give guidance about how critical that 6.5% floor really is.

 

Looking ahead, earnings season will be kicking off this week. First up are several major financial firms; like JPMorgan Chase [JPM], Wells Fargo [WFC], Bank of America [BAC], Citigroup [C],[iv] and investors, will be taking a hard look to get a sense of how fourth quarter earnings season will go. If earnings continue their positive trend, investors could see further upside; if earnings disappoint, investors may decide to take some more profits off the table and wait for better news.

 

ECONOMIC CALENDAR:

Tuesday: Retail Sales, Import and Export Prices, Business Inventories

Wednesday: Producer Price Index, Empire State Mfg. Survey, EIA Petroleum Status Report, Beige Book

Thursday: Consumer Price Index, Jobless Claims, Treasury International Capital, Philadelphia Fed Survey, Housing Market Index, Ben Bernanke Speaks 11:10 AM ET

Friday: Housing Starts, Industrial Production, Consumer Sentiment

 

 




HEADLINES:

Yellen confirmed as next Fed chair. The Senate voted to confirm current Federal Reserve vice chairman Janet Yellen as the next Fed chairman. She will replace current chairman Ben Bernanke when his term ends at the end of January. A major focus of her tenure will be the unwinding of the central bank’s unprecedented quantitative easing programs.[v]

Wholesale inventories grew in November. Business inventories increased 0.5% in November, following a 1.3% increase in October. Inventory growth has been strong over the last few months, suggesting firms have confidence in consumer demand and that restocking could contribute significantly to Q4 economic growth.[vi]

China exports slow.  Chinese exports declined more than expected in December, though the drop may be due to changes in how exports are calculated. Regulators clamped down on speculative trading activities disguised as export deals. Economists are optimistic that a brighter 2014 will cause export activity to pick up in the world’s second largest economy.[vii]

Retailers cut forecasts. A disappointing holiday season led to several retailers cutting 2014 earnings forecasts. Despite aggressive actions to lure shoppers, a shortened shopping season, unseasonably cold weather, and anemic spending combined to hit retailer revenues hard.[viii]

 

Quote of the week

“Courage is being scared to death...and saddling up anyway.” - John Wayne

The Stock Trader’s Almanac says:

As January goes, so does the market. This January barometer has a batting average of .762  ( now if the Famers almanac was as accurate with this ‘crazy’ weather …)

Did you know?

That a year ago Gold was $1648 an ounce, and it is now $1231 an ounce, down 25 %

According to Page one Financial

It’s the economy, stupid:

We’re forecasting real GDP of 3% and inflation of 1.5% in both 2014 and 2105

ISI Group

Just the fact Ma’am:

NOT DOWN - The 11/26/12 issue of Time magazine ran an article titled “Why Stocks are Dead” which documented the gloomy equity forecast of money managers Mohamed El-Erian and Bill Gross. From 11/26/12 to the close of trading on Friday 1/10/14, the S&P 500 has gained +34.2% (total return)

 

 

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.

 

 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 Dow Jones Corporate Bond Index is a 96-bond index designed to represent the market performance, on a total-return basis, of investment-grade bonds issued by leading U.S. companies. Bonds are equally weighted by maturity cell, industry sector, and the overall index.

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.

. 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.

 
 


[i] http://briefing.com/investor/markets/weekly-wrap/weekly-wrap-for-january-6-2014.htm
[iii] http://www.reuters.com/article/2014/01/10/us-usa-economy-idUSBREA090FP20140110
[iv] http://www.cnbc.com/id/101326378
[v] http://www.bloomberg.com/news/2014-01-09/yellen-says-u-s-economy-may-strengthen-this-year-time-reports.html
[vi] http://briefing.com/investor/markets/weekly-wrap/weekly-wrap-for-january-6-2014.htm
[vii] http://www.reuters.com/article/2014/01/10/us-china-economy-trade-idUSBREA0905L20140110
[viii] http://www.smdailyjournal.com/articles/business/2014-01-10/stocks-mixed-as-retailers-give-weaker-outlook/1776425116243.html

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