Now What: A Guide to Retirement During Volatile Times

by ken | 09:17 in |


What will 2014 ‘ring in’ for investors?

 

Stocks closed out their second week of gains despite the short trading week with the Dow and S&P 500 hovering near record highs. The S&P 500 gained 1.27%, the Dow grew 1.59%, and the Nasdaq increased 1.26%.[i]

 

Investors got some good economic news last week. Consumer sentiment rose in December to its highest level in five months as Americans’ outlook on job prospects and the economy improved. Increased shopping plans due to retailer discounting and rising incomes among the wealthy accounted for most of the increase, leading to higher hopes for end-of-year sales.[ii] Jobless claims fell last week to the lowest level in nearly a month. Though seasonal variation may be affecting results, it’s still a hopeful sign for growth in the labor market.[iii]

 

It’s hard to know how retailers are doing during the busy holiday shopping season. The deck was stacked against retailers this year: A shortened holiday shopping season and anemic consumer demand led retailers to aggressively discount and offer free-shipping deals to woo online shoppers. This combination created a last-minute surge that shippers couldn’t handle, leading to unhappy customers on Christmas morning. Current estimates of holiday sales show an increase over 2012 of between 2.3%[iv] and 3.5%.[v] The problem is that retailers achieved those numbers by lowering prices and relying on deep discounts. While these tactics may have boosted sales numbers, gains in absolute dollar terms may have been held back.

 

Looking ahead at the final week of the year, markets will likely see low volume as traders take some vacation and holiday spirits keep markets in check. Important data this week includes the latest consumer confidence numbers and a speech by Fed Chairman Ben Bernanke Friday, where he will discuss the changing Fed and take questions from economists. While Bernanke has been reticent to talk about future Fed actions, we can hope for more guidance about tapering.[vi]

 

 

We’re also hopeful for continued performance next year, and sentiments about 2014 have shifted into cautious optimism on expectations for better global growth next year. Keep in mind that stocks may struggle to maintain their sizzling pace of gains much longer. While Fed tapering hasn’t yet affected markets, investors are waiting to see how slowing quantitative easing will play out. If we continue to see positive economic data, we can expect more gains. However, investors may see a selloff as traders take profits off the table and consolidate their positions.

We hope that 2013 has been a wonderful year for you, and we look forward to continuing to support you as we move into 2014!

 

ECONOMIC CALENDAR:

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

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

Wednesday: All Markets Closed for News Year’s Day

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

Friday: Motor Vehicle Sales, EIA Petroleum Status Report, Ben Bernanke Speaks: 2:30 PM ET

 




HEADLINES:

New home sales fall slightly. Sales of new single-family homes fell modestly in November from a five-year high, and prices moved higher, indicating that the housing sector is weathering higher mortgage rates just fine. Compared with November 2012, new home sales are up 16.6%.[vii]

Durable goods and capital orders up. Orders for long-lasting manufactured goods surged in November and a measure of planned business spending on capital goods recorded its largest increase in nearly a year, suggesting sustained strength in the economy. The increases in these two key measures caused some economists to raise Q4 GDP estimates.[viii]

Turkish lira plunges. Turkey’s currency fell to record lows against a basket of currencies as domestic political woes cause investors to flee. Turkish Prime Minister Tayyip Erdogan was forced to sack nearly half of his cabinet during a corruption scandal. The combination of Fed tapering and political risk proved too much for currency traders, forcing the lira down.[ix]

Obamacare counts down the days. January 1 will bring a big test for Obamacare as hundreds of thousands of Americans begin to use their new healthcare coverage for the first time. While it’s hard to know how Obamacare troubles may affect markets, the success or failure of the program will feature heavily in 2014 mid-term elections.[x]

 

“Believe in yourself! Have faith in your abilities! Without a humble but reasonable confidence in your own powers you cannot be successful or happy.”

- Norman Vincent Peale

 

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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 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.

 

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How long will the 'Santa Clause' rally last

by ken | 09:24 in |


How long will the ‘Santa Clause’ rally last?

 

Stocks broke their losing streak and rallied on the long-awaited Fed taper and positive economic news. The S&P 500 and Dow both finished out the week at record closes.[1] For the week, the S&P 500 gained 2.42%, the Dow surged 2.96%, and the Nasdaq grew 2.59%.[2]

Stock market activity last week shows that good news may finally be good news for markets. The other shoe finally dropped on quantitative easing; the Fed announced a modest taper of $10 billion, reducing the size of its monthly bond purchases to $75 billion. In order to make the tapering pill easier to swallow, the Fed pledged to keep rates near their current levels until the headline unemployment rate declines below 6.5%. If the Fed continues to wind down purchases by $10 billion per Federal Open Market Committee (FOMC) meeting, that would put an end to quantitative easing by late 2014.[3] Stocks rallied on the news, taking it as an emphatic vote of confidence on the economy by the Fed.

 

In other Fed-related news, Janet Yellen, the nominee for chair of the Federal Reserve, cleared a major hurdle last week as the Senate voted to move forward with the nomination. A final vote is set for January 6 when the Senate returns from a holiday break.[4] Yellen is an experienced Fed hand, and it’s likely that her main focus as chair would be to keep the Fed on a slow and steady path.[5]

 

In Washington, the Senate approved the bipartisan budget deal, avoiding any last-minute brinksmanship. The bill guides government spending into 2015 and will avoid another government shutdown and will eliminate some sequestration cuts. Though the deal avoids tackling the debt ceiling issue, it does address government spending and will decrease the deficit by approximately $20 billion over the coming years.[6]

 

On the economic front, markets surged when revised Q3 Gross Domestic Product (GDP) numbers were announced. New estimates of third quarter GDP growth indicated that the economy grew 4.1%, its fastest pace in almost two years. Economists increased their estimates of business and consumer spending as well as exports, which show that the economic recovery is still steaming along.[7]

 

Looking ahead at the holiday-shortened week, there’s not a lot of economic data on the wire, and it’s likely to be a slow week. Regardless of what happens in the final weeks of the year, 2013 will stand out as a banner year for equity performance. It’s hard to know whether to expect a correction at the beginning of the year, but a pullback could provide good buying opportunities as long as fundamentals remain strong.

 

 

 

ECONOMIC CALENDAR:

Monday: Personal Income and Outlays, Consumer Sentiment

Tuesday: Durable Goods Orders, New Home Sales

Wednesday: All Markets Closed for Christmas Holiday

Thursday: Jobless Claims, EIA Petroleum Status Report

HEADLINES:

Weekly unemployment claims rise. According to the most recent Labor Department report, initial unemployment claims rose to their highest level since March. Other labor market indicators show improvement, leading economists to largely discount the increase and attribute it to seasonal factors.[8]

Home resales fell in November. Sales of previously owned homes fell in November by 4.3% to the lowest level since December 2012. This was the third straight month of declines as rising interest rates dampen homebuyer activity. However, analysts believe that housing market fundamentals remain solid and that demand for housing still exists.[9]

Retailers pull out all the stops to lure shoppers. Retailers are down to the wire and are making serious last-ditch efforts to bring in more sales. Many retailers are advertising half off coupons and deals similar to those available on Black Friday. Early data suggests that the holiday shopping season has been soft, leading to aggressive promotions.[10]

EU loses AAA rating. Ratings agency Standard and Poor’s downgraded the European Union’s sovereign credit rating to AA+, citing tensions between member states and a deteriorating financial situation. S&P had recently cut its ratings on the Netherlands and France and believes that the wider region faces growing risks.[11]

 

“A dream doesn't become reality through magic; it takes sweat, determination

and hard work.” - Colin Powell

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.

 

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What will the Fed do this week?

by ken | 07:53 in |


What will the Fed do this week?

Stocks experienced another down week, driven largely by low volume, anticipation of a budget deal, and investor caution before the Federal Open Market Concerns (FOMC) meeting. For the week, the S&P 500 lost 1.65%, the Dow fell 1.65%, and the Nasdaq lost 1.51%.[i]

 

Several narratives drove the action last week. The House passed a breakthrough budget deal that will avoid a government shutdown in January and blunts the next round of automatic sequestration cuts. The modest deal won’t make much of a dent in the U.S. deficit and doesn’t deal with the debt ceiling, meaning that we could see another battle when it needs to be increased by Congress in early spring. The bill will go to the Senate next, where it’s expected to pass despite the objections of some political groups, who would prefer to see government spending cuts included.[ii] It appears that investors had two concerns about the bill last week: Though Senate approval of the bill seems certain, there’s still an opportunity for opponents to derail the process, pushing the deal into the New Year and raising the risk of another shutdown. On the other hand, passage of the bill may increase the possibility of the Fed making a tapering announcement at this week’s meeting.

 

Last week’s initial jobless claims spiked unexpectedly to 368,000 (expectations had ranged from 300,000-315,000); however, the Labor Department said that it is still experiencing problems with seasonal adjustments, meaning that the report is not as disappointing as it may appear.[iii] Another factor in the poor performance last week is that bullish sentiment has been running so high in recent weeks that a pullback was almost certain. Though it’s disappointing to see the rally stumble so close to the end of the year, keep in mind how far we’ve come in 2013: to date, the S&P 500 has gained 24.5%, the Dow has increased 20.2%, and the Nasdaq has grown 32.5%.[iv] Depending on the outcome of the budget bill debates and the FOMC meeting, it’s possible that markets could renew the rally, giving investors another bump before year-end.

 

The Fed’s FOMC meeting will be in focus this week as investors wait to see whether the central bank will send out 2013 with a bang or a whimper. It’s hard to call the odds on whether the Fed will announce intentions to scale back its stimulative bond-buying programs now that the economic outlook is brightening, or if it will wait until next spring. Currently, general sentiment expects the Fed to delay the taper until next year, but we won’t know for sure until the official announcement on Wednesday. Investors will also be watching Washington carefully as the Senate begins debating the budget deal on Tuesday. The final Senate vote on Janet Yellen for the next Fed chair will also be this week.[v]

 

 

 

ECONOMIC CALENDAR:

Monday: Empire State Mfg. Survey, Productivity and Costs, PMI Manufacturing Index Flash, Treasury International Capital, Industrial Production

Tuesday: Consumer Price Index, Housing Market Index

Wednesday: Housing Starts, EIA Petroleum Status Report, FOMC Meeting Announcement, FOMC Forecasts, Chairman Press Conference

Thursday: Jobless Claims, Philadelphia Fed Survey, Existing Home Sales

Friday: GDP

 

.

HEADLINES:

Wholesale price show muted inflation pressure. Producer prices fell for the third straight month in November, indicating that inflation is still weak. Falling gasoline prices caused much of the downward trend, which will likely factor into the Fed’s tapering decision this week. Persistently low inflation can contribute to slow economic growth.[vi]

Strong November retail sales boost economic outlook. U.S. retail sales data showed solid growth in November, increasing 0.7%, as Americans stepped up their spending on a wide range of goods. November’s increase was the largest in five months and could portend a strong holiday shopping season.[vii]

Import price fell in November for second straight month. Falling food and petroleum prices led to lower import costs, indicating that imported inflation is also well below target levels. Soft import inflation also points to weak demand overseas, which is keeping prices down.[viii]

Auto industry showing strengthening sales. Solid November sales data and unexpectedly strong Black Friday performance indicates that consumers are opening their wallets for new cars. Auto financing data shows that Americans took out a record number of car loans in the third quarter.[ix]

 

“Your attitude, not your aptitude, will determine your altitude.”

- Zig Ziglar

 




 

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

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