Message from Jon
After nearly a month of straight up gains in the S&P 500 index, we are starting to see the markets take a rest. For how long is obviously unknown but at this point all of our research is still directing us to remain cautious and step carefully in the markets.
Our short-term indicator has turned bullish, our mid-term indicator has remained steadfast in its confirmation of bonds and cash being favored over domestic equities. Our newest technical analysis resource is saying there are signs that demonstrate a slowing or weakening of this recent rally. So as you might guess, with all this noise right now, we are staying the course and sitting tight.
We are using this time to re-evaluate our shopping list and will continue to watch our current holdings diligently too. Sometimes, a lull in the action is the best time to regroup and get ready for whatever the future may have in store next.
Till we speak again, have a delightful week!
Sources: dorseywright, spirestocks, lowryondemand, finviz
Bull Market Anniversary: What's Changed in 7 Years?
WEEKLY UPDATE - MARCH 14, 2016
Stocks closed out their fourth week of gains as investors gained confidence from higher oil prices and aggressive moves by the European Central Bank. For the week, the S&P 500 rose 1.11%, the Dow grew 1.21%, and the NASDAQ added 0.67%.
Last week marked the seventh anniversary of the market bottom on March 9, 2009. To put the recent volatility into perspective, let's take a look at what has changed over the last seven years:
The S&P 500 has grown 199%
From the depths of the bear market, the S&P 500 grew nearly 215% through its mid-May 2015 high, surpassing previous historic highs. Since then, stocks have lost value, pummeled by global economic forces. However, it's a testament to how resilient markets are that they have lost so little when faced with serious concerns about global growth.
Price return between 3/09/09 and 3/11/16. Past performance is no guarantee of future results. Source: Yahoo Finance. All data as of March 11, 2016.
Economic growth has regained speed
The economy has also made major strides in the last seven years. Taking a look at this chart, we can see that in the first quarter of 2009, the economy contracted by 5.4%, putting it firmly in recession territory. In contrast, the latest data from Q4 2015 shows that the economy grew by 1.0%. Now, we're not too excited about that level of growth, but we can see that the economy has grown substantially since 2009.
Millions of Americans have returned to work
Over the last seven years, the economy has gained over 11.5 million jobs - far more than the 8.7 million jobs lost in the recession. While much of the growth has been in relatively low-paying industries, the improvement has been broad-based, indicating that many sectors of the economy are hiring.
We can also see that the number of both unemployed and "discouraged" workers has been steadily declining since peaking in mid-2010. This is a broader measure of unemployment because it also captures those who are not looking for jobs because they believe no work is available. As the labor market improved, more Americans gained confidence in their prospects and returned to the labor market.
Americans are driving economic activity by spending
In tandem with the increase in available work, Americans opened their wallets and started spending again, increasing personal spending by 15.9% over the last seven years. Since consumer spending accounts for about 70% of economic activity, it represents a driving force for our economy. Though we don't have February or March data yet, consumer spending still appears to be on a healthy trajectory.
With all of the talk of recession and bear markets, it can be easy to lose sight of just how far we've come during this rally. We don't believe that it's possible to accurately time the beginning or end of any market cycle. Since we can't predict where markets will go later this year, we can take a look at underlying fundamentals and make prudent adjustments to investment strategies as needed. We're keeping a close eye on markets and will continue to keep you informed.
The week ahead is packed with data. In addition, investors have two central bank meetings in what the media is calling "bank-a-palooza," a series of meetings by the ECB, Federal Reserve, and Bank of Japan to decide monetary policy. While the Fed isn't expected to raise interest rates again next week, officials could provide valuable insight into the timing of future rate hikes. If economic data supports further increases, investors could confront the possibility of multiple rate hikes this year.
Tuesday: PPI-FD, Retail Sales, Empire State Mfg. Survey, Business Inventories, Housing Market Index, Treasury International Capital
Wednesday: Consumer Price Index, Housing Starts, Industrial Production, EIA Petroleum Status Report, FOMC Meeting Announcement, FOMC Forecasts, Fed Chair Press Conference
Thursday: Jobless Claims, Philadelphia Fed Business Outlook Survey, JOLTS
Friday: Consumer Sentiment
China trade data shows slowdown. Exports from the world's second-largest economy dropped 25.4% in February, far worse than estimates, stoking concerns about China's growth in 2016.
Weekly jobless claims fall. The number of Americans filing new claims for unemployment benefits fell more than expected last week, reaching the lowest level since October.
Oil prices drive higher after watchdog report. Oil rallied last week after the International Energy Agency reported that after months of lows, oil may have bottomed out now that producers are working to stabilize prices.
European Central Bank moves aggressively to stoke growth. After months of anticipation, the ECB voted to cut interest rates to zero and unveiled a raft of measures to pull the EU out of the doldrums.
6 Facts About Capital Gains
When you sell a capital asset like an investment or a piece of property, the sale can result in a capital gain or loss. The IRS defines a capital asset as "most property you own for personal use or own as an investment". Here are six facts you should know about capital gains:
- A capital gain or loss is the difference between what you originally paid for the asset (your basis) and the amount you get when you sell an asset.
- You must include all capital gains in your income and you may be subject to the Net Investment Income Tax if your income is above certain amounts. Consult a qualified tax expert for help.
- The IRS allows you to deduct capital losses on the sale of investment property. You cannot deduct losses on the sale of property that you hold for personal use.
- If your capital losses are more than your capital gains in a tax year, you can deduct the difference as a loss on your tax return. This loss is limited to $3,000 per year, or $1,500 if you are married and file a separate return.
- If your total net capital loss is more than the limit you can deduct, you can carry it over to next year's tax return.
- Capital gains and losses are treated as either long-term or short-term, depending on how long you held the property. If you held it for one year or less, the gain or loss is short-term and your regular income tax rate applies. Long-term gains are taxed at a lower rate.
For more information about capital gains and losses, contact a qualified tax expert or read Publication 550, "Investment Income and Expenses."
Tip courtesy of IRS.gov
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 U.S. Investment Grade Corporate Bond Index contains U.S.- and foreign-issued investment-grade corporate bonds denominated in U.S. dollars.
The SPUSCIG launched on April 09, 2013. All information for an index prior to its Launch Date is back-tested, based on the methodology that was in effect on the Launch Date. Back-tested performance, which is hypothetical and not actual performance, is subject to inherent limitations because it reflects application of an Index methodology and selection of index constituents in hindsight. No theoretical approach can take into account all of the factors in the markets in general and the impact of decisions that might have been made during the actual operation of an index. Actual returns may differ from, and be lower than, back-tested returns.
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.
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.
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.
2 S&P 500 price performance between 3/9/09 and 5/21/15. Source: Yahoo Finance