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Northern Star Newsletter 2/23/2016


Northern Star Newsletter 2/23/2016

Message from Jon

Oil...is the rally for real or not?

The recent boost in the markets has been due to the rally in Oil these past several days. We have seen Oil rally back from $27.10 per barrel to $33.08 on the recent agreement between Russia, OPEC and now, IRAN to all agree to freeze production output at January levels. This has stabilized the speculation and caused a reversal of fortune in the commodity as of late. However, one might argue that this too is a false positive meant to stop the downward slide in oil and thus the bear-market entrenchment of the greater markets. What do you think happens when they agree to return to independent levels of outputs?

So I ask myself what has changed in the technicals of the markets that would require a renewed interest and an expectation to buy? Our short-term indicator has changed from bearish to neutral all the while our mid-term indicator has worsened (see below).

Financial Planning Financial Consultant Lafayette, IN

So now what?

It is customary to have the markets rally back after shedding about 12% in excess exuberance these past several weeks but that does not necessarily underlie a strengthening market condition over-all. As a matter of fact, when you consider the fact that our short-term indicator had made over 85 changes in 2015 alone, we are wise to remain cautious here.

The VIX is still above 20 (21.10) leading us to believe that although the fear in the markets have subsided a bit over the past several days, we still have an elevated level right now. Could this change...sure but for better or for worse?

Till we speak again, enjoy the nice weather!

Jon

Stocks Post Best Week of 2016
WEEKLY UPDATE - FEBRUARY 22, 2016

Markets closed out their best week of the year last week, buoyed by higher oil prices and positive economic data that reassured some recession worriers. For the week, the S&P increased 2.84%, the Dow grew 2.62%, and the NASDAQ added 3.85%.[1]

After tumbling for weeks, oil prices stabilized close to $30/barrel after several major oil producers-including Saudi Arabia, Russia, Qatar, and Venezuela-announced their willingness to freeze production levels to fight low prices. It's not clear that the deal will go anywhere since other countries are refusing to participate.[2] Since cutting production will only work if all or most oil producers commit to collective action, it's not certain that oil prices have ended their declines. However, the temporary pause was enough to give markets a boost.

A key barometer of prices in the U.S.- the Consumer Price Index - showed that core inflation rose 2.2% over the last 12 months.[3] A modest rise is good news because it shows that there is demand pushing up prices. Demand means that the economy continues to grow. However, the increase is small enough that it's not likely to trigger another interest rate increase by the Federal Reserve any time soon.

On the negative side, the current manufacturing picture is bleak. Two reports released last week show that the manufacturing sector is still contracting, a victim of a decline in global demand for manufactured goods. However, some portions of the sector that depend on domestic demand are doing well.[4]

The official minutes from January's Federal Reserve Open Market Committee meeting show that officials are concerned by how global risks may affect the domestic growth picture. This isn't news to investors, and markets didn't react very much to the release. Overall, the FOMC intends to be cautious in moving ahead with rate increases, though they are holding to their medium-term positive outlook on the U.S. economy.[5] We're not likely to see a rate increase in March or April. Currently, the latest Wall Street Journal poll of economists shows June as the odds-on favorite for the next rate hike.[6] We're not holding our breath.

The week ahead is packed with important economic data, including the second release of fourth-quarter GDP, consumer sentiment, international trade, and consumer spending. Will last week's optimism hold? Possibly, if we get more good news. However, it's likely that we'll see additional volatility in the days and weeks ahead.

ECONOMIC CALENDAR: 
Monday: PMI Manufacturing Index Flash
Tuesday: S&P Case-Shiller HPI, Consumer Confidence, Existing Home Sales
Wednesday: New Home Sales, EIA Petroleum Status Report
Thursday: Durable Goods Orders, Jobless Claims
Friday: GDP, International Trade in Goods, Personal Income and Outlays, Consumer Sentiment

HEADLINES:

Housing starts drop in January. Groundbreaking on new homes fell 3.8%, surprising economists who expected to see a rise. Seasonal factors like the large blizzard that blanketed the East Coast could be responsible.[7]

Jobless claims fall unexpectedly. The number of Americans filing new claims for unemployment benefits fell last week, pointing to renewed strength in the labor market.[8]

Mortgage applications rise on lower rates. Falling rates on mortgages continue to drive purchase applications and refinancing activity. Applications for home purchases are up 30% over the same period last year.[9]

Home builders may be losing confidence. An indicator of optimism among the nation's home builders shows that though current and future sales expectations are strong, a lack of labor and available lots may be dragging on future building.[10]

Tax Tips

Do You Owe Taxes On Your Social Security Benefits?

If you received Social Security benefits in 2015, you may have to pay federal income tax on part of your benefits. Here is how to determine if you need to pay taxes on your benefits:

If you received Social Security benefits in 2015, you should receive a Form SSA-1099, "Social Security Benefit Statement," showing the amount of your benefits. If Social Security was your only income in 2015, your benefits may not be taxable. If you receive income from other sources, you may have to pay taxes on some of your benefits.

A quick way to find out if you must pay taxes on your Social Security benefits is to add one-half of your Social Security to all your other income, including tax-exempt interest. Then compare the total to the base amount for your filing status. If your total is more than the base amount, some of your benefits may be taxable.

The three base amounts are:
$25,000 - if you are single, head of household, qualifying widow or widower with a dependent child or married filing separately and lived apart from your spouse for all of 2015
$32,000 - if you are married filing jointly
$0 - if you are married filing separately and lived with your spouse at any time during the year
For more information about Social Security or filing your taxes, consult a qualified tax expert.

Tip courtesy of IRS.gov [12]

 

 

 

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.

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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1 http://finance.yahoo.com/q/hp?s=%5EGSPC&a=01&b=15&c=2016&d=01&e=19&f=2016&g=d

http://finance.yahoo.com/q/hp?a=01&b=15&c=2016&d=01&e=19&f=2016&g=d&s=%5EDJI%2C+&ql=1

http://finance.yahoo.com/q/hp?a=01&b=15&c=2016&d=01&e=19&f=2016&g=d&s=%5EIXIC%2C+&ql=1

2 http://www.cnbc.com/2016/02/18/oil-prices-fall-on-oversupply-concerns-after-us-crude-stocks-hit-record.html

3 http://www.reuters.com/article/us-usa-economy-fed-analysis-idUSKCN0VS2H5

4 http://www.foxbusiness.com/markets/2016/02/19/rumblings-oil-output-freeze-extend-momentum-to-wall-street.html

5 http://www.forbes.com/sites/stevenblitz/2016/02/17/january-fomc-minutes-they-agree-uncertainty-has-increased-but-hold-to-medium-term-outlook/#2160521b288e

6 http://projects.wsj.com/econforecast/#qa=20160201001

7 http://www.foxbusiness.com/markets/2016/02/17/january-housing-starts-fall-3-8.html

8 http://www.foxbusiness.com/markets/2016/02/18/weekly-jobless-claims-fall-by-7000.html

9 http://wsj-us.econoday.com/byshoweventfull.asp?fid=471989&cust=wsj-us&year=2016&lid=0&prev=/byweek.asp#top

10 http://online.barrons.com/mdc/public/page/9_3063-economicCalendar.html

11 http://www.realsimple.com/food-recipes/browse-all-recipes/thai-turkey-salad?iid=most-shared-5

12 https://www.irs.gov/uac/Your-Social-Security-Benefits-May-be-Taxable

13 http://www.golftipsmag.com/instruction/short-game/lessons/short-game-strokesavers.html

14 http://www.aarp.org/health/conditions-treatments/info-2015/opioid-pain-medication-overdose.html?intcmp=HEA-HLLV-FLXSLDR-SLIDE2-RL1

15 http://www.seattlepi.com/news/article/52-tips-for-living-green-1269861.php