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The Northern Star 07/12/18 Jobs Push Stocks Up

Message from Jon

Market Update:

 

The markets at this point have seemingly caught momentum and reversed back upward. The VIX is at a 13.70 measurement indicating a lower level of volatility in the markets at present. The Stormguard Indicator has reversed back up from a low of 0.08% to 0.21% giving indication that the pressures of recent past has subsided for the time being as well. We are also seeing all the indexes rally and rise off their April lows as well.

 

Growth is showing up in Energy, Tech, Financials and Healthcare at the moment. We are still seeing domestic equities leading the way in relative strength to other asset classes we track.

 

Staying Focused:

 

It would not come as a surprise to hear an increase in recession discussions and bear-market warnings. With each tick higher, the heat on the stove also increases but careful not to let any biases creep into your decisions on investments. It is easy to form opinions based upon speculation that in hindsight may not come to fruition so remaining in the moment and true to your objectives is paramount to reaching your goals in the long-run.

 

Being able to utilize technical data has been helpful in the recent months with all the geopolitical noise and headline risks confronting investors. Although nothing is fool-proof, we are finding that a mix of fundamental and technical information supports a solid foundation for decision making.

 

Till we speak again, keep cool and enjoy the pool!

 

Jon

Sources:

https://elite.finviz.com/futures.ashx

https://finviz.com/

https://finviz.com/map.ashx?t=sec&st=w1

Jobs Push Stocks Up

WEEKLY UPDATE - JULY 9, 2018

Domestic stocks only traded for 4 days last week, due to the Independence Day holiday. In that time, all 3 major domestic indexes posted positive results for the week. The S&P 500 added 1.52%, the Dow gained 0.76%, and the NASDAQ increased 2.37%.[1]International stocks in the MSCI EAFE were up as well by 0.56%.[2]

Once again, trade and tariffs were a major topic on many people's minds. On Friday, July 6, the U.S. and China placed $34 billion of duties on each other's imports.[3]  However, instead of focusing on the trade-war escalation, another topic captured many investors' attention: the latest jobs report.
What did we learn about the labor market?
This month's report about the employment situation provided several indications that the economy continues to be healthy and growing.
1. The economy added more jobs than expected.Economists predicted approximately 195,000 new jobs in June. Instead, the report showed that the economy added 213,000 new positions.[4] This positive performance indicates the labor market may be somewhat looser than people originally thought. As a result, the economy may have more ability to continue growing without inflation becoming a bigger concern.[5]
2. More people tried to enter the labor market. Unemployment rose from 3.8% to 4% in June. On the surface, this result may seem negative. In reality, the increase comes from people who were sitting on the sidelines deciding to look for work once again. This choice indicates they feel more confident in their potential to find jobs.[6]
3. Wage growth continued at a moderate pace.The latest data revealed wage growth at a 2.7% annual pace, which was slightly below projections. Economists aren't certain why wages are growing at such a tepid rate, considering the labor market's strength.[7] However, with a record number of open jobs, wage growth should increase later this year. In addition, June's pace should help calm concerns about the economy growing too quickly.[8]  
One detail that June's employment report didn't show was any meaningful, negative impacts from tariffs. If the trade disputes continue, however, industries such as manufacturing and construction could suffer. For now, the economy is starting the 3rd quarter on relatively strong footing - after a 2nd quarter that experts say could have experienced economic growth as high as 5%.[9]
We will continue to monitor ongoing trade developments for any lasting effects on the economy or our clients' financial lives. As always, if you have any questions, we're here to talk.

ECONOMIC CALENDAR
Tuesday: JOLTS
Thursday: Consumer Price Index, Jobless Claims
Friday: Consumer Sentiment

Notes: All index returns (except S&P 500) exclude reinvested dividends, and the 5-year and 10-year returns are annualized. The total returns for the S&P 500 assume reinvestment of dividends on the last day of the month. This may account for differences between the index returns published on Morningstar.com and the index returns published elsewhere. International performance is represented by the MSCI EAFE Index. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly.

"The question isn't who is going to let me; it's who is going to stop me."
- Ayn Rand


Tax Act May Affect Small Business Depreciation Deduction*

The passage late last year of the Tax Cuts and Jobs Act may lessen the tax load on small business by expanding deduction allowances, the IRS states.

Tax deductions on depreciation increased, which means small business owners may see their taxes decline.
Businesses are allowed to depreciate "tangible property except land, including buildings, machinery, vehicles, furniture and equipment."
Highlights include:
  • The act increases the number of items businesses may list as expenses, which includes the cost of any business property. Businesses may deduct the property in the year it is put in service.
  • The maximum deduction rose from $500,000 to $1 million.
  • The phase-out threshold went from $2 million to $2.5 million. 
  • Taxpayers may choose to include improvements made to nonresidential property. The improvements must have been made after the property was initially put in service.
The improvements apply to:
  • A building's interior
  • A roof
  • Heating and air conditioning systems
  • Fire protection systems
  • Alarm and security systems
These improvements do not qualify:
  • Building enlargement
  • Elevator or escalator service
  • The building's internal structure framework
These changes apply on property put into use after December 31, 2017.
Other details may apply, and you can find more information on the IRS website.
* This information is not intended to be a substitute for specific individualized tax advice. We suggest you discuss your specific tax issues with a qualified tax advisor.

Tip adapted from IRS.gov[11]
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.
International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors.

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 indices from Europe, Australia, and Southeast Asia.  
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 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://performance.morningstar.com/Performance/index-c/performance-return.action?t=SPX®ion=usa&culture=en-US
http://performance.morningstar.com/Performance/index-c/performance-return.action?t=!DJI®ion=usa&culture=en-US
http://performance.morningstar.com/Performance/index-c/performance-return.action?t=@CCO
[2] www.msci.com/end-of-day-data-search

[3] www.reuters.com/article/us-usa-economy/u-s-job-growth-underscores-economys-strength-tariffs-a-threat-idUSKBN1JW0EI

[4] www.cnbc.com/2018/07/06/us-stock-futures-tariff-turmoil-and-jobs-report-in-focus.html
[5] www.bloomberg.com/news/articles/2018-07-06/u-s-jobs-report-shows-room-to-run-as-trade-war-threatens-gains

[6] wsj-us.econoday.com/byshoweventfull.asp?fid=485657&cust=wsj-us&year=2018&lid=0&prev=/byweek.asp#top

[7]www.bloomberg.com/news/articles/2018-07-06/u-s-jobs-report-shows-room-to-run-as-trade-war-threatens-gains
[8] www.reuters.com/article/us-usa-economy/u-s-job-growth-underscores-economys-strength-tariffs-a-threat-idUSKBN1JW0EI
[9] www.reuters.com/article/us-usa-economy/u-s-job-growth-underscores-economys-strength-tariffs-a-threat-idUSKBN1JW0EI

[10] www.goodhousekeeping.com/food-recipes/easy/a19865491/mixed-green-and-herb-toss-salad-recipe/

[11] www.irs.gov/newsroom/tax-reform-changes-to-depreciation-affect-businesses-now
[12] golftips.golfweek.com/stop-using-strength-golf-swing-20228.html
[13] healthfinder.gov/HealthTopics/Category/health-conditions-and-diseases/obesity/stay-active-with-a-disability-quick-tips

[14] www.earthshare.org/2011/05/green-your-camping-trip.html