Message from Jon
As you know by now, our fiduciary responsibility requires us to know our investments well and maintain a constant level or research and due diligence. It is our belief that the best way to do this is by a myriad of sources - technical, fundamental, newsletters, peer conversations, webinars, conferences, third-party research and so on, In other words, by most any means necessary.
Our approach is to use this data to either confirm or contrast our current views of the economy, the markets, trends in the markets, political, monetary, and social developments that may influence the markets condition or direction. What we DO NOT do is to bend the data to fit our needs and views.
We have said for over a year now that the domestic market is overbought/overvalued and that it is getting difficult to put money to work without investing at a higher level of risk than normal. We have also recently noticed and acted upon what we feel is the next bull market in emerging and foreign markets. This has fortunately worked in our clients' favor and will likely continue to do so.
Our belief is that we have more time in this market rally before seeing the potential for a significant market decline. It may be 4 months or 12, and certain geopolitical events and policies stand to increase or decrease this timeline in our opinion.
I spend the majority of my day reading (if you would have told me I would be doing that back when I was in high school, I would have puked) but information is power - or should I clarify -the right information from reliable, tried and true sources is power. Today I came across an article that I thought was interesting. It only confirmed what it is that we are seeing and our action behind it. Our article is a premium service so publishing it openly is a violation, but here is a link to the interview he gave in which the article is based.
Again, this is but one piece of data in a sea of information, and we think this will help better explain some of our views on the recent developments.
Till we speak again, enjoy your day!
Mixed Markets Continue
WEEKLY UPDATE - JUNE 19, 2017
Markets remained mixed last week as the Dow closed at another record high, while the NASDAQ fell and the S&P 500 held steady. By Friday, the Dow gained 0.52%, the NASDAQ fell -0.92%, and the S&P 500 gained a slight 0.05%. Meanwhile, the MSCI EAFE remained virtually unchanged from last week, down only -0.002%.
In other markets, oil closed at $44.74 a barrel, down 2.4% on the week - its fourth week of declines. Overall, European equity markets remained steady while most Asian markets recorded modest gains at week's end.
The Fed Increases Interest Rates
As expected, the Fed announced last week that it raised the short-term interest rate target by 25 basis points to a range between 1.00 and 1.25%. This was the third interest rate hike by the Fed in the last six months. The Fed also announced its intention to reduce the $4.5 trillion balance sheet by selling off assets acquired in the wake of the 2008 financial crisis. The Fed currently plans to sell approximately $10 billion monthly starting later this year.
Further, last Wednesday, Federal Reserve Chair Janet Yellen reported on the Fed's belief that the current weak inflation numbers are temporary. However, the Fed's plan to continue raising interest rates going forward and sell off its assets may change if the economy does not gain momentum in Q3 and Q4. To date, the economic data continues to point to a Q2 Gross Domestic Product (GDP) that may be weaker than previously anticipated.
Soft Economic Data Continues
Consumer Sentiment Dampens: The preliminary consumer sentiment index for June dropped to 94.5, the lowest since last November. The index fell from May's reported 97.1.
Inflation Slows: As noted last week, consumer prices remain weak. Inflation slowed in April to an annual rate increase of 1.7% year-over-year, down from the 1.9% recorded in March and 2.1% in February. Falling oil prices, excessive auto inventories, and increasing apartment rental inventories will all create headwinds to reaching the Fed's target rate of 2.0%.
Retail Sales Soften: Retail sales had their largest monthly drop since January 2016. Sales declined 0.3% in May against predictions of a 0.1% gain over April. The report includes a variety of disappointing numbers:
- 0.1% decrease for restaurants
- 0.2% dip for automotive vehicles
- 1.0% fall for department stores
Business Inventories Drop: In April, business inventories dropped 0.2% from the prior month, which was 0.1% under the consensus. Further, retail inventories also dropped 0.2%, and wholesale inventories abruptly fell 0.5% for the month.
CPI Falls: The Consumer Price Index fell 0.13% in May. The disappointing numbers mark another decline - the 2nd in 3 months - as economists had expected a 0.2% increase from April's number.
Housing Weakens: In May, housing starts dropped 5.5% from April and permits fell 4.9%. The trend continues the decline from Q1 and could signal another negative quarter.
Market Details on the Horizon
More housing news will influence the week ahead as the existing home sales report comes out on Wednesday and the new home sales report comes out on Friday. Markets will continue to watch the fundamentals, including consumer spending, which makes up 69% of GDP. So far this year, consumer spending has been soft with vehicle sales and restaurant sales sliding downward most months.
As always, we are here to talk should you have any questions about the markets or your own financial objectives. Our goal is to help you understand your financial life with clarity and confidence.
Wednesday: Existing Home Sales
Thursday: Jobless Claims
Friday: PMI Composite Flash, New Home Sales
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.
Manage Your Tax Liabilities with an Installment Agreement*
When you owe substantial tax funds, an installment agreement can help you settle your debt with the IRS. Here's some insight into how the agreement works.
How do you enter an Installment Agreement?
You must first file all your required tax returns and supporting documents. From there, you can apply online to enter an installment agreement through the IRS Online Payment Agreement tool.
How do the payments work?
If the IRS approves your installment agreement, you will make a required payment each month until you settle your debt.
Who is eligible?
Individuals and businesses can both enter an Installment Agreement, if approved.
- Individuals: Owe $50,000 or less, including combined taxes, penalties, and interest.
- Businesses: Owe $25,000 or less in the current or previous filing year, including combined taxes, penalties, and interest.
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 courtesy of IRS.gov
Practice Your Rhythm with the Driver
Losing control of your ball? Not solidly hitting? More than likely, you're hitting the ball with a backswing that's faster than your downswing. To improve your shot, you need to find your rhythm so you gain speed without sacrificing contact. In short, you need to finish your backswing.
Rather than strike the ball in a weak position that relies on your hands and arms, you need to wind up your power from behind the ball. The goal is to make sure your swing remains smooth and deliberate.
Fine-Tune Your Drive
To practice finding your rhythm, focus on your swing's speed and control with the following technique:
- Step 1: Tee up three balls in a row.
- Step 2: Hit the first ball.
- Step 3: Step up immediately to the next ball, and hit it without pausing.
- Step 4: Step up again, and immediately hit the next ball.
- Step 5: Repeat the sequence, without taking breaks in between each swing.
This back-to-back practice will help you stay in balance without over-swinging and allow you to internalize your rhythm and flow. Concentrating on this feeling will enable you to hit more shots in the center of the clubface and maximize your speed.
Tip courtesy of Golf Digest
Improve Your Bone Health with These Exercises
As we age, our bone health can decrease and result in osteoporosis. And the condition is widespread: In the United States, 54 million Americans suffer from low bone density or osteoporosis. While encouraging strong bones earlier in life is important for avoiding osteoporosis, you can take steps today to improve your bone health. Here are some helpful exercise tips for you to keep in mind:
- Engage in weight-bearing exercises: When we stand, the force of gravity on our legs and feet encourages our bodies to build more cells, thus strengthening our bones. Of course, consult your doctor to ensure any exercises support your specific health condition.
- Dance more: When you dance, you increase your pulse and remain on your feet. Dancing provides a well-rounded workout and strengthens your heart, muscles, and bones.
- Improve your balance: Falling and shattering bones is a real problem with osteoporosis. You can help avoid this catastrophe by exercising in ways that focus on improving your balance, such as Tai Chi.
Tip courtesy of WebMD
Minimize Water Consumption by Reusing Rain Water
Using rainwater for daily household chores can help cut down on your water bill and conserve how much tap water you consume. Generally, rain water is clean and safe to use for both indoor and outdoor water needs. Rainwater that hasn't run down your house's roof typically has fewer chemicals than the treated water you purchase in your utilities. To help reduce your utility water consumption, here are some ways to reuse rain water at home:
- Water your yard and gardens: Rain barrels are a popular way to collect rainwater for watering lawns and gardens, and you also can connect them to an irrigation system. Planting garden beds along your driveway's edge or at the bottom of a hill can also use rain's natural flow to keep the plants watered.
- Flush your toilet: In America, toilets use nearly 27% of our home water usage. You can swap some of this consumption by rerouting rainwater to your toilet. To do so, install piping that connects rainwater to your toilet's plumbing.
- Wash automobiles and equipment: When you don't treat the rainwater, it's also great to use for washing vehicles and equipment like garden tools.
Tip courtesy of Care2.com
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 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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