Weekly Market Notes – July 16, 2018

Weekly_Market_Notes

For the Week of July 16, 2018

The Markets

Stocks edged higher Friday. Although financials dropped following disappointing reports from three big banks, gains in industrials and other areas helped the S&P 500 hit its highest close in more than five months. The Dow logged its best week in nearly a month. And the NASDAQ closed at a historical high. For the week, the Dow rose 2.32 percent to close at 25,019.41. The S&P gained 1.55 percent to finish at 2,801.31, and the NASDAQ climbed 1.79 percent to end the week at 7,825.98.

Returns Through 7/13/18 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) 2.32 2.41 18.75 14.46 12.81
NASDAQ Composite (PR) 1.79 13.36 24.73 15.56 16.80
S&P 500 (TR) 1.55 5.86 16.69 12.40 13.08
Barclays US Agg Bond (TR) 0.18 -1.20 0.05 1.97 2.41
MSCI EAFE (TR) 0.16 -2.05 6.38 4.76 5.67

Source: Morningstar.com. *Past performance is no guarantee of future results. Indexes are unmanaged and cannot be invested into directly. Three- and five-year returns are annualized. The Dow Jones Industrials, MSCI EAFE, Barclays US Agg Bond and S&P, excluding “1 Week” returns, are based on total return, which is a reflection of return to an investor by reinvesting dividends after the deduction of withholding tax. The NASDAQ is based on price return, which is the capital appreciation of the portfolio, excluding income generated by the assets in the portfolio in the form of interest and dividends. (TR) indicates total return. (PR) indicates price return. MSCI EAFE returns stated in U.S. dollars.

 

Not a Record We Want — The total U.S. debt is projected to reach $21.5 trillion by the end of fiscal year 2018 (i.e., Sept. 30, 2018), equal to 107 percent of the size of the U.S. economy. That’s the highest level of debt relative to the size of our nation’s economy since 1947 (source: Office of Management and Budget, BTN Research).

Look Back — As of June 30, the total return of the S&P 500 was +14.4 percent for the trailing one year, +11.9 percent per year for the last three years, +13.4 percent per year for the last five years and +10.2 percent per year for the last 10 years (source: BTN Research).

From Lowest to Now — The yield on the 10-year Treasury note closed at 1.36 percent on July 8, 2016, its lowest closing yield ever. Ten-year notes have been traded in the U.S. since 1790, i.e., 228 years of trading. The yield on the 10-year note closed on Friday, July 6, 2018, at 2.82 percent (source: Treasury Department, BTN Research).

 

WEEKLY FOCUS – What to Know About Interest Rates

During much of the extended Bull Run preceding 2018, cheap money flows and low-interest rates helped drive the market. But that tide has turned. Thanks to a growing economy and positive jobs reports, the Federal Reserve made its seventh interest rate hike in two years in June and signaled two more increases are probably coming this year. Here’s how climbing rates may affect different groups: 

Credit Card Holders: Rising interest rates can be bad news for Americans with considerable credit card balances. Bankrate reports average credit card rates are at a record high of 17 percent. Credit card borrowers will want to shop around for better rates or a zero-interest balance transfer and aggressively pay their cards down.

Millennials: Individuals with variable-rate school loans will also feel the pinch. They may want to combine their federal and private loans into one fixed-rate, lower-interest loan. But they should weigh that choice carefully since they could lose federal loan benefits, such as deferment, forbearance and forgiveness.

Homeowners: Although longer-term loans like mortgages react more slowly to increases, home shoppers may want to move soon in the likelihood of future hikes. Since home equity loans are more directly linked to the prime rate, baby boomers may prefer to downsize to a home that allows them to age in place rather than financing a remodel of their present home.

Investors: One might expect rising interest rates to impact equities negatively as conservative investments like bonds and Treasury notes become more appealing. But stock prices also reflect investors’ outlook on the economy and may retain their appeal when rising rates are tied to economic confidence. And certain sectors can actually benefit from rising rates, such as financial institutions, which generally raise interest on loans faster than the interest they pay.

When interest rates rise or are expected to rise, bond prices often fall, particularly longer-term bonds. But investors must weigh the risk of falling prices with longer-term bonds against smaller returns with short-term bonds. Some invest in bonds with varying maturities to reduce these risks. Often, a 401(k) bond fund will recoup potential losses over time as it acquires new bonds at higher yields.

Every economic environment provides challenges and opportunities. Give me a call if you have questions about the best choices for your situation in light of climbing interest rates.

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* 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 index of 30 actively traded blue-chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Morgan Stanley Capital International Europe, Australia and Far East Index (MSCI EAFE Index) is a widely recognized benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies representative of the market structure of 20 European and Pacific Basin countries and includes reinvestment of all dividends. Barclays Capital Aggregate Bond Index is an unmanaged index comprised of U.S. investment-grade, fixed-rate bond market securities, including government, government agency, corporate and mortgage-backed securities between one and 10 years. Written by Securities America, Copyright July 2018. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI#2179969.1

Weekly Market Notes – July 9, 2018

Weekly_Market_Notes

For the Week of July 9, 2018

The Markets

Stocks bounced Friday as a positive jobs report offset trade war anxieties. The rosy report showed a bigger increase in new jobs than expected, moderate wage growth and a slight rise in the unemployment rate. There were also positive revisions for the April and May jobs reports. The wealth of good news helped the S&P 500 and the NASDAQ hit their highest levels in two weeks. For the week, the Dow rose 1.05 percent to close at 24,456.48. The S&P gained 1.64 percent to finish at 2,759.82, and the NASDAQ climbed 2.46 percent to end the week at 7,688.39.

Returns Through 7/06/18 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) 1.05 0.09 16.48 14.11 12.79
NASDAQ Composite (PR) 2.46 11.37 24.94 15.33 17.18
S&P 500 (TR) 1.64 4.25 15.66 12.24 13.40
Barclays US Agg Bond (TR) 0.28 -1.38 -0.05 1.87 2.53
MSCI EAFE (TR) 1.59 -2.20 7.40 4.97 6.44

Source: Morningstar.com. *Past performance is no guarantee of future results. Indexes are unmanaged and cannot be invested into directly. Three- and five-year returns are annualized. The Dow Jones Industrials, MSCI EAFE, Barclays US Agg Bond and S&P, excluding “1 Week” returns, are based on total return, which is a reflection of return to an investor by reinvesting dividends after the deduction of withholding tax. The NASDAQ is based on price return, which is the capital appreciation of the portfolio, excluding income generated by the assets in the portfolio in the form of interest and dividends. (TR) indicates total return. (PR) indicates price return. MSCI EAFE returns stated in U.S. dollars.

 

In the Black — From October 2008, through March 2012, the U.S. government had 42 consecutive months of deficits. Since then (i.e., April 2012 through May 2018), the U.S. government has generated a surplus in 23 of 74 months or 31 percent of the time (source: Treasury Department, BTN Research).

Older Folks — Since 1950, the population of the United States has doubled, while the number of Americans at least age 65 has quadrupled (source: Social Security).

A Thousand a Week Per Household — Retail sales, tracked monthly in the United States, exceeded $500 billion for the first time ever in May 2018 ($502 billion). That’s equal to $4,184 for every household in the country for the month of May. Retail sales include purchases of groceries, prescription drugs, appliances, furniture, gasoline, clothes, dining out, etc. (source: Commerce Department).

 

WEEKLY FOCUS – Keeping Your Child Safe on the Internet

“Out of sight, out of mind.” An old proverb meaning you quickly forget, or don’t think about, people or things not visible or present. It might be old, but it has new relevance when it comes to the internet and our children’s and grandchildren’s security.

Today, invisible people are identity thieves, data miners and online predators. It’s easy to think we’ll just keep our children offline, but reality is that the internet is firmly woven into our daily lives. Here’s another old proverb that deserves a new look: “Forewarned is forearmed.” If we know what can happen, we can take steps to protect our most vulnerable. Here are a few things to be aware of – and steps you can take to avoid.

Smart toys may be high on a young one’s gift list, but those toys could come with prying eyes. Children are targeted because they have pristine credit histories and unused Social Security numbers – just what hackers need for identity theft. Make sure the smart toy you buy has a solid, easy-to-understand privacy policy. Don’t give any more information than is necessary, and be sure children turn the toy off when not using it.

Social media is location-aware and can allow kids to inadvertently provide online predators with not only their location, but also their status. A casual tweet or post of “Hanging out by myself today – totally bored” is a potential disaster waiting to happen. Turn off the location-sharing function on children’s devices both in their phone settings and apps. Modify the stranger-danger warning for online use. Make sure the kids never give out their address, school name, where they are or will be. No should be their automatic answer when asked to share their location.

Home assistants like Alexa and Google Home present their own privacy issues. These devices are designed to collect and store enormous amounts of data gleaned from conversations, and it’s still unclear what companies do with it. Turn off microphones when the assistant isn’t in use. You can also remove information in your devices’ app settings, so it’s not stored on the phone or in the companies’ cloud servers.

Online security is no laughing matter. Neither is financial security. Call our office today. We can help you develop a financial plan that provides you a fulfilling and stable future.

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* 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 index of 30 actively traded blue-chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Morgan Stanley Capital International Europe, Australia and Far East Index (MSCI EAFE Index) is a widely recognized benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies representative of the market structure of 20 European and Pacific Basin countries and includes reinvestment of all dividends. Barclays Capital Aggregate Bond Index is an unmanaged index comprised of U.S. investment-grade, fixed-rate bond market securities, including government, government agency, corporate and mortgage-backed securities between one and 10 years. Written by Securities America, Copyright July 2018. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI# 2172764.1

July 2018 Monthly Outlook – Mid Year Update

Well the first six months of 2018 were very different from 2017.  Volatility is back, sometimes with a vengeance.

Stocks, as measured by the S&P 500, gained 1.64% year-to-date.  Interest rates, as measured by the US 10-year Treasury, stand at 2.85%, up from 2.40% at the start of the year.  While these changes are not significant, the road both stocks and bonds traveled was quite hilly.  Stocks opened the year going up 7% before falling over 10%, recovering,  and then trading in a narrow range for the last couple of months.  Interest rates were on a steady climb peaking at 3.11% in mid-May, before sliding down into the end of June.

The most recent and biggest issue facing the financial markets right now is the issue of trade.  Investors fear that the Trump administration’s proposed tariffs could lead to retaliatory measures from trading partners around the world, which in turn could foster a global recession. I remain hopeful that this is just a negotiating tactic, and that it will not escalate into an all-out trade war, which will have no winner.

Barring such an outcome, I believe that the current business cycle has at least another year or two left to run. The major signs that would signal the beginning of the next recession are not currently in place. Unemployment is low and likely to decline further; wages are rising, but not sharply; the Federal Reserve is tightening, but real interest rates are still quite low; inflation is moving higher slowly; the yield curve is not inverted; corporate profits are increasing; and the leading indicators are still rising. Until some of these indicators change, recession is not likely. The charts below highlight this outlook.

Global economic cycle, Q2 2018                                                                                                                    Leading Economic Indicators (12-month change) June 1988 – May 2018

On the investment front, I feel small cap stocks may do better than larger companies, as most of their business is domestic and therefore somewhat insulated from trade tariffs.  Value stocks (large dividend paying companies), which have lagged growth stocks (think Amazon) are starting to signs of improvement.  While international stocks look like a better value than US stocks, I think the US will outperform international for the rest of the year.  I believe stocks will end the year higher than where they are now, and that stocks will do better than bonds for the balance of 2018.  We continue to maintain a diversified approach to your portfolio with slight adjustments to reflect the above outlook.

Feel free to call me if you have any questions or concerns.

 

July Calendar of Events   (comments and additions for future months are always welcome)

  • July is National Picnic and National Parks month – why not go to a national park and have a picnic – a 2 for 1

 

July 1st             Bureau of Internal Revenue (the IRS) founded in 1862– betcha nobody celebrates this birthday

July 4th            Independence Day

July 11th          My daughter Ryan’s birthday

July 18th          National Hot Dog Day

July 29th          National Lasagna Day

July 30th              International Friendship Day is a day designed to foster friendships and bridge the gaps between race, color, religion

 

 

P.S. Thank you for your referrals. They are making a big difference in my practice. Feel free to share my name with your friends on Facebook or LinkedIn.

 

Sources:  Nationwide Financial, Blackstone, Envestnet

 

 

 

Although information herein has been obtained from sources deemed reliable, its accuracy and completeness are not asserted. All opinions and estimates included in this report constitute the judgment of the financial advisor as of the dates indicated and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. 

Investing involves risk and you may incur a profit or a loss. Diversification does not ensure a profit or ensure against a loss. There is no assurance that any investment strategy will be successful.  Past performance is no assurance of future results.

Please consider the charges, risks, expenses and investment objectives carefully before investing. Please see a prospectus containing this and other information. Read it carefully before you invest or send money.

Information provided should not be construed as legal or tax advice.  You should discuss any tax or legal matter with the appropriate professional.

Weekly Market Notes – June 25, 2018

Weekly_Market_Notes

For the Week of June 25, 2018

The Markets

A sharp rally in crude-oil prices boosted energy stocks Friday, which led the S&P higher and helped the Dow Jones end an eight-day losing streak. Technology stocks kept the NASDAQ in negative territory. For the week, the Dow lost 2.03 percent to close at 24,580.89. The S&P fell 0.87 percent to finish at 2,754.88, and the NASDAQ dropped 0.69 percent to end the week at 7,692.82.

Returns Through 6/22/18 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) -2.03 0.54 17.53 13.49 13.41
NASDAQ Composite (PR) -0.69 11.44 23.35 14.28 18.04
S&P 500 (TR) -0.87 4.01 15.39 11.37 13.93
Barclays US Agg Bond (TR) -0.01 -1.95 -1.25 1.65 2.27
MSCI EAFE (TR) -0.96 -1.73 7.87 3.80 6.85

Source: Morningstar.com. *Past performance is no guarantee of future results. Indexes are unmanaged and cannot be invested into directly. Three- and five-year returns are annualized. The Dow Jones Industrials, MSCI EAFE, Barclays US Agg Bond and S&P, excluding “1 Week” returns, are based on total return, which is a reflection of return to an investor by reinvesting dividends after the deduction of withholding tax. The NASDAQ is based on price return, which is the capital appreciation of the portfolio, excluding income generated by the assets in the portfolio in the form of interest and dividends. (TR) indicates total return. (PR) indicates price return. MSCI EAFE returns stated in U.S. dollars.

 

End of This Month — The second longest economic expansion in U.S. history (based upon data tracked since 1854) will reach nine years in length as of June 30, 2018 (source: National Bureau of Economic Research, BTN Research).

Bonds — The U.S. bond market (including treasury, municipal, corporate, mortgage and asset-backed debt) was worth $41.7 trillion as of March 31. Treasury debt ($14.9 trillion) makes up the largest piece of the U.S. bond market (source: Securities Industry and Financial Markets Association, BTN Research).

In Nearly a Century — Oil production in the United States reached 10.9 million barrels per day for the week ending June 8, 2018, the highest level recorded for our country per records maintained since 1920 (source: U.S. Energy Information Administration; BTN Research).

 

WEEKLY FOCUS – Trusts Can Provide Solutions to Planning Quandaries

Trusts are often associated with end-of-life planning to ensure assets are managed and held for another person’s benefit. They’re used to ensure assets are distributed exactly the way you want. They can help avoid the headache and expense of probate court, provide protection from lawsuits and creditors, and solve other financial challenges. But trusts can be useful in other types of financial situations as well.

There are basically two types of trusts. Revocable trusts can be modified, and the grantor remains in control. Once an irrevocable trust is established, it can’t be modified, and the grantor gives up control. It’s important to be familiar with the pros and cons of each. The following are some situations that might call for a trust.

Special Needs Beneficiaries: A trust can provide protection and income for a loved one who is unable to take care of themselves. An advantage to a revocable trust is the beneficiary can still take advantage of qualified government benefits or assistance, no matter how large the trust. It can also financially support an alternate caregiver if the primary caregiver becomes incapacitated.

Protecting Assets From Theft: Identity theft is a constant and growing problem as cyber criminals go online to gather personal information that can be used to steal funds and hijack identities. Irrevocable trusts usually have their own tax ID numbers. Beneficiaries who become victims of theft may be able to draw funds from the trust while they sort out their financial difficulties resulting from identity theft or fraud.

Divorce and Prenuptial Agreements: A revocable living trust may be in order if you have assets and are planning to marry, but your spouse doesn’t want to sign a prenuptial agreement. Property acquired during your marriage is generally considered common property. But what if you inherited property before you married and want to keep that outside of the communal assets? By placing it in a revocable trust, the inheritance could be exempted if the assets in the trust weren’t mixed with other marital assets. Courts usually consider assets in a revocable living trust as belonging to the grantor or trustee.

Call our office today. There are many financial situations that could benefit from the creation of a trust. We can work with you and your estate planning attorney to help develop a financial plan that addresses life’s expected, and unexpected, challenges.

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* 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 index of 30 actively traded blue-chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Morgan Stanley Capital International Europe, Australia and Far East Index (MSCI EAFE Index) is a widely recognized benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies representative of the market structure of 20 European and Pacific Basin countries and includes reinvestment of all dividends. Barclays Capital Aggregate Bond Index is an unmanaged index comprised of U.S. investment-grade, fixed-rate bond market securities, including government, government agency, corporate and mortgage-backed securities between one and 10 years. Written by Securities America, Copyright June 2018. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI# 2160511.1

Weekly Market Notes – June 18, 2018

Weekly_Market_Notes

For the Week of June 18, 2018

The Markets

Wall Street closed lower Friday but off the day’s lows after President Trump announced new tariffs on Chinese goods and a plummet in oil prices pushed energy stocks down. For the week, the Dow fell 0.84 percent to close at 25,090.48. The S&P rose 0.07 percent to finish at 2,779.66, and the NASDAQ climbed 1.32 percent to end the week at 7,746.38.

Returns Through 6/15/18 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) -0.84 2.62 20.17 14.97 13.47
NASDAQ Composite (PR) 1.32 12.21 25.64 15.48 17.74
S&P 500 (TR) 0.07 4.92 16.52 12.39 13.65
Barclays US Agg Bond (TR) 0.13 -1.94 -1.08 1.66 1.90
MSCI EAFE (TR) -0.49 -0.77 9.45 5.15 6.24

Source: Morningstar.com. *Past performance is no guarantee of future results. Indexes are unmanaged and cannot be invested into directly. Three- and five-year returns are annualized. The Dow Jones Industrials, MSCI EAFE, Barclays US Agg Bond and S&P, excluding “1 Week” returns, are based on total return, which is a reflection of return to an investor by reinvesting dividends after the deduction of withholding tax. The NASDAQ is based on price return, which is the capital appreciation of the portfolio, excluding income generated by the assets in the portfolio in the form of interest and dividends. (TR) indicates total return. (PR) indicates price return. MSCI EAFE returns stated in U.S. dollars.

 

In the Year 2034 — On June 5, Social Security trustees announced the trust fund backing the payment of Social Security benefits (OASI retirement benefits) would be zero in 2034. A zero trust fund does not mean the payment of Social Security benefits would also go to zero but rather would drop to 77 percent of their originally promised levels through the year 2092. When the trustees released their 2008 report (i.e., 10 years ago), the Social Security Trust Fund was projected to be depleted in 2042 (source: Social Security Trustees 2018 Report, BTN Research).

Downhill From Here — Forty-six percent of Americans surveyed believe future generations of retirees will be worse off financially than current American retirees (source: Aegon Center for Longevity and Retirement).
Strong Banks — No U.S. banks failed during the first five months of 2018 (January-May), the first time that has occurred since 2006. There were no bank failures in 2006, the last calendar year when that happened. Since 2007, 531 banks have failed, an average of 48 per year over the last 11 years (source: FDIC, BTN Research).

 

WEEKLY FOCUS – Things to Know Before Your Summer Getaway Abroad

Is traveling abroad on your mind? Below are some savvy tips to make sure you get the most out of your money.

Let your credit card company know you’re traveling out of the country and ask about foreign transaction fees. When it comes to cash, avoid currency exchange booths in favor of ATMs, which will give you better rates. Find a bank ATM that accepts major credit cards for cash withdrawals, and use your bank or major credit card. Larger institutions or your bank will handle exchange rates on their end, and the withdrawal will provide you with foreign currency. You’ll still be charged a transaction fee, so make fewer and larger withdrawals.

When seeking out an ATM, make sure you know what to ask for. For example, in Chile, it’s called un Redbanc; in France, ask for a distributeur; in the U.K, a cashpoint; in Italy, look for a Bankomat; and in Canada, an ABM, short for automatic banking machine. You may want to shorten your pin number – many foreign ATMs won’t accept pins longer than four digits.

Renting cars in large foreign cities may not be the best economic choice. However, it can be a good option if you visit smaller cities and villages. If you do rent a car, check the glove compartment for a cardboard parking clock. In many countries, signs post the amount of time you can park in a spot for free. Set the clock to your arrival time and return before it expires. Also, be cautious about where you park. Thieves are always on the lookout for tourist cars. A parking lot with glittering pavement could mean broken glass from break-ins. A safer option would be to use a parking garage with an attendant on staff.

Rail passes are another good choice if you’re traveling quite a bit outside bigger cities. Consider a second-class train car. They’re just as fast as first-class and cost about 50 percent less. For the most economical way to travel, look to buses. They’re slower but even less expensive than rail. For example, traveling from London to Edinburgh by train will cost around $145 but only about $45 by bus.

Call our office today. We can help ensure planning for travel and other important activities is part of your overall financial strategy.

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* 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 index of 30 actively traded blue-chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Morgan Stanley Capital International Europe, Australia and Far East Index (MSCI EAFE Index) is a widely recognized benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies representative of the market structure of 20 European and Pacific Basin countries and includes reinvestment of all dividends. Barclays Capital Aggregate Bond Index is an unmanaged index comprised of U.S. investment-grade, fixed-rate bond market securities, including government, government agency, corporate and mortgage-backed securities between one and 10 years. Written by Securities America, Copyright June 2018. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI# 2153883.1

Weekly Market Notes – June 11, 2018

Weekly_Market_Notes

For the Week of June 11, 2018

The Markets

All three indexes rose Friday despite tension among the seven powerful world leaders who were gathered in Canada for the G7 Summit and expectations the Federal Reserve will raise rates this week. The Dow Jones closed at its highest level since March. Both the S&P and the NASDAQ posted weekly gains for the third week in a row. For the week, the Dow rose 2.79 percent to close at 25,316.53. The S&P gained 1.66 percent to finish at 2,779.03, and the NASDAQ climbed 1.21 percent to end the week at 7,645.51.

Returns Through 6/08/18 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) 2.79 3.50 22.28 15.37 13.41
NASDAQ Composite (PR) 1.21 10.75 20.94 15.04 17.12
S&P 500 (TR) 1.66 4.85 16.44 12.47 13.41
Barclays US Agg Bond (TR) -0.22 -2.07 -1.02 1.61 1.91
MSCI EAFE (TR) 0.96 -0.29 9.00 5.41 6.44

Source: Morningstar.com. *Past performance is no guarantee of future results. Indexes are unmanaged and cannot be invested into directly. Three- and five-year returns are annualized. The Dow Jones Industrials, MSCI EAFE, Barclays US Agg Bond and S&P, excluding “1 Week” returns, are based on total return, which is a reflection of return to an investor by reinvesting dividends after the deduction of withholding tax. The NASDAQ is based on price return, which is the capital appreciation of the portfolio, excluding income generated by the assets in the portfolio in the form of interest and dividends. (TR) indicates total return. (PR) indicates price return. MSCI EAFE returns stated in U.S. dollars.

 

Doubled — The yield on the 10-year Treasury note closed at 2.83 percent on May 31, 2018, up 0.42 percentage points since Dec. 31, 2017, and more than double the 1.36 percent record low yield achieved on July 8, 2016 (source: Treasury Department, BTN Research).

Looking But Not Finding — In early May, seven out of eight small businesses (88 percent) in the United States reported they were having difficulties finding qualified candidates for job openings (source: National Federation of Independent Businesses, BTN Research).

Actual vs. Expected — Only 36 percent of workers surveyed anticipate their monthly Social Security benefit “will be a major source of income” during retirement. However, 67 percent of retirees surveyed have determined their monthly Social Security benefit “is a major source of income” during retirement (source: Employee Benefit Research Institute 2018 Retirement Confidence Survey; BTN Research).

 

WEEKLY FOCUS – Financial Planning Under the New Tax Law

With the Tax Cuts and Jobs Act (TCJA) over five months old, many families are still getting a feel for how it will impact them personally and what changes they may want to make under the new legislation. Here are a few potential issues to consider.

Charitable giving: Under the TCJA, those who itemize can now deduct 60 percent (compared to 50 percent) of their income for qualified charitable donations. So taxpayers nearing the standard deduction threshold may want to front load their charitable contributions in one year in which they itemize to get the highest tax benefits. They can do so by making several years’ donations to a donor-advised fund and then allocating the funds to their charities of choice over a period of years.

Retirement investments: Lower income tax rates may make converting a traditional IRA to a Roth look more attractive. But it’s important to weigh the decision fully since the new law eliminates the prior ability to reverse the conversion by October 15 of the following year.

Divorce: Alimony payments were previously taxed as income to the payee and deducted by the payer. Beginning in 2019, alimony will no longer be viewed as income to receiving spouses or deductible for payers who entered into divorce agreements after Dec. 31, 2018. Without the deduction, divorcing spouses will likely want to pay less in alimony going forward.

Estate planning: The threshold for estate taxes doubles from $5.6 million to $11.2 million in 2018; $22.4 million for married couples.  Only 1,800 estates nationwide are expected to owe the 40 percent levied above the exempted amount in 2018. Wealthy individuals should review existing wills with clauses tied to the tax exclusion to avoid larger dispositions than intended. It’s also good to remember the TCJA law doesn’t apply to state estate tax. Among Washington D.C. and the 12 states that levy estate taxes, only three currently match the federal exemption. And six states have an inheritance tax likely unaffected by the legislation. Unless a political shift leads to a change in law or the bequestor expects to live beyond 2026, when the law sunsets, insurance policies purchased to pay federal estate taxes may no longer be necessary.

This is just a sampling of areas the new law impacts. I encourage you to check with your tax advisor, and I am always happy to answer any questions you may have about your finances. Securities America and its representatives do not provide tax advice; coordinate with your tax advisor regarding your specific situation.

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* 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 index of 30 actively traded blue-chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Morgan Stanley Capital International Europe, Australia and Far East Index (MSCI EAFE Index) is a widely recognized benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies representative of the market structure of 20 European and Pacific Basin countries and includes reinvestment of all dividends. Barclays Capital Aggregate Bond Index is an unmanaged index comprised of U.S. investment-grade, fixed-rate bond market securities, including government, government agency, corporate and mortgage-backed securities between one and 10 years. Written by Securities America, Copyright June 2018. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI# 2146705.1

 

Weekly Market Notes – June 4, 2018

Weekly_Market_Notes

For the Week of June 4, 2018

The Markets

After a downbeat day Thursday, the market indexes bounced Friday. Gaining more than 200 points, the Dow recouped most of its losses for the week. Positive factors included the May jobs report, which showed unemployment fell to an 18-year low and news the North Korean summit was back on and Italian parties agreed to a coalition government. For the week, the Dow fell 0.59 percent to close at 24,635.21. The S&P gained 0.54 percent to finish at 2,734.62, and the NASDAQ climbed 1.62 percent to end the week at 7,554.33.

Returns Through 6/01/18 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) -0.59 0.69 19.98 13.80 12.99
NASDAQ Composite (PR) 1.62 9.43 20.93 14.12 16.93
S&P 500 (TR) 0.54 3.14 14.75 11.30 13.22
Barclays US Agg Bond (TR) 0.16 -1.85 -0.64 1.43 1.91
MSCI EAFE (TR) -1.42 -1.23 8.30 4.43 6.00

Source: Morningstar.com. *Past performance is no guarantee of future results. Indexes are unmanaged and cannot be invested into directly. Three- and five-year returns are annualized. The Dow Jones Industrials, MSCI EAFE, Barclays US Agg Bond and S&P, excluding “1 Week” returns, are based on total return, which is a reflection of return to an investor by reinvesting dividends after the deduction of withholding tax. The NASDAQ is based on price return, which is the capital appreciation of the portfolio, excluding income generated by the assets in the portfolio in the form of interest and dividends. (TR) indicates total return. (PR) indicates price return. MSCI EAFE returns stated in U.S. dollars.

 

A Lot In a Little — The top 10 percent of American households, i.e., 10 percent of 120 million U.S. households, own 84 percent of the stock market wealth in the country (source: Federal Reserve Bank of New York, BTN Research).

Falling Behind — Over the last 20 years, i.e., April 30, 1998, to April 30, 2018, inflation in the United States (using the Consumer Price Index) has increased 54.2 percent or 2.2 percent annually. As of April 30, 2018, an individual living on a fixed income who has not benefited from cost-of-living increases would have only 65 percent of the purchasing power they had 20 years earlier (source: Department of Labor).

Historical Struggles — Three of the upcoming four months rank as the bottom three performers for the S&P 500 over the last 25 years, i.e., 1993-2017. June is ranked 10th of the 12 months (average total return loss of 0.13 percent). September is ranked 11th of the 12 months (average total return loss of 0.15 percent). August is ranked last of the 12 months (average total return loss of 0.56 percent) (source: BTN Research).

 

WEEKLY FOCUS – When Alzheimer’s Hits the Family

June is Alzheimer’s and Brain Awareness Month – a good time to consider what you will do if you or your loved one is diagnosed with Alzheimer’s or another dementia.

Alzheimer’s is a tremendous burden. According to the Alzheimer’s Association, in 2018, the direct costs to caretakers of those who have Alzheimer’s will total an estimated $277 billion. Without adequate long-term care insurance, a diagnosis of Alzheimer’s can mean losing most, if not all, financial assets. What are the first steps you should take to prepare for your and your family member’s financial future?

Begin sensitive and respectful conversations about finances well before you see signs of mental decline. Let your loved one know you don’t want to take control. You just want to ensure they are protected and their wishes honored in the years to come.

Ask for information you’ll need in case it becomes necessary to manage their finances: names and contact information of their financial planner, accountant and attorney; financial records and where they are kept; their monthly income and the sources; insurance policies; the location of financial accounts; regular bills and how they are paid; and log-in information for online accounts.

Suggest meeting together with their financial advisor and/or other family members. Find out what will be important to them. What assets matter most to them? Do they want to continue supporting their favorite causes or nonprofits? Should they update their will?

If your loved one becomes unable to make decisions for themselves, legal documents and worksheets can help you or another family member plan and make decisions for them. These documents can include: a health care power of attorney (POA) or a more limited living will, either a limited or durable power of attorney for finances, an authorization to disclose account information and a form authorizing a financial institution to contact you if they become concerned about your loved one’s ability to manage their finances.

Call our office today. We can provide more information on protecting your loved one or help you create a plan to care for them.

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* 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 index of 30 actively traded blue-chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Morgan Stanley Capital International Europe, Australia and Far East Index (MSCI EAFE Index) is a widely recognized benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies representative of the market structure of 20 European and Pacific Basin countries and includes reinvestment of all dividends. Barclays Capital Aggregate Bond Index is an unmanaged index comprised of U.S. investment-grade, fixed-rate bond market securities, including government, government agency, corporate and mortgage-backed securities between one and 10 years. Written by Securities America, Copyright June 2018. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI# 2139653.1