Weekly Market Notes – February 25, 2019

Weekly_Market_Notes

For the Week of February 25, 2019

The Markets

Wall Street rose Friday amid positive expectations the U.S. and China will resolve their trade differences before the March 1 deadline. All three indexes achieved gains for the week, with the S&P posting its highest closing since Nov. 8. For the week, the Dow rose 0.59 percent to finish at 26,031.81. The S&P gained 0.65 percent to finish at 2,792.67, and the NASDAQ climbed 0.74 percent to end the week at 7,527.54.

Returns Through 2/22/19 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) 0.59 12.02 6.71 18.96 12.78
NASDAQ Composite (PR) 0.74 13.45 4.40 18.09 12.04
S&P 500 (TR) 0.65 11.74 5.35 15.13 11.01
Barclays US Agg Bond (TR) 0.11 1.21 3.65 1.82 2.46
MSCI EAFE (TR) 1.65 8.94 -6.59 8.89 2.14

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.

 

But What Do They Pay? — Sixty-three percent of 1,993 registered voters surveyed earlier this month believe upper income people pay too little in taxes (source: Morning Consult + Politico, BTN Research).

The Richest Five Percent — The top 5 percent of U.S. taxpayers in tax year 2016 (the latest year for which tax data has been released) made at least $197,651 of adjusted gross income (AGI), received 35% of all AGI nationwide and paid 58% of all the federal income tax paid by Americans (source: Internal Revenue Service, BTN Research).

Less Foreign Buyers — Foreign investors, led by China and Japan, held $6.2 trillion of U.S. Treasury securities as of November 2018, just under 40 percent of total U.S. Treasury debt. That’s the lowest percentage held by foreign investors in the last 15 years (source: Treasury Department, BTN Research).

 

WEEKLY FOCUS – Simple Spending Changes Can Lead to Big Savings

If you want to save more for the future than you already are but aren’t sure where the money will come from, one of the first places to look is your personal spending habits. Even if you think you’re a smart shopper, a close inspection of how you spend your money can go a long way toward having the extra cash needed to grow your nest egg.

Make a Savings Plan: Before you evaluate your spending habits, develop a plan to increase your savings. Start by determining the amount of money you would like or need to save. Set a goal for how much of this amount you would like deposited into savings each month and have it automatically transferred. When money is automatically deposited, you’re less likely to miss it and won’t be tempted to spend it.

Make a List: You can’t avoid spending. But you can make sure you buy only what you need by making a list of just the essentials and sticking to that list. It takes discipline to walk away from a great deal on something that isn’t on your list. But remember, impulse buys are just another way of overspending.

Leave the Cards at Home: If you use plastic for most of your purchases, switch to cash. By only paying with cash for big and small purchases, you’ll be more likely to limit your purchases. It also helps you keep better tabs on where your money is going.

Wait Awhile: When you feel the urge to spend, take time to determine what’s driving that feeling. If you’re stressed or feeling down, clear your head before you go shopping. Take time to appreciate everything you already own. If those items aren’t bringing you happiness, buying more stuff probably won’t either.

Review Your Spending: Save your receipts, even those for small purchases like coffee and snacks, and review them periodically. You may be surprised at how much you really spend in a month. Eliminate or reduce unnecessary expenditures and apply these to your savings plan goals instead.

If you find you’ve stuck to your spending plan, it’s ok to reward yourself with something inexpensive but enjoyable. You earned it. To learn more ways to improve your spending and savings habits and put the money you’ll save to work for you, call us today.

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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 February 2019. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI# 2436536.1

Weekly Market Notes – February 11, 2019

Weekly_Market_Notes

For the Week of February 11, 2019

The Markets

Friday on Wall Street, positive corporate results offset skepticism over a U.S. – China trade deal by the March 1 deadline. The S&P 500 and the NASDAQ snapped a two-day losing streak, and all three indexes closed the week higher. For the week, the Dow rose 0.32 percent to finish at 25,106.33. The S&P gained 0.11 percent to finish at 2,707.88, and the NASDAQ climbed 0.47 percent to end the week at 7,298.20.

Returns Through 2/08/19 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) 0.32 7.91 7.69 19.03 12.42
NASDAQ Composite (PR) 0.47 9.99 7.69 19.43 12.08
S&P 500 (TR) 0.11 8.24 7.04 15.83 10.81
Barclays US Agg Bond (TR) 0.38 1.20 3.22 1.77 2.44
MSCI EAFE (TR) -1.38 5.04 -8.23 8.42 2.21

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.

 

Estate Taxes — An estimated 2.8 million Americans died in 2018. Of the 2.8 million deaths, an estimated 4,000 (i.e., one in every 700 deaths) died with an estate worth more than $11.2 million, the maximum dollar amount that can be passed estate tax-free per decedent with proper tax planning (source: Tax Policy Center, BTN Research).

Required Minimum Distributions — Clients who turned age 70½ sometime in 2018 must begin taking annual withdrawals from their IRA accounts no later than April 1. If they delay their first withdrawal until April 1, they must also take a second distribution by Dec. 31 (source: Internal Revenue Service, BTN Research).

Way Down — U.S. banks repossessed 230,305 homes in 2018, down 21 percent from 291,579 repossessions in 2017, down 39.3 percent from 379,437 repossessions in 2016 and down 48.8 percent from 449,900 repossessions in 2015. The peak in repossessions: 1,050,500 in 2010 (source: Attom Data Solutions, BTN Research).

 

WEEKLY FOCUS – Making Your Executor’s Job Easier

Being an executor is a serious and time-consuming task performed during a stressful time. Why not make your designated executor’s work easier with a well-organized, clearly communicated overview of your assets and wishes? Here are a few tips to get started.

Create a letter of direction telling the executor where to find everything they need, including passwords to your digital accounts. Privacy policies could make it very difficult for an executor to access your online accounts without them. Don’t reveal passwords in a will, which will become a public document. Also provide the code or keys to your home alarm system, home safe, safe deposit box and locked mailboxes or cabinets. State your funeral and remains preferences. If your will doesn’t address personal items with sentimental value, cover how you want them distributed here as well.

Make some cash available. You may want to make your executor a co-signer on your financial accounts and safe deposit box. Your executor will need to pay bills and cover funeral expenses. And they might need to hire repairs and updates to get your home ready to sell.

Review your estate plan annually to make sure your will, trust and beneficiary designations are current. Your estate plan should include the following documents: a will, medical and financial powers of attorney, an advance health directive, testamentary trust documents, organ donation wishes and guardianship information, if applicable.

Provide other documents and connections. On top of the estate documents, the following may be needed: your birth certificate, death certificate, brokerage statements, insurance policies, real estate deed(s), marriage certificate, divorce decree, military discharge papers, property and income tax records, Social Security records, bank statements, vehicle titles and a current snapshot of assets. It is also an excellent idea to introduce your executor to your lawyer, accountant, financial advisor, banker and insurance agent.

From medical to financial decisions and everything in between, planning an estate can be an uncomfortable subject, especially when you involve your family in the planning. In the end, you want your legacy to be protected. Our office can work with your attorney to plan your estate, help you take the proper steps to protect your family’s future and make your executor’s role easier. Securities America and its representatives do not provide legal advice.

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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 February 2019. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI# 2419016.1

Weekly Market Notes – February 4, 2019

Weekly_Market_Notes

For the Week of February 4, 2019

The Markets

Following a blockbuster January jobs report, stocks closed mostly higher Friday. The U.S. added 304,000 new jobs in January, the largest gain since February of 2018. The Dow Jones advanced for the sixth week in a row. For the week, the Dow rose 1.33 percent to close at 25,063.89. The S&P gained 1.62 percent to finish at 2,706.53, and the NASDAQ climbed 1.38 percent to end the week at 7,263.87.

Returns Through 2/01/19 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) 1.33 7.57 -2.09 17.91 12.50
NASDAQ Composite (PR) 1.38 9.47 -1.65 16.28 12.10
S&P 500 (TR) 1.62 8.13 -2.17 14.07 10.98
Barclays US Agg Bond (TR) 0.53 0.81 2.27 1.94 2.39
MSCI EAFE (TR) 0.94 6.51 -12.63 7.41 2.65

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.

 

Some Don’t Pay Anything — 50.2 million of the 150.3 million tax returns filed in tax year 2016 (the latest year tax data is available), legally did not pay any federal income tax, i.e., 33 percent of all returns paid nothing. The remaining 100.1 million tax returns paid $1.45 trillion of federal income tax (source: Internal Revenue Service, BTN Research).

Sales Price — The median sales price of existing homes sold in the United States in Dec. 2018 was $253,600, down from an all-time peak median sales price of $273,800 from June 2018. The low point for this statistic was $154,600 in January 2012 during the 2008-12 real estate crisis. (source: National Association of Realtors, BTN Research).

Crazy High — For the 13 consecutive years from 1951-1963, the top individual marginal tax rate was at least 91 percent. The top individual marginal tax rate for 2019 is 37 percent (source: Internal Revenue Service, BTN Research).

 

WEEKLY FOCUS – Splitting Retirement Plans When Divorcing

Is divorce or legal separation in your future? If you or your spouse have money in retirement plans, you’ll most likely have to share the assets. It’s important to understand what governs the division of these assets to ensure the right party is responsible for paying applicable taxes. The type of retirement plan – IRA or qualified plan – determines the rules.

A separate legal term applies to each type of division. IRAs use a process known as transfer incident to divorce, while 403(b) and qualified plans, such as a 401(k), are split under the Qualified Domestic Relations Order (QDRO). You need to clearly define into which category each of the retirement assets fall when you submit your information to the court, so they’re listed correctly in the divorce or separation agreement.

A transfer incident to divorce isn’t taxed. The movement of funds can be classified as either a transfer or a rollover by the IRA custodian, depending on the circumstances of the division and the wording in the decree. The recipient takes legal ownership of the assets after the transfer is complete and assumes sole total responsibility for taxes on any future transactions or distributions.

A QDRO is used to divide qualified retirement plan assets between the owner and their current or ex-spouse or children or other dependents. Like transfers incident to divorce, QDROs are tax-free transactions so long as they are reported properly to the courts and the IRA custodians. QDRO assets can be rolled into a qualified plan, or a traditional or Roth IRA. Before a divorce settlement, any transfer from a qualified plan not considered a QDRO by the IRS is subject to tax and penalty.

Dividing retirement assets in a divorce can be less difficult if the correct information is provided to all parties involved. If the courts and custodians of the IRA and/or qualified plan recognize your divisions as QDROs or transfers incident to divorce, there shouldn’t be tax consequences. Lack of attention to detail can make this stressful time even more complicated and expensive, especially if large sums of money are involved.

Call our office, we are available to help you and your legal counsel provide the information needed to divide your retirement plan assets.

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 February 2019. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI#2408976.1

February 2019 Market Outlook – Conflicting Signals

I hope everyone has survived the arctic blast covering most of the country, even those of you suffering in the 30’s-40’s degrees in Florida.

As we enter February, I am seeing a number of conflicting signals.

On the economy:

  • The positive signs are continued strong employment, improving wages for employees, and a Federal Reserve that seems to be cautious on interest rates.
  • The negative signs are slowing business investment and the housing market; declining business and consumer sentiment, especially expectations about the future.

Given that the consumer accounts for roughly 2/3 of the economy, and the history that declining consumer expectations precede recessions (although not in every case) this is a potential red flag.  The still open issues of US/China trade and a potential second government shutdown on February 15th also serve to potentially impact economic growth.

2.1.2019_MONTHLY_OUTLOOK_CHART_1

Source: SentimenTrader  – Recessions in gray bars

 

On the investment front:

  • The positive signs are  – the extreme volatility we experienced at the end of 2018 has subsided; corporate earnings for the 4th quarter of 2018 have been pretty good so far; and a more patient Federal Reserve has reduced the concern of interest rates rising too fast.
  • The negative signs are – February is historically weak month for equities; the stock market went from extremely oversold at the end of December 2018 to overbought at the end of January 2019; investor sentiment has gone from Fear at the end of 2018 to Greed right now; 2019 has had a similarly strong start to 2018  (Jan 2019 +7.8%, Jan 2018 + 5.6%), recall we had an 8.6% decline in stocks in February 2018.

S&P 500 by month:  1986 – 2018

Source: Strategas                                                                                                                                             source: CNN Money

 

Given the conflicting signals our outlook is cautious.  The fundamentals look okay, with solid corporate earnings, modest inflation, a strong labor market and a newly dovish Fed. The government shutdown will contribute to anemic GDP growth in the first quarter, but a snap-back is likely in the second quarter — as long as another shutdown is avoided. Stay tuned.

I hope this report proves informative.

We have added a new tool to help those nearing or just beginning retirement to explore their readiness for retirement.  It’s an easy interactive tool.  Please share it with family, friends and colleagues.

https://www.ready-2-retire.me/JimMcCarthy

 

 

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

  • February is Black History Month.  Let’s all strive for understanding and acceptance for people of all colors, nationality, and religions.

 

February  2nd                   Groundhog Day – rooting for no shadow

February 14th                  Valentine’s Day

February 18th                  Presidents Day

 

Sources: SentimenTrader, Strategas, CNN Money

 

 

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.