Weekly Market Notes – July 29, 2019

Weekly_Market_Notes

For the Week of July 29, 2019

The Markets

The S&P 500 and the NASDAQ hit all-time highs Friday following a quarterly report showing U.S. economic growth slowed less than expected. Strong earnings from tech giants like Alphabet and Intel also boosted the S&P.  For the week, the Dow rose 0.14 percent to close at 27,192.45. The S&P climbed 1.66 percent to finish at 3,025.86, and the NASDAQ gained 2.26 percent to end the week at 8,330.21.

Returns Through 7/26/19 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) 0.14 18.11 9.06 16.49 12.61
NASDAQ Composite (PR) 2.26 25.54 6.09 17.69 13.36
S&P 500 (TR) 1.66 22.06 8.81 14.01 11.13
Barclays US Agg Bond (TR) -0.03 6.09 7.97 2.27 2.92
MSCI EAFE (TR) -0.20 13.61 -1.51 7.92 2.29

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.

 

Up and Up and Up — U.S. oil production for all of 2019 is projected to be 12.36 million barrels a day, then rising to 13.26 million barrels a day in 2020. Actual oil production for the U.S. in 2009 was 5.35 million barrels a day (source: International Energy Agency, BTN Research).

Have Started Saving for Retirement — 58 percent of 5,000 Americans surveyed currently participate in an employer-sponsored retirement plan or have begun making pretax contributions to an IRA (source: Financial Health Network, BTN Research).

Higher Risk, Higher Return — The stock market has produced a total return of 14.7 percent per year over the last 10 years through June 30, 2019. The worst quarter over the last decade was a drop of 13.9 percent in the 3rd quarter of 2011. The S&P 500 was used as the stock measurement for this statistic (source: BTN Research).

 

WEEKLY FOCUS – One of the Fastest Growing Crimes

According to the Identity Theft Resource Center, 27 percent of data breaches in 2017 were medical or health related. This is unfortunate news on several fronts. Medical identity theft can be difficult to detect, be hard to correct and create potential health risks.

Why it’s growing: Medical identity theft is becoming more common for several reasons. Medical providers’ security is often weak. For example, hospitals may allow a wide variety of employees – from doctors to techs and admins – to access patients’ information. One dishonest employee could sell thousands of dollars’ worth of electronic health records. (Because medical records contain so much personal information, a medical record can sell for $100 on the dark web.)

Why it’s dangerous: Imagine the ramifications if a thief’s health records get mixed with yours. You could be given the wrong blood type or a drug you’re highly allergic to. You could even be turned down by future insurers because of a serious illness or condition you never had. If an insurance company or the government pays the bills, unsuspecting victims may not notice something is amiss. Getting records corrected can be complicated. Medical insurers may be reluctant to remove inaccurate information if an action was taken based on the information.

Although federal law limits fraudulent credit charges to $50, it doesn’t offer the same protection for medical identity theft. According to a survey by cybersecurity research firm, the Ponemon Institute, medical identity victims who lost money spent $13,500, on average, to resolve their problem.

What you can do to prevent it: Watch your Explanation of Benefits statements for incorrect information. Ask your health care provider for a copy of your current file and correct anything that’s wrong. Monitor your credit report for unpaid medical bills. Ask medical providers how they protect your information. Don’t provide your Social Security number unless absolutely required to do so. Never give out medical or personal information over the phone or by email – unless you started the communication and are sure who you are dealing with. Be wary of offers for free health services or products. Shred outdated health insurance forms, statements and prescription labels.

Protecting your personal information is important to us. For more information on obtaining and monitoring your accounts and credit history and for tips on protecting your identity, please give our office a call.

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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 2019. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI#2660119.1

Weekly Market Notes – July 22, 2019

Weekly_Market_Notes

For the Week of July 22, 2019

The Markets

After breaking records earlier in the week, stocks dropped Friday and posted weekly losses. Contributing factors included growing tension in the Middle East, mixed corporate earnings reports, unsettled trade talks between China and the U.S. and concern over the Federal Reserve’s next move. For the week, the Dow fell 0.61 percent to close at 27,154.20. The S&P lost 1.21 percent to finish at 2,976.61, and the NASDAQ dropped 1.18 percent to end the week at 8,146.49.

Returns Through 7/19/19 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) -0.61 17.95 10.92 16.27 12.39
NASDAQ Composite (PR) -1.18 22.78 4.10 17.39 12.95
S&P 500 (TR) -1.21 20.06 8.30 13.48 10.77
Barclays US Agg Bond (TR) 0.38 6.13 7.46 2.25 2.95
MSCI EAFE (TR) -0.14 13.84 0.28 8.26 2.42

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.

 

The Very Richest — The top 1 percent of wage earners in the U.S. reported at least $480,804 of pretax income in 2016 and owned an estimated 29 percent of the total wealth in the country (source: Survey of Consumer Finances, BTN Research).

Going, Going, Gone — 7,037 American retail stores have closed YTD through June 30, 2019, already exceeding the 5,864 closures that occurred during all of calendar year 2018. This year’s store closures are on pace to exceed the all-time record of 8,139 from 2017 (source: Coresight Research, 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. 10-year notes have been traded in the U.S. since 1790. The yield on the 10-year note closed Friday, July 5, 2019, at 2.04 percent (source: Treasury Department, BTN Research).

 

WEEKLY FOCUS – The Importance of a Good Withdrawal Plan

So, you’ve developed a financial plan for your future. You know how you’re going to accumulate the savings and investments needed to provide a comfortable retirement. But do you have a plan for withdrawing savings during retirement? If you don’t create a well-thought out plan for accessing funds from your accounts, you could lose savings to taxes or even run out of money.

Here are some things to keep in mind when developing your budget and withdrawal plan.

Budget for your future lifestyle. Your budget is a good place to begin in determining your monthly retirement withdrawals. Will you continue your current financial lifestyle? Adopt a more conservative approach? Or do you have goals that will require a higher budget? In addition to living expenses, include travel, entertainment and the possibility of life-changing events like marriage or health issues.

Know how taxes will affect your assets. Having assets in accounts that vary in terms of their tax treatment could be wise. Your assets likely fall into tax-deferred, taxable or tax-free categories. Knowing how your savings will be taxed is important when developing your withdrawal plan. For example, depending upon your circumstances and goals, it might be best to use the profits from taxable investment accounts first and later look to your tax-deferred accounts, such as a traditional IRA or 401(k). Most experts agree Roth IRAs should be the last account to tap, giving them as much time as possible to grow tax-free.

Know your required minimum distributions (RMDs). When you reach 70½, certain types of accounts require you begin withdrawing savings. If you don’t, the tax penalty could be as high as 50 percent of the required distribution. The rules for RMDs can be confusing. Your financial professional can help you understand them and avoid fees.

Just as it’s never too early to start saving for retirement, it’s never too soon to think about how you’ll withdraw from those savings in retirement. There are many approaches to withdrawal plans, but the best plan is based on your future goals and the kind of investment accounts you have. Call our office today. We can help you create a well-thought out withdrawal plan designed to provide peace of mind, protect your retirement assets and reduce your tax burden. 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 July 2019. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI#2651517.1

Weekly Market Notes – July 15, 2019

Weekly_Market_Notes

For the Week of July 15, 2019

The Markets

The three major indexes rose to record closing highs on Friday after Fed Chairman Jerome Powell said the central bank was ready to “act as appropriate” regarding a potential rate cut. On Thursday, the Dow closed above 27,000 for the first time. The S&P notched its first close above 3,000 on Friday. For the week, the Dow rose 1.54 percent to close at 27,332.03. The S&P climbed 0.82 percent to finish at 3,013.77, and the NASDAQ gained 1.01 percent to end the week at 8,244.14.

Returns Through 7/12/19 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) 1.54 18.66 12.27 16.96 12.75
NASDAQ Composite (PR) 1.01 24.25 5.37 17.96 13.30
S&P 500 (TR) 0.82 21.54 9.89 14.16 11.17
Barclays US Agg Bond (TR) -0.21 5.73 7.19 2.08 2.89
MSCI EAFE (TR) -0.55 13.99 0.66 8.45 2.52

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.

 

Impact of Global Trade — Exports make up 12 percent of the gross domestic product (GDP) of the United States, 19 percent of the GDP of China and 50 percent of the GDP of Germany. GDP is the annual market value of all goods and services produced domestically by a country (source: Economic Cycle Research Institute, BTN Research).

Longest in History — The U.S. economic expansion began its 11th year on July 1, 2019, making it the longest-running expansion in our nation’s history based upon government data maintained since 1854 (source: National Bureau of Economic Research, BTN Research).

At Midyear — The S&P 500 was up 18.5 percent YTD (total return) through June 30, the index’s best performance at the half-way point of the year since 1997, when the stock index was up 20.6 percent YTD (total return) as of June 30 (source: BTN Research).

 

WEEKLY FOCUS – What You May Not Know About Credit Cards

Most of us know the number one rule for using credit cards is to avoid building up a balance we can’t pay off promptly. What many of us don’t know about credit cards is the number of benefits they often offer (in addition to purchase rewards). Here are some that are common:

Extra security: With fewer retailers accepting checks, remaining options are cards or cash. If cash is lost, it’s often gone forever, whereas you’re not liable for more than $50 in fraudulent charges with a credit card. However, debit card fraud could block other payments from your checking account. If your debit card or pin is lost or stolen, you must let your bank know within two business days of discovering the loss to limit your liability to $50. If you don’t notice fraudulent charges until you view your statement, your liability is limited to $500 – if you contact your bank within 60 days.

Purchase protections: Some cards add an extra year to manufacturers’ warranties if you buy the item with your card. Some companies will reimburse you if a qualified item is lost, damaged or stolen and may even include cellphones. Want to return a purchase past the store’s 30-day return policy? If you used the right card, you may be able to return it up to 90 days or even 120 days. If the price of the item you purchased drops, many cards will reimburse the difference up to 60 – 120 days (within a limit).

Travel bonuses: When you rent a car using the right credit card, you can automatically receive rental car insurance. Certain cards offer reductions on the car rental itself, dining and hotels. Many major credit cards provide roadside assistance. Some will charge you for the service; others will cover costs to a set amount. The right card may include airline discounts, free checked bags and access to the airport lounge, priority boarding and lost luggage protection (with some items excluded).

Benefits differ from card to card. Be sure to read your card benefits guide to see which perks it provides. As with any form of credit, responsible use is crucial. Making your money go farther and protecting your assets are important to us. We can help you evaluate your options for spending, saving and investing your money to support your financial goals.

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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 2019. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI#2642619.1

Weekly Market Notes – July 8, 2019

Weekly_Market_Notes

For the Week of July 8, 2019

The Markets

The three major indexes dropped Friday after June’s surprisingly good jobs report diminished hopes of a rate cut in the near future. The Labor Department’s report showed nonfarm payrolls rose by 224,000 jobs – the biggest increase in five months. For the week, the Dow rose 1.27 percent to close at 26,922.12. The S&P gained 1.69 percent to finish at 2,990.41, and the NASDAQ climbed 1.94 percent to end the week at 8,161.79.

Returns Through 7/05/19 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) 1.27 16.87 13.19 17.48 12.25
NASDAQ Composite (PR) 1.94 23.01 7.58 19.17 12.72
S&P 500 (TR) 1.69 20.55 11.51 15.01 10.80
Barclays US Agg Bond (TR) -0.15 5.96 7.57 2.03 3.05
MSCI EAFE (TR) 0.52 14.62 1.82 9.50 2.13

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.

 

July Fourth — When the Continental Congress approved the Declaration of Independence on July 4, 1776, the population of the 13 colonies was 2.5 million, equal to the population of Houston today (source: Census Bureau, BTN Research).

Young and Old — By the year 2035, the number of Americans at least age 65 (projected to be 78 million) will exceed the number of Americans under the age of 18 (projected to be 76.4 million), the first time in our nation’s history that has occurred (source: Census Bureau, BTN Research).

At the Beginning — The ongoing bull market for the S&P 500, which began on March 10, 2009, has gained 441 percent (total return) over its 10-year, 3½ month duration. The stock index gained 72 percent during the first 12 months of the bull run, including 27 percent during the first month of the bull market (source: BTN Research).

 

WEEKLY FOCUS – Phased Retirement Can Help Ease Into Life After Work

Whether it’s for financial or emotional reasons, many people reach retirement age only to realize they’re not ready to leave the workforce for good. If you find yourself in this situation, you may consider a phased retirement – transitioning from full-time work to part-time and then gradually reducing your hours until you are ready to retire completely.

Financial Security: By earning income in retirement, you can stretch your savings and delay claiming Social Security benefits. Because Social Security benefits are calculated based on your average monthly income during the 35 highest-earning years of your life, continuing to work may boost the amount you will receive once you start claiming benefits. Working part-time may also allow you to stay on an employer’s health care plan until you’re eligible for Medicare at age 65.

If you’ve been saving money in a tax-deferred account, you will have to eventually take required minimum distributions (RMDs), determined by your age and the total balance of your accounts. Failure to take an RMD will result in a significant tax penalty on the money not withdrawn. But taking the RMD may push you into a higher tax bracket, which could cost you more than what you had planned for. Continuing to work – even part time – may make you eligible for a Still-Working Exception that allows you to withdraw less than your RMD, so the remainder can continue to grow tax free.

Emotional Stability: After decades in the workplace, you may miss the camaraderie and sense of purpose a job provides. If you believe you won’t find that same satisfaction in retirement, a phased retirement may be an option for you. By working part-time, you can maintain relationships with coworkers and continue to be a productive member of a team until you can find something to fulfill those needs.

Talk to Your Employer: If you believe phased retirement will work for you, you’ll need to share your plan with your employer. If they won’t let you move to part-time, you may have to find another employer who will.

If you’re considering phased retirement, call us today, and we can start developing a plan that will put you on the path to success.

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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 2019. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI#2629993.1

July 2019 Monthly Outlook – A Tale of Two Cities

A Tale of Two Cities – the novel by Charles Dickens – about the life in two cities, London and Paris, during the 1800’s  – opens with “It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness”.

The current state of affairs brought this quote to mind for me.  In this case our 2 cities are the economy and the financial markets.  The financial markets are behaving as if it was “the best of times” and the “age of foolishness” while the economy is looking more like we are moving towards worse times and a need for more wisdom.

The S&P 500 closed out June 2019 with the best first half of a year in over a decade, and less than 1% below a new all-time high.  All 11 broad industry sectors were positive YTD.  The best of times indeed.  The “Dumb Money” Confidence index just crossed into the red zone.  Notice what happens to the S&P500 (SPX) when this index reaches these levels.  Clearly some foolishness going on.

7.2.2019_MONTHLY_OUTLOOK_CHART_1

Conversely, the US economy closed out June with some negative trends emerging in economic data.  Leading Economic Indicators, published by the Economic Cycle Research Institute (ECRI) has rolled over and is at a level not seen since 2011.

7.2.2019_MONTHLY_OUTLOOK_CHART_2

The Conference Board’s consumer confidence index declined in June to its lowest point in nearly two years. The US economy remains the envy of the world but some cracks are starting to show. Certainly not the “worst of times” but clearly a trend that requires some “wisdom”

So what are we watching going forward:

  1. Second quarter corporate earnings season starts in earnest on 7/15/19.   To date 77% of companies issuing pre-announcements say their profit picture will be worse than Wall Street is expecting. That’s the second-worst quarter on record going back to 2006, according to FactSet. The biggest issue companies are reporting are uncertainty about US tariff policies. If corporate profits are poor the stock market will likely see a correction.7.2.2019_MONTHLY_OUTLOOK_CHART_3
  2. Tariff negotiations –  A temporary “truce” was announced in the trade war between the US and China.  I am skeptical a deal can be completed.  A similar “truce” was announced back in December 2018, only to have both the US and China increase tariffs in mid-May 2019.  Additionally, there are pending tariffs on European Union auto’s that need to resolved by November 2019. There is also a brewing trade battle with India.
  3. The Federal Reserve – at their June 2019 meeting they appeared to signal a willingness to lower interest rates to help support the slowing economy. Despite what the President says, monetary policy is not “tight” and negatively impacting the economy.  In fact, monetary policy is quite loose and I think a rate cut now is unwarranted.  I also don’t believe a rate cut will be sufficient to offset the negative effects of all the tariff battles going on.
  4. Congress – the US still needs to raise the debt ceiling and create a new federal budget by the end of September.  Given the disfunction in Washington this is sure to be an 11th hour, kick the can down the road issue.
  5. International issues – The United Kingdom faces an election of a new Prime Minister and finalizing their exit from the EU.  Rising tensions in the Middle East, specifically around Iran and the nuclear treaty.

 

In summary, our outlook going forward is one of caution but not defensive. I prefer to not try to chase gains at the expense of suffering losses if the stock market wakes up to what the economy is saying.  We continue to focus on well diversified portfolios with good risk controls.

Please call us if you have any questions.

Feel free to pass this note along to family, friends, and colleagues as you see fit.

 

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.

I want to extend a special thanks to clients & colleagues who have recently referred us to family and friends:

Benny G.     Kevin W.   Richard L.

 

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
    • Interesting tidbit – July Fourth — When the Continental Congress approved the Declaration of Independence on July 4, 1776, the population of the 13 colonies was 2.5 million, equal to the population of Houston today (source: Census Bureau, BTN Research).

 

 

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 21st           National Ice Cream Day   – Breyers vanilla with Hershey’s chocolate syrup is my go-to

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

 

 

  • Sources:  SentimenTrader, Advisor Perspectives, CNBC

 

 

 

 

 

 

 

 

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 – July 1, 2019

Weekly_Market_Notes

For the Week of July 1, 2019

The Markets

Stocks rose Friday, led by banks and anticipation of trade talks between President Trump and Chinese President XI Jinping at the G-20 summit in Japan. The three major indexes posted gains for the month, quarter and first half of the year. The Dow enjoyed its best June since 1938; the S&P saw its biggest percentage increase in June since 1955. For the week, the Dow fell 0.45 percent to close at 26,599.96. The S&P lost 0.27 percent to finish at 2,941.76, and the NASDAQ dropped 0.32 percent to end the week at 8,006.24.

Returns Through 6/28/19 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) -0.45 15.40 12.45 17.97 12.26
NASDAQ Composite (PR) -0.32 20.66 6.70 19.51 12.73
S&P 500 (TR) -0.27 18.54 10.51 15.37 10.71
Barclays US Agg Bond (TR) 0.43 6.11 7.91 2.31 2.97
MSCI EAFE (TR) 0.65 14.03 2.11 10.56 2.31

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.

 

Maybe Next Time — The Fed’s fourth meeting of 2019 ended with no change in short-term interest rates. The Fed last cut interest rates on Dec. 12, 2008, or 10½ years ago (source: Federal Reserve, BTN Research).

Not Saving Enough — The average 65-year old American male has accumulated retirement savings that will sustain him in retirement for 9.7 years. The problem is, the average 65-year old American male has a life expectancy of 83 years, or 8.3 years beyond when his savings runs out. This study assumed male retirees would need retirement income of 70 percent of the individual’s preretirement pay (source: World Economic Forum, BTN Research).

Taking the Keys — Banks repossessed 10,634 homes nationwide in May 2019. Banks repossessed 93,777 homes in May 2010, the second worst month ever in American history (source: ATTOM Data Solutions, BTN Research).

 

WEEKLY FOCUS – Estate Planning Misconceptions

Many people postpone creating an estate plan because considering their demise is unsettling. Others make false assumptions that cause them to neglect this important task or make less-than-ideal decisions. Here are a few common misconceptions related to estate planning:

Estate planning is for the wealthy. Anyone who owns property or assets, or has loved ones who depend on them for income or care, needs an estate plan. And as the next paragraph notes, some estate documents protect an individual’s own best interests before death.

A will is all I need. You should also consider a letter of instruction that explains your plan to your executor; a power of attorney to empower a representative to make legal and financial decisions if you can’t; and a healthcare proxy, which designates an agent to make healthcare decisions, and details the kind of care you do or don’t want to receive in the event of incapacity.

I don’t need to worry about estate tax. Yes, the current federal tax exemption for an individual’s estate is $11.4 million. However, many states still tax estates or inheritance. One way to reduce this liability is by gifting down your estate before you die. The federal government doesn’t tax gifts up to $15,000. Only two states do – Connecticut and Minnesota.

A will can distribute all my assets. Accounts that have beneficiaries – like 401(k)s, IRAs, life insurance and pay-on-death accounts – transfer assets directly to named beneficiaries. That’s why it’s essential to update beneficiaries as soon as your family circumstances or wishes change.

A will helps me avoid probate. A will doesn’t help you avoid probate. A revocable living trust is often used for this purpose. Adding a joint owner to a bank or investment account – if the account is owned as joint tenants with rights of survivorship – will avoid probate.

Both spouses’ assets become community property. Certain assets can remain individual property during marriage, including: assets acquired before marriage and inheritance and gifts received during marriage – if they are kept in the individual spouse’s name and not changed into community property through a written transmutation instrument.

Estate planning can be complex. With so much at stake, it’s crucial to get it right. We would be happy to work with you, your attorney and tax professional to secure, and make the most of, your legacy.

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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 2019. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI#2623599.1