Weekly Market Notes – December 23, 2019

Weekly_Market_Notes

For the Week of December 23, 2019

The Markets

The three major indexes attained record closing highs on Friday. Several factors boosted investor confidence: unemployment at 50-year lows, President Trump’s positive remark regarding a conversation about the trade deal with China’s president and an upwardly revised report on consumer spending in the third quarter. For the week, the Dow rose 1.14 percent to close at 28,455.09. The S&P gained 1.68 percent to finish at 3,221.22, and the NASDAQ climbed 2.18 percent to end the week at 8,924.96.

Returns Through 12/20/19 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) 1.14 24.98 27.54 15.21 12.55
NASDAQ Composite (PR) 2.18 34.51 36.71 17.63 13.37
S&P 500 (TR) 1.68 31.05 33.21 14.62 11.51
Barclays US Agg Bond (TR) -0.30 8.54 9.00 4.28 3.05
MSCI EAFE (TR) 0.64 21.43 21.97 9.70 5.49

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.

 

Mind Boggling — As of Thursday, Dec. 12, our national debt is $23.1 trillion. If the United States was to pay down the national debt by $1 million a minute ($1.44 billion a day), it would still take 44 years to extinguish $23.1 trillion of debt (source: Treasury Department, BTN Research)

Just Our Interest Expense — The government paid $376 billion of interest expense on our nation’s outstanding debt during fiscal year 2019; that equals roughly $1 billion per day (source: Treasury Department, BTN Research).

Where Have You Been? — 61 percent of 1,010 Americans adults surveyed in November 2019 indicated the stock market has had no impact or not much impact on their personal finances, suggesting they hold limited to no equity investments. 18 percent of those surveyed thought the stock market had declined YTD, when really, the S&P 500 was up 28.9 percent YTD (total return) through Friday, Dec. 13 (source: Peter G. Peterson Foundation, BTN Research).

 

WEEKLY FOCUS – Smart Spending Can Save You Money in the Year Ahead

As you look ahead to 2020 and start setting financial goals, don’t forget to also make plans on how you’ll spend your money. Of course, it’s wise to save and invest. But by spending your money smartly on the right things, you may improve the quality of your life and even save more money over the long run. Here are just a few key areas you may want to focus on as you set your spending goals for the year ahead.

Home Improvement: Your home is a big investment, and improvements help increase its value over the long run and may save you from being hit with large unexpected repair bills. Start by going room to room and make a prioritized list of improvements and upgrades, set a budget and shop around for the best prices on service and supplies. Also consider upgrading appliances and your furnace and air conditioning to more energy-efficient models.

Self-Improvement: Investing in your health today may save you from facing major health care expenses or having to miss work due to illness or injury down the road. But before you purchase an expensive piece of exercise equipment or a gym membership, be sure you are fully committed to using it all year long and beyond. Maintaining good health isn’t just about exercise. You also may want to buy better quality foods, take a long overdue vacation and purchase resources that will alleviate stress, improve sleep quality, ease pain, keep your teeth healthier or help you quit smoking.

Items that Can Save You Money: Upgrading to a programmable thermostat can potentially save you hundreds of dollars each year in heating- and cooling-related expenses. By installing water filters you can enjoy the same quality of drinking water found in much more expensive bottled water at a fraction of the cost. Adding low-flow shower heads and faucet aerators can help lower your water bill. And replacing standard light bulbs with long-lasting LEDs can significantly reduce electricity costs.

Also, be sure to schedule your car for regular maintenance to keep it running at peak performance, which can improve fuel economy and reduce the chances for costly repairs.

These are just a few suggestions to help you spend wisely in the year ahead. If you would like to discuss these and other ways you can save and invest your hard-earned money, please contact my office today to schedule an appointment.

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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 December 2019. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI# 2881971.1

Weekly Market Notes – December 16, 2019

Weekly_Market_Notes

For the Week of December 16, 2019

The Markets

Stocks closed slightly higher Friday after President Trump and Chinese officials announced a phase-one trade deal. The increase helped the S&P 500 and the NASDAQ notch all-time highs. The trade agreement reduces some U.S. tariffs in exchange for larger Chinese purchases of American farm products and some progress on the issue of China’s intellectual property theft. For the week, the Dow rose 0.49 percent to close at 28,135.38. The S&P gained 0.77 percent to finish at 3,168.80, and the NASDAQ climbed 0.91 percent to end at 8,734.88.

Returns Through 12/13/19 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) 0.49 23.57 17.21 14.89 12.97
NASDAQ Composite (PR) 0.91 31.64 23.54 16.93 13.42
S&P 500 (TR) 0.77 28.89 22.00 13.98 11.89
Barclays US Agg Bond (TR) 0.29 8.87 10.00 4.24 3.06
MSCI EAFE (TR) 1.72 20.66 17.11 8.87 5.54

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.

Has Not Happened Yet — 65 percent of 500 global money managers surveyed in October and November 2018, predicted the U.S. stock bull market would end in 2019. The current bull market run is three months short of 11 years in length. The survey included investors in 28 countries worldwide (source: Natixis Investment Managers, BTN Research).

Are We Twice as Healthy? — The United States spends 18 percent of its $21.5 trillion gross domestic product (GDP) on health-care expenditures, more than double the 8.6 percent of GDP spent by 35 other major economies throughout the world (source: Organization for Economic Cooperation and Development, BTN Research).

Keeping the Lights On — The Department of Energy predicts 38 percent of U.S. electricity in 2020 will be generated by natural gas, 22 percent from coal, 20 percent from nuclear power plants, 7 percent from hydropower (water) and the remaining 13 percent from wind, solar and other suppliers (source: Department of Energy, BTN Research).

 

WEEKLY FOCUS – Year-End Money Moves

As 2019 quickly draws to a close, it may be wise to consider making some last-minute moves to get your finances in the best possible shape for the new year. Here are a few steps to consider:

Max out your retirement contributions. For 2019, you can contribute $19,000 to your 401(k), but it must be funded by Dec. 31. You can contribute $6,000 to your IRA, and you actually have until the 2020 April tax deadline to do so. If you’re 50 or older, you can contribute an extra $6,000 to your workplace plan or another $1,000 to your IRA.

Make sure you’ve paid enough income tax to avoid a surprise tax bill. This is especially important for couples and people who have switched jobs or have multiple jobs. The tax withholding calculator on the IRS site can help.

Take any Required Minimum Distributions from your tax-advantaged retirement accounts by Dec. 31. Fail to do so, and you’ll pay a 50 percent penalty on the amount you should have withdrawn. (If you just turned 70½ in 2019, you have until April 1 to withdraw the necessary funds. But you’ll have to take two distributions in 2020.)

Rebalance your portfolio. Perhaps a certain class of investments has grown disproportionately to others. You may want to move some investments to maintain your desired balance of risk versus growth. Or, you may consider tax loss harvesting your investments – selling some losing stocks off. You can use up to $3,000 in short-term losses to offset $3,000 of income each year.

Strategize your giving. Determine whether it pays to itemize your 2019 taxes. If it does, you may want to donate several years’ worth of charitable giving in the next few weeks. You may also want to begin transferring some wealth to a child or grandchild. The IRS allows you to gift up to $15,000 without triggering gift tax issues.

Don’t forget your health accounts. Max out your Health Savings Account contributions. With a qualifying health plan, you can contribute $3,500 to an HSA as an individual or $7,000 for family coverage. If you’re 55 or older, add $1,000. If you have a Flexible Spending Account, make sure to use any funds that won’t roll over.

We can help you evaluate if any of these year-end money moves are right for you. Call our office today to schedule an appointment for a consultation. 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 December 2019. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI#2873456.1

Weekly Market Notes – December 9, 2019

Weekly_Market_Notes

For the Week of December 9, 2019

The Markets

The three major indexes closed a choppy week on a positive note. Investors’ optimism was fueled by a glowing November jobs report. The Labor Department announced 266,000 non-farm payrolls were added. As a result, the unemployment rate fell to 3.5 percent – the lowest in 50 years. Because of earlier losses, two indexes still closed the week in the red. For the week, the Dow fell 0.06 percent to close at 28,015.06. The S&P gained 0.21 percent to finish at 3,145.91, and the NASDAQ dropped 0.10 percent to end the week at 8,656.53.

Returns Through 12/06/19 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) -0.06 22.98 15.06 16.04 12.01
NASDAQ Composite (PR) -0.10 30.46 20.43 17.52 12.61
S&P 500 (TR) 0.21 27.90 19.08 14.72 10.93
Barclays US Agg Bond (TR) -0.22 8.55 9.82 4.06 3.15
MSCI EAFE (TR) 0.37 18.62 16.13 9.24 4.42

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.

 

They Have No Choice — 46 percent of working Americans surveyed expect to remain in the workforce beyond age 65. Of the 46 percent of Americans continuing to work after age 65, 47 percent will continue to work only because they haven’t accumulated sufficient assets to retire (source: Northwestern Mutual 2019 Planning & Progress Study, BTN Research).

The Cost of Health Insurance — The average American employee paid $453 per month for their family’s health insurance coverage through an employer-sponsored plan in 2018. The $453 amount represents 28 percent of the total cost of the insurance coverage, i.e., the employer paid $1,164 per month (source: Commonwealth Fund, BTN Research).

Closed for Good — 9,271 American retail stores have closed YTD through Friday, Nov. 29, exceeding the all-time record of 8,139 store closures from 2017 (source: Coresight Research, BTN Research).

 

WEEKLY FOCUS: Thwarting Porch Thieves

According to the 2019 Shorr Packaging Theft Report, nearly 24 percent of the respondents reported they had personally experienced package theft, up 7 percent from 2017. *

The 2019 holiday shopping season is nearly a full week shorter than last year. And with less time, shoppers may turn even more to online shopping, especially if the vendor offers expedited home (or workplace) delivery. More packages on the porch can mean more porch pirates.

What can you do to protect your holiday gift packages? Some popular steps online shoppers are taking to protect themselves from theft include scheduling deliveries; installing home security systems and video doorbells; and using package lockboxes.

An item on many people’s shopping list this year is a video doorbell; 41 percent of the victimized respondents in the Shorr Report have purchased a video doorbell. Sixty-two percent of all the report’s respondents have purchased one. Video doorbells, which vary in price, notify your phone when someone’s at the door. Some of them allow you to talk with the person, making it appear you’re at home.

A fairly new option is a “package guard.” The circle-shaped device is placed on the porch, and the delivery person is instructed to place the package on the guard. The service sends a notice to your phone if the package is removed. It also makes an alarm loud enough for neighbors to hear.

Package lockers are becoming more popular for online shoppers who live close to locations offering the service. But even if it’s a secure alternative to an unwatched front porch, it does have limitations. For example, Amazon offers free Hub Locker service, but you must pick up your package within three days or it could be returned. Check with the service in your area for guidelines.

Just like protecting your online deliveries, protecting your financial future takes a plan. Call our office today. We can help you develop a plan to ensure your financial goals are protected.

*https://www.shorr.com/packaging-news/2019-11/2019-package-theft-report-porch-pirates-and-prevention

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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 December 2019. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI#2864730.1

December 2019 – Monthly Outlook – Can it Continue?

U.S. Equities closed the month of November near record highs.  The gains have been fueled by optimism that U.S.-China trade issues will be resolved amicably.  I remain skeptical of this. This can clearly be seen in the divergence of consumer confidence and CEO confidence.  Consumers tend to be more near-term focused, while CEOs have to make plans for staffing, capital expenditures and investments going out a year or two. Clearly CEOs are concerned.

12.4.2019_MONTHLY_OUTLOOK_CHART_1

Also, while consumer confidence remains significantly higher than CEOs, “Consumer confidence declined for a fourth consecutive month, driven by a softening in consumers’ assessment of current business and employment conditions,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board.

One key economic indicators I follow is the Leading Economic Indicators (LEI).  While month-to-month changes can be caused by “noise”, I watch the longer term trends.  Here are notes on the most recent report for October 2019:

  • “The US LEI declined for a third consecutive month, and its six-month growth rate turned negative for the first time since May 2016. The decline was driven by weaknesses in new orders for manufacturing, average weekly hours, and unemployment insurance claims,” said Ataman Ozyildirim, Senior Director of Economic Research at The Conference Board. “The major difference this month is the softening in the labor market, whereas conditions in manufacturing remain weak and show no signs of improvement yet. Taken together, the LEI suggests that the economy will end the year on a weak note, at just below 2 percent growth.”

 

The fact that the 6-month growth rate has turned negative is concerning to me.

All told, I feel the US economy is slowing but will likely plod along at about 2% annual growth.  This is not the problem.

The problem is the financial markets, specifically US stocks, are reflecting a much better situation.  The term you might here is “stocks are priced for perfection”,  or “it’s a goldilocks market” meaning stock prices are reflecting positive outcomes to trade disputes, economic growth, monetary stimulus and consumer spending. How will the market react if any, or some, of these outcomes are not as positive?

For the last few months, I have been cautious and in a neutral position in portfolios.  Through the end of November, that posture proved too conservative.  However, stocks have declined by 2% over just the last three trading days, mostly because of new uncertainty around the trade situation. Just today, December 3rd, President Trump indicated he may wait until after the 2020 elections to push for a trade deal with China.  December 15th is a key date.  The US is set to impose new tariffs on China.  Will that happen? The market has been betting it will not. I’m not so sure.

I continue to believe the upside potential is less than the downside risk, at the moment. As such, we will remain neutrally positioned with a cautious bias. I would rather miss out on a small upside move to avoid getting caught in a swift downside adjustment.

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.

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

  • December is Universal Human Rights Day.  Let’s pray that all people, regardless of race, religion, gender, or nationality  can learn to treat others as we all wish to be treated.

 

December 10th            Human Rights Day   –  I have cherished the ideal  of a democratic and free society… it is an ideal for which I am prepared to die. – Nelson Mandela

December 15th            Healthcare open enrollment – for coverage starting Jan 1, 2020 – ENDS!   

December 19th            Christian’s birthday

December 21st                  Winter Solstice    –       The shortest day of the year and the start of winter

December 22nd           Happy Hanukkah  –    May it also be a festival of love, happiness, success, and health in your world now and always.

December 25th            Merry Christmas – have a wonderful holiday.  Let’s all remember the true significance of this day – the birth of Christ. 

 

Sources: The Conference Board, 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.