Weekly Market Notes – May 18, 2020

Weekly_Market_Notes

For the Week of May 18, 2020

The Markets

The market was volatile on Friday as investors digested a record drop in retail sales and  increased trade tensions with China as the Trump administration imposed new restrictions on Chinese telecom giant Huawei. Stocks edged up by closing but still suffered big losses for the week. For the week, the Dow fell 2.61 percent to close at 23,685.42. The S&P lost 2.20 percent to finish at 2,863.70, and the NASDAQ dropped 1.15 percent to end the week at 9,014.56.

Returns Through 5/15/20 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) -2.61 -16.27 -5.37 6.60 7.92
NASDAQ Composite (TR) -1.15 0.84 16.44 14.82 13.56
S&P 500 (TR) -2.20 -10.69 2.47 8.16 8.37
Barclays US Agg Bond (TR) 0.33 4.86 10.01 5.14 3.85
MSCI EAFE (TR) -3.18 -20.81 -12.02 -2.62 -1.29

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, NASDAQ 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. (TR) indicates total return. MSCI EAFE returns stated in U.S. dollars.

 

Less Needed — 26 percent of 305 chief financial officers surveyed in late April anticipate their firms will reduce their real estate footprint when work life resumes some level of normalcy (source: PricewaterhouseCoopers, BTN Research).

Shortfall —The Congressional Budget Office forecasted on April 24 our nation’s fiscal year 2020 budget deficit, i.e., the 12 months ending Sept. 30, will be a record $3.7 trillion, equal to 18.1 percent of our economy. That would be our largest deficit-to-GDP percentage since the U.S. hit 21 percent in 1945 (source: CBO, BTN Research).

Help for Borrowers — Pandemic-impacted homeowners who have mortgages that are owned by Fannie Mae have access to a forbearance plan that allows them to reduce or suspend their monthly mortgage payment for up to 12 months. Homeowners are allowed to establish a repayment plan to catch up gradually or modify the entire loan but are not required to make a lump-sum payment at the end of 12 months. Homeowners need to contact their mortgage servicer to determine if they qualify (source: Fannie Mae, BTN Research).

 

WEEKLY FOCUS – Tips for Working From Home

As U.S. governors plan to reopen their states and medical researchers across the globe scramble to create an effective vaccine or treatment for COVID-19, it’s natural to wonder how different our lives might look after the virus is under control.

Chances are, parents will continue accessing online educational resources for their children, and geographically distanced families and friends will continue to gather on Zoom. Businesses will likely spend less time and money traveling to meetings, and medical professionals will still offer telehealth care. But many believe the widest-reaching change will be a greater acceptance of working from home. With that perspective, taking the following steps to improve your work-from-home experience may pay off now and in the future.

First and foremost, ensure your workspace fits your body. Your elbows should be close to a 90-degree angle when you’re typing, and your wrist should not be hinged. If that’s not the case, you may need to raise your chair or lower your keypad with a pull-out tray under your desk. Similarly, your neck shouldn’t be bent. If your monitor or laptop is too low, consider risers. If your back hurts, consider a different chair, a lumbar support pillow or an orthopedic seat cushion. A footrest can help if your legs are short.

Next, establish boundaries. Keep consistent hours. Let family and friends know you are not available during those times. Protect your free time as well. Stop and stretch every 20 minutes. Take a couple 10-minute breaks during the day and a short walk outside over your lunch hour. Take a sick day if you’re not well. And, don’t check emails once you’re off the clock.

Overcommunicate. Remind coworkers when you’re not going to be available. Let your team know when you complete an important task. Make your presence known on conference calls. Since tone is harder to discern in digital communications, err on the positive side. In informal emails, you may want to include an exclamation point or a friendly emoji.

Don’t forget to socialize. Interacting with colleagues is important for your career and your emotional well-being. So, join Zoom happy hours and, once it’s safe to do so, attend meetings, trainings and conferences in person from time to time.

Please take care of yourself and stay well. And, as always, if you have financial concerns or questions you want to discuss, feel free to call my office.

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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 May 2020. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI# 3090721.1

Weekly Market Notes – May 11, 2020

Weekly_Market_Notes

For the Week of May 11, 2020

The Markets

Stocks rose Friday despite the worst jobs report on record; the Labor Department reported the nation lost 20.5 million jobs in April. However, investors were encouraged by plans to begin reopening the country and a statement from Chinese and U.S. leaders saying they expected to meet their obligations in the phase one trade deal signed in January. For the week, the Dow rose 2.67 percent to close at 24,331.32. The S&P gained 3.57 percent to finish at 2,929.80, and the NASDAQ climbed 6.05 percent to end at 9,121.32.

Returns Through 5/08/20 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) 2.67 -14.03 -3.87 7.54 8.62
NASDAQ Composite (PR) 6.05 2.02 16.09 15.58 14.03
S&P 500 (TR) 3.57 -8.68 3.85 9.04 8.94
Barclays US Agg Bond (TR) -0.33 4.52 10.20 5.13 3.79
MSCI EAFE (TR) 0.87 -18.21 -9.99 -1.38 -0.36

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, NASDAQ 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. (TR) indicates total return. MSCI EAFE returns stated in U.S. dollars.

 

Not This Year — The CARES Act has provided sponsors of defined benefit pension plans a one-year holiday from their required annual pension contribution, i.e., they do not have to contribute to their pension plans during calendar year 2020 (source: CARES Act, BTN Research).

Market Rally or New Bull Market? — The S&P 500 gained 12.8 percent (total return) in April, its first double-digit gain since October 2011 and its best month since January 1987. The S&P 500 consists of 500 stocks chosen for market size, liquidity and industry group representation. It is a market value weighted index with each stock’s weight in the index proportionate to its market value (source: BTN Research).

In the Year 2034 — Social Security trustees announced on April 22 that 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 76 percent of their originally promised levels through the year 2095. When the trustees released their report in 2010, the Social Security Trust Fund was projected to be depleted in 2040 (source: Social Security Trustees 2020 Report, BTN Research).

 

WEEKLY FOCUS – A Great Time to Make a Difference

As we digest today’s sobering headlines, conflicting reports and startling predictions related to COVID-19, it’s easy to feel rather powerless. Across the globe, researchers are scrambling to learn about the disease and leaders are struggling to protect their citizens’ health and their nations’ economies. On an individual level, our normal routines have been shattered, and we wonder what the future will hold.

In these uncertain times, the compulsion to hoard money, food or even toilet paper is natural. Building up our reserves may restore a small sense of control. Certainly, it is prudent to save more and stock up on some things. But giving may actually do more to ease feelings of helplessness. Instead of dwelling on what we can’t change, giving focuses on the difference we can make.

Needs are particularly great now. Many nonprofits, particularly those that provide safety net services, are facing the greatest demand they’ve seen. Increased requests are coming at the same time organizations are unable to hold normal fundraising events, some donors are unable to give and others are supporting candidates in this year’s political campaigns.

The good news is, the CARES Act, the $2 trillion stimulus package President Trump signed on March 27, increases federal tax deductions for qualifying charitable donations. Under CARES, even taxpayers who do not itemize on their return (an estimated 85 percent of us) can deduct up to $300 for charitable cash contributions.1 To ensure an organization qualifies, enter its Employer Identification Number at apps.irs.gov/app/eos/.

CARES also removes the limit on deductions for charitable cash gifts if you itemize. Previously, you could not deduct more than 60 percent of your adjusted gross income. Under CARES guidelines, you may donate your entire taxable income to qualified organizations and not owe federal taxes on that income.2 Contributions to private foundations or donor advised funds do not apply.

Contact our office if you need help weighing how much to donate to your favorite cause or to schedule a joint meeting with your other professional advisors.

Securities America and its financial professionals do not provide tax advice. Coordinate with your tax advisor regarding your specific situation.

1https://taxfoundation.org/standard-deduction-itemized-deductions-current-law-2019/

2https://www.forbes.com/sites/morgansimon/2020/04/08/now-is-a-great-time-to-give-new-charitable-rules-incentivize-generosity-during-covid-19/#61dadf266d2e

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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 May 2020. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI#3080678.1

Weekly Market Notes – May 4, 2020

Weekly_Market_NotesFor the Week of May 4, 2020

The Markets

Even though the drug remdesivir received emergency use authorization for treating hospitalized coronavirus patients, stocks fell on the first day of May amid disappointing earnings reports and growing tensions between China and the U.S. The day before, the market ended April with its best monthly surge in over 30 years, with the S&P up 12.7 percent and the Dow up 11.1 percent for the month. For the week, the Dow fell 0.22 percent to close at 23,723.69. The S&P lost 0.19 percent to finish at 2,830.71, and the NASDAQ dropped 0.33 percent to end the week at 8,604.95.

Returns Through 5/01/20 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) -0.22 -16.26 -8.00 6.79 8.28
NASDAQ Composite (PR) -0.33 -3.80 8.06 13.42 12.71
S&P 500 (TR) -0.19 -11.83 -1.22 7.96 8.27
Barclays US Agg Bond (TR) -0.12 4.86 10.68 5.21 3.84
MSCI EAFE (TR) 3.07 -18.92 -12.70 -1.11 -0.38

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, NASDAQ 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. (TR) indicates total return. MSCI EAFE returns stated in U.S. dollars.

 

In the Year 2034 — Social Security trustees announced on April 22 that 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 76 percent of their originally promised levels through the year 2095. When the trustees released their report in 2010, the Social Security Trust Fund was projected to be depleted in 2040 (source: Social Security Trustees 2020 Report, BTN Research).

Just Sitting Somewhere — 64 percent of the commercial aircrafts operated by airlines worldwide have been removed from daily usage and are in storage (source: Upgraded Points, BTN Research).

People Are Not Spending — Retail sales in the United States in March declined 8.7 percent  from the previous month to $483 billion. The worst month-over-month decline in retail sales during the 2008-2010 mortgage crisis was a drop of just 3 percent in December 2008 (source: Census Bureau, BTN Research).

 

WEEKLY FOCUS – Estate Planning in a Pandemic

While the majority of the 60,000 U.S. deaths caused by the coronavirus have been individuals at higher risk due to age or pre-existing health conditions, we have all seen reports of younger, seemingly healthy men and women who have become very ill and in some cases, even succumbed to COVID-19.

Witnessing a new virus turn life upside down in such a short time demonstrates the importance of having a thorough, up-to-date estate plan. Considering how difficult – if not impossible – it could be to create estate documents during the isolation imposed on COVID hospital patients creates an even greater urgency. In addition to being isolated, seriously ill patients may be put into a medically induced coma, so they can be connected to a ventilator. Without an advanced care directive or a health care proxy, the patient won’t be able to influence their care.

If you have an advanced care directive, you may want to make sure ventilation is only ruled out in situations that appear hopeless – since thousands of COVID patients have been saved through intubating. A HIPAA Authorization should also be included in health care directives to ensure medical professionals can share information with a designated family member – crucial if a health system is overwhelmed and staff have little time to work out privacy issues.

In addition to health-related documents, even a basic estate plan should include a durable power of attorney (POA) to handle financial matters, a letter with instructions and final thoughts to loved ones and a simple will designating an executor and directing the distribution of assets. It’s important to ensure the will agrees with beneficiary designations on all accounts and wise to ask your financial institutions if they require their own POA form.

While working with an attorney is always the ideal, sites like FiveWishes.org, MyDirectives.com, LegalZoom.com and LawDepot.com can help you create a temporary solution in this crisis. But social distancing may make getting documents witnessed and notarized difficult. Some states allow online notarization using webcam. If yours doesn’t, you can probably sign documents inside your car with a notary witnessing through the windshield. Some states even accept unwitnessed, handwritten wills.

We can work with you, your attorney and your accountant to ensure your current estate plans take into consideration all the wills and won’ts you desire. Call our office to schedule a virtual appointment with us and your other trusted advisors. Securities America and its representatives do not provide legal advice; therefore it is important to coordinate with your legal 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 May 2020. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI#3070672.1

May 2020 Monthly Outlook – So Far

I sure underestimated the size of the relief rally and my thesis has been wrong – so far.

The market has made a miraculous recovery.  Certainly better than I anticipated.  Yet perhaps a little ahead of itself.  Basically, stocks are only down approx. 15% from the all-time high in February 2020.  It seems to me that the US and world are more than 15% out-of-whack, so there is clearly a disconnect between the market and what’s happening around the globe.

A few data points to consider:

  • There are now over 30 million people unemployed in the US – that’s almost 20% of the workforce; that’s 8 million more jobs lost than all the jobs created from 2009 – 2019; and that’s 21 million more jobs lost than during the entire Great Financial Crash in 2008-2009.  Yes, many of these people will go back to work once the economy opens back up, but I think its clear many will not have a job to go back to.

5.1.2020_Monthly_outlook_1

  • Both Chase and Wells Fargo have stopped doing HELOCs and have tightened conditions in which it will make mortgages, requiring higher FICO scores and bigger down payments for new loans.  Why?  “Wells Fargo Home Lending will temporarily stop accepting applications for all new home equity lines of credit after April 30,” Goyda said in an emailed statement. The choice “reflects careful consideration of current market conditions and the uncertainty around the timing and scope of the anticipated economic recovery.”
  • As of April 29th, more than 3.8 million homeowners were in mortgage forbearance plans, under the governments CARES Act program.  This represents 7.3% of all active mortgages accounting for $841 billion in unpaid principal.  Applications to participate in the forbearance program have been swelling at a rate of approximately 500,000 per week.

The U.S. economy contracted -4.8% in the first quarter, according to the GDP release yesterday. It’s the largest contraction in GDP since 4th quarter of 2008.  This was worse than analysts were expecting and was the first contraction since the first quarter of 2014. 2Q is going to be worse as much of the economy has been closed for the first month of the quarter. Perhaps the more astonishing data point was the decline in personal consumption, which shrank -7.6%. This suggests consumers were cutting back even before the economy officially closed. Even with a re-opening, it is hard to envision a scenario where consumers run out to spend. An economy that is 70% consumption may take longer to recover than most initially thought.

5.1.2020_Monthly_outlook_2

source: Strategas

The key point is that the US economy is not Sleeping Beauty, ready to wake up at first kiss by the government.   It’s true that $2+ trillion in government bailout money, and trillions more from the Federal Reserve, will blunt the damage. But it won’t stop the atrophy. It just slows it down.  My outlook is for a slow, “swoosh” like recovery.  Basically a sharp contraction followed by a gradual recovery over the next 18 months.

On the investment front, there is a disconnect between rising stock prices and falling corporate earnings.  Based on my swoosh economic outlook, I estimate the fair value of the S&P 500 is around 2,600, compared to 2,912 where it ended April.  This implies a potential 11% pullback from current levels.  The big question is where are we in the process?  Are we in the true recovery phase (see right side below) or are we at the early stages before things get worse (see left side below).  The answer likely is based on the medical outcome.  With a proven treatment for Covid-19 or a vaccine we are probably on the right side – without either we are probably on the left side.

5.1.2020_Monthly_outlook_3

Quote of the Day
“KEEP IN MIND THAT progress is not always linear. It takes constant course correcting and often a lot of zigzagging. Unfortunate things happen, accidents occur, and setbacks are usually painful, but that does not mean we quit.”

– Buzz Aldrin (Astronaut)

I hope this report is helpful.  Please feel free to share with friends and family.

 

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

 

  • May is National Mental Health awareness month.  Nearly 44 million American adults, and millions of children, experience mental health conditions each year. Let’s all get educated on this issue and work towards acceptance and inclusion of people dealing with mental health issues.

              

May 5th                       Cinco De Mayo – stay thirsty my friends                 

May 10th                     Mother’s Day – wishing all mom’s, grandmothers, and great grandmothers a wonderful day. Hopefully soon we can get together to celebrate.

May 16th                      Armed Forces Day.  Dedicated to recognizing those presently serving in our armed forces

May 23rd                     My daughter Caryn’s birthday  

May 25th                     Memorial Day – let’s remember and give thanks to all who served our country

 

Sources:  Strategas, Fidelity, CNBC.com, Dwyer Strategy

 

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 – April 27, 2020

Weekly_Market_Notes

For the Week of April 27, 2020

The Markets

It was a choppy week on Wall Street as investors digested the ongoing oil crisis, manufacturing stress, staggering jobless claims, a new economic aid package and slowing coronavirus hospitalizations in New York and New Jersey. On Friday, oil prices clawed back some of their losses and stocks ended in the green. But stocks still slipped for the week. For the week, the Dow fell 1.90 percent to close at 23,775.27. The S&P lost 1.30 percent to finish at 2,836.74, and the NASDAQ dropped 0.18 percent to end at 8,634.52.

Returns Through 4/24/20 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) -1.90 -16.08 -8.38 7.12 8.26
NASDAQ Composite (PR) -0.18 -3.49 7.72 14.22 12.40
S&P 500 (TR) -1.30 -11.66 -1.13 8.24 8.22
Barclays US Agg Bond (TR) 0.24 4.99 11.01 5.18 3.68
MSCI EAFE (TR) -2.02 -21.34 -14.83 -1.84 -1.16

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, NASDAQ 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. (TR) indicates total return. MSCI EAFE returns stated in U.S. dollars.

 

It’s Raining Now — All 50 U.S. states maintain a rainy-day fund that may be accessed as a result of an economic emergency. As of July 1, 2019, California had $19.2 billion set aside, Texas had $7.8 billion, New York had $2.5 billion while Illinois had just $4 million (source: National Association of State Budget Officers, BTN Research).

Get a Whole Row to Yourself — 95,085 travelers went through TSA screening at U.S. airports last Thursday, April 16, down 96 percent from the 2,616,158 screened passengers on Tuesday, April 14, 2019, or one year earlier (source: Transportation Security Administration, BTN Research).

Will They Look to Washington for Help — 88 percent of more than 2,400 city officials across the U.S. anticipate the economic impact of the COVID-19 virus will result in budget shortfalls that will force them to reduce services and cut staff. The loss of sales tax and fee revenue occurred because businesses have closed and travel and tourism has disappeared (source: National League of Cities, BTN Research).

 

WEEKLY FOCUS – Defeat the Villains

To say we all have a lot on our minds these days is a massive understatement. Unfortunately, bad actors and scammers know we are preoccupied. And, as they often do in a crisis, they’re ramping up their nefarious activities. There has been an increase in email and text message phishing, social media posts and fake websites designed to steal information and distribute malware. Here are some steps to head the bad guys off at the pass:

Be early. Yes, you have until July 15 to file your 2019 taxes. But one of the best ways to avoid identity tax theft is to file your taxes soon (if you haven’t already) to give thieves less time to file a fake return.

Be skeptical of requests for donations to help people who are ill or to fund a treatment or cure. Be wary of ads from unknown companies selling face masks or hand sanitizer or offers to invest in companies claiming to solve pandemic problems. To avoid clicking on a scammer’s COVID-related headline, get your news from reputable sites.

Be deliberate. Slow down. Scam artists create a sense of urgency to keep you from evaluating the situation. So, don’t be too quick to click a link or open an attachment – even if it’s in an email from a friend. If someone claiming to be a bank or company you associate with contacts you and asks for information, hang up and call them directly. If you receive information on an investment opportunity, ask a financial professional you trust for their opinion.

Be a little anti-social: Monitor your privacy settings on your social media profiles. Don’t accept friend requests from anyone you don’t know. Don’t share risky personal information (like your mother’s last name or your birthdate) on your profile. Use strong passwords. Don’t access your accounts on public wi-fi.

Be vigilant. Back up personal data, keep your devices secured and updated, and use multi-factor (MF) authentication when you can. (MF requires a security code sent to a second device.) Delete programs you don’t need. Monitor your credit cards, bank accounts and credit reports for activity you don’t recognize.

If you would like more information about identity theft and protecting your confidential and important information, please contact our office.

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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 April 2020. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI#3060760.1

Weekly Market Notes – April 20, 2020

Weekly_Market_Notes

For the Week of April 20, 2020

The Markets

Despite massive unemployment reports, stocks rose sharply Friday amid discussions on reopening parts of the economy and hopes surrounding an experimental drug to treat COVID-19. Stocks were also up for the second week in a row. For the week, the Dow rose 2.24 percent to close at 24,242.49. The S&P gained 3.06 percent to finish at 2,874.56, and the NASDAQ climbed 6.09 percent to end the week at 8,650.14.

Returns Through 4/17/20 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) 2.24 -14.45 -6.06 8.05 8.99
NASDAQ Composite (PR) 6.09 -3.32 9.34 15.11 13.16
S&P 500 (TR) 3.06 -10.49 1.10 9.11 8.89
Barclays US Agg Bond (TR) 0.70 4.74 11.18 5.06 3.58
MSCI EAFE (TR) 0.77 -19.71 -13.52 -0.45 -0.35

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, NASDAQ 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. (TR) indicates total return. MSCI EAFE returns stated in U.S. dollars.

 

Not Smart — 54 percent of Americans surveyed in February 2020 said if they inherited $1 million today, they would spend it – as opposed to paying off debt or investing (source: Charles Schwab Modern Wealth Survey, BTN Research).

Educated — 39 percent of millennials have at least a college bachelor’s degree, and another 28 percent have attended college but not graduated. Millennials were born between 1981-97 and are ages 23-39 in 2020 (source: Pew Research, BTN Research).

What We Spend in 2½ Days — If the U.S. was to fund the entire $2.3 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act by issuing new 30-year bonds at the long-dated bond’s interest rate from the close of trading on March 31 (1.35 percent), the annual debt service cost would be $31.05 billion per year. During fiscal year 2019, the U.S. had outlays of $12.18 billion per day (source: Treasury Department, BTN Research).

 

WEEKLY FOCUS – Health Provisions in COVID-19 Stimulus Legislation

Recent COVID-19 stimulus packages allocated billions to health care providers for eligible expenses to combat the disease and included health-related provisions directly impacting individuals, such as:

Sick leave and family leave: Under the Families First Coronavirus Response Act (FFCRA), private-sector companies with fewer than 500 employees and certain public employers must pay qualifying employees up to two weeks, or 80 hours, of emergency paid sick leave. Eligibility factors include personal COVID-19-related care or quarantine (at the employee’s full pay rate) or caring for an ill family member or child whose school or day care has closed due to the virus (at two-thirds their pay rate). The Act caps sick leave payments.

Also under FFCRA, qualifying employees caring for children whose school or day care has closed may take up to twelve weeks of family and medical leave. Up to 10 weeks must be paid at two-thirds their regular pay, up to a cap.

Employers will receive payroll tax credits for wages paid under the Act’s sick leave and family leave provisions. Businesses that have been forced to close are exempt from the requirement. Firms with fewer than 50 employees may also be exempt.

Health insurance: Under the Coronavirus Aid, Relief and Economic Security (CARES) Act, all private health plans must cover coronavirus testing and vaccinations (when available) with no cost sharing. High-deductible health plans will not be in jeopardy of losing their status for offering cost-free telehealth services to members, regardless of whether they have met their plan’s deductible for the year. CARES increases Medicare payments for COVID-19-related hospital stays and durable medical equipment and expands coverage of phone-based health services under Medicare.

HSAs and FSAs: CARES overturns an Affordable Care Act provision, allowing Health Savings Accounts and Flexible Spending Accounts to again be used for over-the-counter drugs without a prescription.

We hope you and your family are taking every precaution to stay safe and well. Although we currently aren’t able to meet with you in person, we are still available to answer your questions or discuss your concerns.

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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 April 2020. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI#3049613.1

Market Update 4-20-2020 – Epic Battle

Coronavirus (COVID-19) continues to dominate world news. Markets took a beating in March, but with the support of a massive monetary and fiscal response around the world, some markets have started to recover.

Presently, there is an epic battle going on between monetary and fiscal stimulus on one side and overwhelming negative economic data and declining corporate profits on the other.  While the recent rally off the lows has been extraordinary and encouraging, I am troubled that the sectors leading the recovery are traditionally defensive sectors like healthcare, utilities and real estate.  Optimally, cyclical sectors like industrials, financials, and consumer discretionary would be leading the recovery. So far, these key sectors, along with Small Cap stocks, continue to underperform.

While we believe the stock market is continuing through its four-step bottoming process (oversold, rally, retest, breadth thrust) there has been enough evidence in certain areas to move to a more neutral position on stocks. The message within fixed income sectors is similar, due to unprecedented Federal Reserve intervention, so we moving to a neutral position in bonds. These indicator improvements we’ve seen do not mean a retest is off the table. In fact, historical tendencies and leadership trends support a retest. Ultimately, the market direction depends on what happens with the coronavirus.

Chart of the week: A prolonged economic recovery may signal further volatility ahead

  • The Conference Board put together a range of potential scenarios by which investors may think about an eventual U.S. economic recovery.
  • According to their analysis, U.S. GDP would decline by -3.6% in a best-case scenario that includes a May reboot and a V-shaped recovery. In a worst-case scenario, the U.S. economic growth would decline -6.6% in 2020, or more than twice the GDP decline of 2009.
  • My outlook is along the Fall recovery line with a steeper decline in the economy.  I just pray we don’t get a virus resurgence in the fall as illustrated below.

Market_Update_4.20.2020

Hoping you are safe and well.

Sources:  Conference Board, Ned Davis Research, Dwyer Strategy

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 – April 13, 2020

Weekly_Market_Notes

For the Week of April 13, 2020

The Markets

Stocks closed higher on the final trading day before the holiday weekend. Investors appeared to dismiss jobless numbers and focus on the Federal Reserve’s announcement of new measures to provide $2.3 trillion in additional aid to local governments and businesses crushed by widespread closures. The main indexes recovered around half the losses they suffered in late March. For the week, the Dow rose 10.82 percent to close at 23,719.37. The S&P gained 10.46 percent to finish at 2,789.82, and the NASDAQ climbed 8.90 percent to end the week at 8,153.58.

Returns Through 4/09/20 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) 10.82 -16.32 -7.04 7.22 8.35
NASDAQ Composite (PR) 8.90 -8.87 4.20 12.73 11.64
S&P 500 (TR) 10.46 -13.15 -1.11 7.93 8.13
Barclays US Agg Bond (TR) 0.67 4.01 10.12 5.06 3.53
MSCI EAFE (TR) 8.30 -20.32 -13.31 -0.56 -0.55

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, NASDAQ 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. (TR) indicates total return. MSCI EAFE returns stated in U.S. dollars.

 

To Near Zero — The Fed cut its key benchmark interest rate to zero-to-0.25 percent on March 15. The only other time in American history that the Fed has cut rates to near zero was on Dec 16, 2008, a level that was maintained for seven years until it raised rates by 0.25 percentage points on Dec. 16, 2015 (source: Federal Reserve, BTN Research).

Bonds — Long-dated Treasuries produced a 32.6 percent total return over the year ending March 31. The Bloomberg Barclays Long U.S. Treasury Index, which includes all Treasury securities with a remaining maturity of at least 10 years and having at least $250 million of outstanding face value, was used as the proxy (source: Bloomberg, BTN Research).

No Job — First-time jobless claims for the week ending Feb. 1 were 201,000, its lowest level since Nov. 15, 1969. Just seven weeks later, jobless claims for the week ending March 21 were 3.283 million, a U.S. record (source: DOL, BTN Research).

 

WEEKLY FOCUS – What You Should Know About CARES Stimulus Checks

The third COVID-19 stimulus package, the Coronavirus Aid, Relief and Economic Security (CARES) Act, which passed March 27, includes stimulus checks to qualifying individuals ($1,200), married couples filing jointly ($2,400) and parents with children under 17 ($500 for each child).

Who qualifies: To receive a check, you must be a U.S. citizen or legal resident, have a Social Security number and have reported income within the bill’s guidelines on your 2019 federal tax return (or your 2018 tax return if you haven’t filed for 2019). Those guidelines are: Individuals who filed an adjusted gross income up to $75,000 and married couples filing jointly with adjusted gross income up to $150,000 receive the full amount. Childless individuals with income above $75,000 but not over $99,000 and couples with income above $150,000 but not exceeding $198,000 will receive reduced amounts.

Who doesn’t qualify: Young adults whose parents claim them as dependents will not receive any cash. Individuals who receive Social Security or Veterans Affairs disability payments are not eligible if their parents claim them as dependents. Senior citizens who live with family members who claim them as dependents also won’t receive a check.

High-earning individuals who lost their job in 2020 will not qualify if their 2019 income was above the guidelines. But they will receive a tax credit on their 2020 taxes. Parents who had a baby in early 2020 will not see a $500 check for the child but will receive a $500 tax credit on their 2020 taxes. A divorced parent who didn’t claim their child on their last return won’t receive a payment for the child.

What you need to do: As long as you filed a return and your direct deposit information hasn’t changed, you don’t need to do anything other than watch for the deposit beginning in mid-April. If the IRS doesn’t have your direct deposit information, you can wait for a check in the mail or enter bank information on a portal the IRS will create. If you divorced after filing a joint return, the check will be deposited to the bank account listed on your joint return unless the information is updated.

If you have questions about other ways the CARES Act may affect you or concerns about market volatility, please feel free to call. While our method or location may change, we’re here to serve you.

 

Securities America and its financial professionals do not provide tax 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 April 2020. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI#3038730.1

Market Update – April 9, 2020

Folks,

First, I want to wish you a happy Passover and Easter.

Everything about the last few months have been historic.  The Covid-19 is a crisis like no other we have seen in our lifetimes. In the financial markets we continue to see extreme volatility, both up and down, across most asset classes.  We have also seen unprecedented actions by governments and central banks in an effort to mitigate the economic and financial damage from dealing with the virus.

Since the low point in the S&P 500 on March 23rd, we have seen a relief rally, then another decline, and another relief rally this week.  The bounce of the low has exceeded what history suggested and has only been exceeded by a relief rally of 24% coming off the late 2008 low, which lasted over a month but ultimately led to a lower low in March 2009.  The drop from record levels in February 2020 was historic in both degree and speed and so too has been the relief rally. The broad stock market remains some 21% below the February 2020 high.

Our game plan was formed based on the way the market declined and how it tracked previous serious economic slowdowns such as 1987 and 2008/2009. So the obvious question is whether we are sticking with our game plan anticipating a retest of the low before this is all over.

market_update_4.9.2020

What are we still worried about?

  1. As of this morning, some 16 Million American’s filed for unemployment – that’s over 10% of all jobs in America lost.  That number will continue to climb over the next several weeks. How many jobs will be lost permanently, post-Covid 19, is an unknown.
  2. Small businesses have yet to get needed money from the government support programs.  Small businesses account for approximately 64% of all employment in the US.  How many of these businesses close permanently?  Another unknown.
  3. Almost 90% of the country is still in a “shelter-in-place” status through the end of April. When will that start to change?
  4. The economic shutdown was so swift that the impact has not been accurately reflected in economic report yet.
  5. Our contacts in the mortgage market suggests extreme stress in both the residential and commercial mortgages due to forbearance requests.
  6. Our contacts in the bond markets report that while the actions of the Federal Reserve has led to improvement, there is still significant stress in the credit market.

We need to see significant improvement in the above factors before overriding our game plan.  So at this point we are sticking to our game plan and would rather wait to adopt a more offensive position once the market pulls back toward the late March level.

Jim

Sources: Dwyer Strategy, Bespoke Investment Group

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 – April 6, 2020

Weekly_Market_Notes

For the Week of April 6, 2020

The Markets

Stocks slid on the final day of another volatile week, amid dismal unemployment and a spike in coronavirus-related deaths in New York. Andrew Cuomo, governor of New York, reported over 100,000 cases and 2,900 deaths. For the week, the Dow fell 2.65 percent to close at 21,052.53. The S&P lost 2.02 percent to finish at 2,488.65, and the NASDAQ dropped 1.69 percent to end the week at 7,373.08.

Returns Through 4/03/20 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) -2.65 -25.74 -17.67 3.07 6.03
NASDAQ Composite (PR) -1.69 -17.59 -5.60 8.91 9.81
S&P 500 (TR) -2.02 -22.56 -11.62 3.85 5.93
Barclays US Agg Bond (TR) 0.73 3.42 9.72 4.82 3.32
MSCI EAFE (TR) -3.76 -26.43 -20.14 -3.25 -1.82

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, NASDAQ 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. (TR) indicates total return. MSCI EAFE returns stated in U.S. dollars.

A LOT OF MONEY – The $2.3 trillion stimulus legislation, officially called the “Coronavirus Aid, Relief and Economic Security” Act (CARES), represents government spending equal to 52 percent of the $4.4 trillion of actual government outlays during all of fiscal year 2019 (source: Treasury Department).

FORGIVEN – $349 billion of the $2.3 trillion stimulus package is for small businesses that have less than 500 employees in the form of loans that will be forgiven if used for payroll and rent (source: CARES).

WHEN THE BEAR BOTTOMS – The S&P 500 had fallen 34 percent as of Monday 3/23/20 from its all-time closing high set on 2/19/20, the index’s 12th bear market since the end of WWII.  The average return for the S&P 500 in the first year following the bear market low close in the previous 11 bears is +39.2 percent, more than 3 times the +12.6 percent average gain in the 2nd year following the bear market low close (source: BTN Research).

 

WEEKLY FOCUS – How CARES Act Affects Individuals

President Trump signed the Coronavirus Aid, Relief and Economic Security (CARES) Act into law March 27. In addition to hundreds of billions of dollars in funding to businesses, healthcare and state and local governments, the CARES Act includes these measures directly impacting individuals:

Taxes and payments: Individual tax filers who had an adjusted gross income up to $75,000 and married couples who filed joint returns with income up to $150,000 will automatically receive $1,200 and $2,400 checks respectively. Individuals and couples whose income was over those limits but up to $99,000 and $198,000 respectively will receive reduced amounts. Parents will receive $500 for each qualifying child. Individuals now have until July 15 to file their 2019 federal income taxes. Taxpayers can claim up to a $300 deduction for charitable donations made in 2020 – even if they don’t itemize.

Retirement accounts: Required Minimum Distributions from IRAs and 401(k)s are suspended through 2020. 401(k) loan limits are increased from $50,000 to $100,000. Penalties are waived on early withdrawals from pretax retirement plans up to $100,000 for coronavirus-related needs in 2020. Such withdrawals will be taxed, but taxes will be spread over three years. Alternatively, individuals may replace the funds within three years. 

Student loans: Federal student loan and interest payments are automatically deferred until September 30. For individuals who qualify for student loan forgiveness, these skipped payments will count toward their 120 required payments.

Unemployment: Eligibility for unemployment insurance is expanded to include self-employed contractors and gig workers. Unemployment filers will receive an extra $600 a week (in addition to their states’ unemployment benefits) for up to four months. It also adds 13 weeks of unemployment benefits.

Homeowners and renters: Holders of federally backed mortgages can request forbearance for up to 180 days for virus-related hardships, with a second extension. Landlords with mortgages backed by the U.S. Department of Housing and Urban Development, Fannie Mae, Freddie Mac and other federal entities cannot pursue eviction of tenants for 120 days following the Act’s enactment.

If you have questions on how the CARES Act affects you personally or other concerns about our current situation, don’t hesitate to call.   Securities America and its financial service professionals do not provide tax 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 April 2020. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI#3029683.1