Presidential Virus Case and Impact on the Markets

Presidential Virus

Happy fall y’ll! The President has contracted the virus. Lawmakers are working on a coronavirus relief bill. Jobs continue to recover, but at a slower than expected rate. Last week all indexes finished up. The Dow up 1.9%, S&P 1.5%, and Nasdaq 1.5%. The markets fell mid last week as news of the Presidential virus emerged, before rallying by the weeks end.

Last Week

Despite President Trump testing positive for coronavirus, equities ended a volatile week higher. Investors became more upbeat about a potential stimulus package. The positive test for the President does creates near term uncertainty. However, House Speaker Nancy Pelosi said President Trump’s prognosis changed the shape of talks over a new stimulus package. In economic news, non-farm payrolls continued to improve with 661,000 jobs added in September. These numbers are below the consensus of 859,000 jobs. The unemployment rate dropped to 7.9% from 8.4% in August. The pace of growth in the manufacturing sector slowed in September. But still expanded with an ISM Manufacturing Index reading of 55.4.

Consumer spending was up 1% over the prior month. This is the 4th straight monthly increase, and is now down roughly 2% compared to a year ago. Initial jobless claims for the week ended September 26 were 837,000. Marking the 5th consecutive week between 800,000 and 900,0000. Continued claims, or the number of people already receiving unemployment benefits, fell by nearly 1 million. This marks the lowest level since March. The jobs report released Friday showed the U.S. economy added 661,000 jobs in September. This data was below expectations, while the unemployment rate fell to 7.9%. The economy has now recovered about half of the 22 million jobs lost in March and April. Adding 11.4 million jobs from May through September.

The Week Ahead

Looking ahead, the path of COVID-19 and the presidential election will remain at the forefront of investors’ minds. In addition, the major banks will report results starting in less than two weeks. This will provide a good barometer of the health of the overall economy. President Trump’s health is a huge macro risk with far reaching financial market implications. Just weeks away from the Presidential election, it is clear anything can happen. The base case is for a full recovery. However, polls could move in the coming weeks as voters assess his health and his tone on the virus. Furthermore, the Supreme Court nomination and the battle over fiscal stimulus remain key topics. Neither of which look to be resolved easily. Fed chair Powell will offer insights into the economic outlook today.

The COVID-19 pandemic has been on the attack for over seven months now. We are still anxiously awaiting a medical breakthrough that will help us better coexist with this virus. There is a good chance the virus may never go away, according to experts. In late September, Dr. Anthony Fauci, commented that COVID-19 vaccinations could begin as early as November or December. In all likelihood, a vaccine will not be available prior to election day on 11/3/20. As a result, things could get a bit bumpy in the markets in October based on the daily news feed. Year-to-date index performance; Dow down 3.0%, S&P up 3.6%, and Nasdaq up 28.8% through the close on Friday.

Have a great week!

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This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers. Past performance is no guarantee of future results. Historical performance figures for the indices are for illustrative purposes only and not indicative of any actual investment.

Markets Retreat after the Fed Chairman Said This

Fed Chairman

Welcome to fall 2020! Stocks rallied early last week, then fell after the Fed meeting on Wednesday. Last week all indexes finished flat or down. The Dow barely dropped 0.03%, S&P was down 0.64%, and Nasdaq down 0.56%. Tech stocks continued to sell off, leading to the Nasdaq’s 3rd straight weekly decline.

Last Week

The markets see-sawed through the week before finishing lower. Stalemate in Washington over any kind of relief bill continued. The Fed meeting on Wednesday was highlighted by projections to keep interest rates near zero through 2023. Economic data missed the mark too. Retail sales came in lower than expected. The weekly unemployment claims came in higher than expectations of 860,000. Housing starts and building permit data came in lower than expected. The decline of housing data compared to July is likely attributed to higher lumber prices.

More on the Fed. Low interest rates enhance the value of all equities. The Fed indicated this past week that it intends to keep its overnight federal funds rate target at 0-0.25% until 2023. They also said they would continue purchasing Treasuries and agency mortgage-backed securities. Chairman Powell said they will keep this stance until the labor market returns to full employment. Pre-covid unemployment rates were 3.5%.

The Week Ahead

The Federal Reserve chairman, Jerome Powell, speaks on Tuesday. Many agree the recovery has slowed, so to what degree that slowing has occurred will be seen in the latest reports. Fed chair Powell’s testimony on the CARES Act could contain market-moving morsels on Tuesday and Wednesday, as could treasury Secretary Mnuchin’s testimony on Thursday. Another week of high unemployment claims looms, but so far, the market remains relatively content with the labor market’s status. Friday’s durable goods orders offers insight into capital expenditure intentions among companies, and it’s poised to decline slightly. The elephant in the room for the market is the Presidential election, now roughly 6 weeks away.

Looking ahead to October. October is a peculiarly dangerous month to speculate in stocks. According to the Trader’s Almanac, that is especially true in presidential-election years. Since 1952, the Dow industrial averaged a 0.8% decline in those years. The S&P 500 index averaged a 0.7% drop. In Octobers of election years, the market was generally up when the incumbent party won. Not surprising as bull markets tend to favor the party in power. Clarity on the next 4 years will be here soon! Year-to-date index performance; Dow down 3.09%, S&P up 2.75%, and Nasdaq up 20.29% through the close on Friday.

Have a great week!

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How the Markets are Moving – Market Brief September 14, 2020

How the Markets are Moving

With school back in session, the markets have slumped for two weeks now. Last week all indexes finished down. The Dow down 3.3%, S&P 2.5%, and Nasdaq 4.0%. Following the long weekend, the markets fell right from the start. Technology stocks led the free fall, as investors continue to selloff the big winners. Continue reading for the latest Market Brief and insight into how the markets are moving.

Last Week

The S&P 500 index finished last week with the worst performance since June. The next coronavirus relief package hangs in limbo as Senate Democrats and Republicans remain miles apart. Investors continue to fear lasting volatility from the looming Presidential election. According to Predict-It, Democratic candidate Biden has a 17% lead over the incumbent. The Fed recently said it would no longer preemptively raise interest rates to prevent higher inflation. Instead, the Fed will wait to tighten monetary policy until there is clear evidence of inflation running above its target of 2%.

Counter intuitively, volatility indices finished much softer despite turbulence in equities. The weekly unemployment claims figured held steady at 884k, above estimates. 884K is the lowest level of initial unemployment claims since broad economic shutdowns took effect in March, suggesting the labor market continues to make progress in its recovery. The total number of people claiming benefits in all programs rose 380,000 to 29.6 million.

The Week Ahead

Technical levels may be a primary driver of flows, but a busy data slate awaits investors this week. Chinese growth rates will be released today. On Wednesday, U.S. retail sales figures are published and the Federal Reserve is meeting to update economic projections. If passed, probability is rising that any stimulus package is going to be underwhelming. The Fed’s updated projections may show slower growth, hotter inflation, and stationary policy for longer.

On the data front, Chinese growth figures are poised for a modest increase, while U.S. retail sales are expected to slip slightly. Thursday’s unemployment claims will be closely watch for any reversal higher, while housing data is expected to remain robust. Lastly, an updated look at consumer sentiment will close out what looks to be a busy and pivotal week for global financial markets.

Year-to-date index performance; Dow down 3.06%, S&P up 3.41%, and Nasdaq up 20.96% through the close on Friday.

Have a great week!

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This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

What to do When Receiving Life Insurance Money

Life Insurance Money

Recently, I contributed to an article about receiving life insurance money. The Q&A is below followed by a link to Melanie’s full article on the website Meet Fabric.

So do you have an order of things/checklist that people should go through when getting a life insurance payout? 

Receiving a life insurance payout is no different than a financial plan without life insurance proceeds. People have current needs to address. These vary from paying-off debt, building an emergency fund, saving for retirement, replacing the income of the deceased, paying for the final expenses of the deceased, etc. As a financial advisor providing comprehensive planning, I look at everything for my clients. So upon receiving a life insurance payout, the families needs are addressed first. Next, a go-forward plan is built upon their current situation.

For example, the proceeds going to a family who is debt free and the surviving spouse is still able to work. The priority may be to fund a college education account and increase retirement savings. In another example, the surviving spouse is a stay-at-home parent, and carrying mortgage and credit card debt. For this family, it may be in their best interest to pay-off the debt and use the remaining funds to support day-to-day living expenses. 

Also, one of the stories included someone who received a life insurance payout and kept the money in the interest-bearing account from the company and not get a check into her account. Do experts typically advise leaving it in the interest-bearing account, or taking it out and investing it instead?

Upon the death of a loved one, we encourage the beneficiary to receive the proceeds directly. This allows the beneficiary to pay final expenses and evaluate where the remaining proceeds should be allocated. If the beneficiary already has a comfortable savings account balance, and has a long-term investment plan, than yes, investing is a better option for long-term growth than an interest bearing account. Albeit, taking on more risk.


Do you have any tips for someone that is really emotional and maybe not in the best mental space to make financial decisions? How long should they wait to make a decision? How can they do what’s “best” for their money while dealing with grief? 

There is always emotional grievance. That is why hiring a financial professional to guide you through this period is essential. Your advisor will make decisions that exclude the emotions. Part of the planning I do for clients is to run updated scenarios, with the top industry software, of their financial position including the proceeds. This removes the emotions of planning and allows the family to make the best decisions, taking into account multiple options with their proceeds. As a fiduciary, I always serve with my clients best interests, whether a death in the family has occurred or not. It is important to work with a financial advisor who operates under the fiduciary standard of care. 

Follow this link to read the entire article: https://meetfabric.com/blog/what-should-you-do-with-a-life-insurance-benefit

Follow this link to learn more about life insurance.

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This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

The Great Divide – Economy and Markets

The Great Divide - Economy and Markets

The Dog Days are here! School is back in session, some in-person, some virtual. The virus continues to be present and the economy slowly is rebuilding while the markets continue to climb. Last week indexes finished slightly up. The Dow up 1.8%, S&P up 0.64%, and Nasdaq up 0.08%. The S&P began the week rising for it’s 7th straight session in the green and briefly passed the all-time high on Wednesday. The flat performance was a result of uncertainty with economic data, the latest virus patterns, and a second fiscal stimulus package that never was.

Last Week

The S&P 500 index is close to record territory once again. The economy and the stock market seem far off. Thursday marked the 100th day since the market lows on March 23. The markets have rebounded 50% since then. A strong recovery for investors, while millions have lost jobs and over 160,000 Americans have lost their lives. Management reports on earnings calls have been surprised at the speed and scale of the demand rebound. Many companies expected a short lived drop, followed by a gradual recovery. Not so much the “snap-back” experienced.

It is encouraging that the U.S. has added back millions of jobs lost during the first wave. Last Thursday marked the first jobless claims report under 1 million since March. Also, from earnings calls, consensus views are pointing towards record breaking earnings next year. Strongly supported by interest rates, which continue to be favorable for the foreseeable future. Investor fears over companies falling into financial distress are offset by the Feds support of buying bonds and Congress spending on relief. Retail sales also rose in July 1.2% higher than June, setting a new all-time high, and another sign of recovery.

The Week Ahead

The equity markets will have their eyes on Washington in hopes of a new stimulus. On Thursday, unemployment claims will be reported and the hope is that a under 1 million trend goes on. Continuing unemployment claims are still above 15 million, however, this is much lower than the 25 million in May. Stress for parents remains as school openings have created more unrest than security. How the school year unfolds for parents will no doubt impact the workforce productivity. Some areas of the country have already started so watching closely for signs that reopening in person can be done safely is key.

At the end of the day, it is clear the markets and the economy are not one in the same. Very different directions, as reflected in year-to-date index performance; Dow down 2.1%, S&P up 4.4%, and Nasdaq up 22.8% through the close on Friday.

Have a safe week!

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This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

Market Brief – 2020 Mid-Year Review

Market Brief 2020 Mid-Year Review

Dog days of summer have arrived. For 2020, it feels like the dog days arrived in March. From the moment the pandemic began to spread, to stay-at-home orders, to lock-downs, to protest rallies, to reopening phases, and back to more restrictions… what a year, and we are only halfway home. Didn’t even mentions the murder hornets! Let’s take a minute to catch our breath and see where we have been, where we are, and where we will go. Currently, we are in the midst of earnings season. Big name stocks will report second quarter earnings this week. Last week the main indexes finished mixed. The Dow up 2.3%, S&P up 1.25%, and Nasdaq down 1.1%. The S&P 500 outperformed the Nasdaq index by the widest margin since February 2016. The markets were mainly buoyed by progress of a virus vaccine.

What Happened?

The year started off strong through mid-February. Early cases and the fast spread of the coronavirus took hold in Asia and quickly jumped country borders to become a worldwide pandemic. Just about a month from the market peak in February came the market lows in March, a 33.9% drop for the S&P index. In just a few weeks, the U.S. economy erased 7 years of employment gains. 30 million Americans lost jobs, driving unemployment as high as 22% in April. By June, the unemployment rate hovered around 14%. Still extremely high, but significantly lower from 2 months prior.

In March, the Fed stepped in and provided a backstop to the equity markets. Stabilizing and possibly adding turbo to the economy via stimulus for individuals and businesses. The pandemic accelerated tech disruption. It changed how companies reach consumers, how supply chains work, how to deal with remote employees, and still build their brands.

Where Are We Today?

Year-to-date index performance; Dow down 6.54%, S&P down 0.2%, and Nasdaq up 17.0% through the close on Friday. Last week, Treasury Secretary Mnuchin said the Trump administration and Senate leadership are discussing a new stimulus bill. The end of July is the target time frame as the previous stimulus benefits are ending. The housing market reports are exceeding expectation. Current metrics show a shortage of existing home inventory, limited housing labor to build new homes, and a shortage of entry level homes for the first time home buyer. Historically low mortgage rates help boost the housing demand. Labor income across the board is surging and consumer spending is rebounding.

The markets are in fairly good position today. Much of the strength is attributed to the Fed and swift implementation of monetary policy. With interest rates near zero, investors are willing to pay for future earnings. Growth stocks have done well, value stocks have lagged. When the economy improves and interest rates rise, growth stocks will be challenged by high valuations. Communities have begun to re-open. The U.S. seems to have chosen independence over lock-down. This has led to a recent uptick in coronavirus cases. Deaths due to the virus have decreased as health care has gotten smarter about how to handle symptomatic cases. The resurgence of hiring and end of mass layoffs indicate the job market is recovering. While the decreasing layoffs and increasing hires offer hope, the reopening process has been trending in the wrong direction.

Where Are We Going?

It’s election season. From here on out, politics will headline media reports. Snippets and quotes from leadership on both sides will sway the markets. Bigger than the election is the Fed’s actions. Interest rates are low and likely to remain low for a very long time. This creates a scenario of easy lending and the opportunity for trillions of dollars to remain invested in the market. The future months will measured by the resurgence of the coronavirus, how quickly a vaccine can be developed, another round of monetary stimulus, and the upcoming election. If you thought the first half of 2020 was a roller coaster, the second half might be just as wild! Take care and be safe.

Market Brief’s are taking a summer hiatus, see you at the end of August!

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This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

Market Brief July 6, 2020

Market Brief July 6 2020

Welcome back after the holiday weekend. The markets welcomed us back with a big day today, all indexes were in the green! This positive trend is a continuation from the previous week. Last week all indexes finished up. The Dow up 3.3%, S&P 4.0%, and Nasdaq 4.6%. The markets had a short week due to the holiday observance on Friday. Virus cases continue to rise. The Fed remains extremely helpful. And election season is right around the corner.

Last Week

The markets shrugged off the rising Covid cases. The S&P 500, Dow, and Nasdaq all finished their best quarters in decades. Manufacturing data was better than expected. June payroll was released last Thursday morning, and the positive report sent stocks soaring. The report indicated that 4.8 million jobs were added in the month of June. The U.S. reported a daily record of 52,000 new cases in a 24-hour period. The Fed continues to pump money into the economy. Chances of another round of stimulus are high. And progress for a Covid vaccine get better each day.

The Week Ahead

The markets are in a historically bullish time frame, June 26-July 11. Historically, the market gains 6.3% over this time frame. If history repeats, the indexes could hit all-time highs. On the flip side, it is an election year. The markets tend to fall prior to the election. The beginning of earnings season could help buck the trend as quarterly reports will be released in mid-July.

The U.S. labor market has recouped nearly 1/3 of March and April job losses, but employment fractures linger. Initial jobless claims have provided one of the most current pictures of the state of the economy and have stayed stubbornly high. Continuing claims came in at 19 million last week, so many Americans are still receiving unemployment benefits. This suggest s that either the first wave of job losses continues, or businesses that have re-opened are beg inning to shutter. With the increase of Covid cases, another lock-down is not likely, but delayed progression is inevitable.

Year-to-date index performance; Dow down 9.5%, S&P down 3.1%, and Nasdaq up 13.8% through the close on Friday.

Have a great week. Stay cool and safe!

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Market Brief June 29, 2020

Market Brief June 29 2020

Summer is full swing and so is the heat! The markets continue to sweat up and down. Last week all indexes finished down. The Dow down 3.3%, S&P 2.8%, and Nasdaq 1.9%. The markets fell mid last week as virus cases rose. More states delayed or paused reopening plans. Some small businesses chose to close their own stores.

Last Week

The V-shaped economic recovery is being challenged. Virus cases rose over 30% in some states last week. 33 states showed increases in cases. States, such as Texas and Florida, closed bars and reduced restaurant capacity. Bank shares fell as the Fed ordered them to stop share buyback programs and dividend payouts. The global economy shows signs of recovery based on PMI economic reports. The indexes fell for the second weekly loss in the past three weeks.

The Week Ahead

The markets are closed on Friday in observance of Independence Day holiday. Jobs data being released on Thursday morning will headline the reporting week. Pending home sales in May were expected to increase 18%, and the reading came in at 44.3% for May! That is good news for the economy. In fact, the coronavirus contraction could end up being the shortest U.S. recession ever. And the recession may already be over. Despite the worst part potentially behind us, recovery will take a long time. During 10 recessions since 1950, it took an average of 30 months for the lost jobs to finally return. Not to mention, the two previous recoveries took longer, 4 and 6 years respectively. Many more jobs were lost from the virus, so the rebound might be here now, but full recovery may take much longer.

To put the recession behind us two points are in focus. The first, improving health situation. Second, continued federal government support. The latter picture is more clear. The former, not so much. Federal unemployment benefits expire at the end of July. However, with the recent rise in cases, renewing these benefit programs may be a reality. Current discussion for another round of stimulus includes $1.5 trillion package. At the end of the day, the markets continue to worry about another outbreak. Year-to-date index performance; Dow down 12.3%, S&P down 6.8%, and Nasdaq up 8.74% through the close on Friday.

Have a fun and safe 4th of July holiday!

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Market Brief June 8 2020

Market Brief June 8 2020

Despite protests, ongoing pandemic, and fresh trade war barbs with China, the stock market rally continues. Positive news regarding a vaccine, European stimulus, and better than expected unemployment reports spurred the market. Indexes were up across the board, the Dow up 6.8%, S&P up 4.9%, and the Nasdaq 3.4% on the week.

This Past Week

The recession that started in March is the sharpest downturn since the Great Depression. As it turns out, it was also the shortest. This does not mean the US is fully recovered, or even close; a full recovery is going to take at least a few years. But look for more positive numbers from here on out, including next week’s reports on retail sales, industrial production, and home building. Friday’s employment report should leave little doubt that the US economy has already hit bottom and is starting to recover.

Meanwhile, initial jobless claims fell for the ninth consecutive week, and continuing claims remain below the peak hit in the week ending May 9, both consistent with an economy that is already hit bottom. The May jobs report unexpectedly showed a net 2.5 million jobs returned to the labor market and the unemployment rate dropped to 13.3% versus rising to consensus 19.4%.

The Week Ahead

Wednesday’s Federal Reserve’s monetary policy statement and economic projections is the week’s key risk event. One data point does not define a trend, so Friday’s blockbuster employment report is unlikely to materially change their somber economic outlook. Wednesday and Thursday’s CPI and
PPI reports offer updates on U.S. inflation.

Profits will be down substantially in the second quarter, but should recover strongly in the several quarters thereafter. No one knows for sure what the second half will bring, much less 2021 and beyond. But we think that, like in the past, those who have faith in the future will be rewarded. Year-to-date index performance; Dow down 5.0%, S&P down 1.1%, and Nasdaq up 9.4%.

Have a safe week!

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Market Brief June 1 2020

Market Brief June 1 2020

Optimism regarding the re-opening process is getting stronger. Indices finished the month of May up 4-6%. Unemployment continues to grow. Economic reports, as expected, are not good.

This Past Week

The markets finished with the best 2-month gain since April 2009. Equities moved higher for the week as economic activity starts to improve. More states and businesses continue to reopen. On Thursday, China passed a National Security Law that jeopardizes Hong Kong’s autonomy. These increased tensions may lead to Hong Kong losing their special trading status with the United States. Initial Jobless Claims came in at 2.12M. Continuing Claims reported 21.1M are compared to estimates of 25.7M. Indexes have risen 36.06% from the lows in March.

Week Ahead

As far as employment is concerned, losses have reached levels not seen since the 1930s. Social unrest reflects the 1960s, and city-wide curfews are expected. U.S./China continue to offer headlines news. The focus this week will be on the May jobs and U.S. manufacturing reports. If the job report figures are less than 8 million, this is positive for the economy.

From a technical viewpoint of the markets, investors may be in a good position. TDAmeritrade research released the following statement, “95% of stocks in the S&P500 are trading above their 50-day moving average. Higher than any point since at least 2003. Near-term breadth remains robust. Historically, when this metric exceeds 90% for the first time, it is a statistically significant event. Pointing towards potentially strong equity performance ahead.” Good news for investors.

Looking ahead, the path of reopening different states, and tensions between China and the U.S. will be closely watched by investors. Watch next week’s unemployment report closely, predicted to show a 19.6% jobless rate. The rally in stocks, could continue as markets tend to start to ratchet higher after data starts to bottom. Year-to-date index performance; Dow down 11.1%, S&P down 5.8%, and Nasdaq up 5.8%.

Have a safe week!

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This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

Market Brief May 26 2020

Market Brief May 26 2020

The indexes all finished higher last week on the hopes of Moderna reporting a promising phase 1 of the Covid vaccine. Fed Chairman Powell also said the Fed has more tools to support the economy. Markets fell on news of renewed tension with China. The Dow, S&P, and Nasdaq indexes all finished up last week Dow up 3.3%, S&P 3.2%, and Nasdaq 3.4%. Dow’s biggest week since April 9.

Last Week

The U.S. death toll passed 95,000. Cases passed 1.5 million. Despite the rising cases, more states re-opened. Another 2.4 million applied for unemployment claims last week. Again, it is bad news, but not as bad as the prior week. Which means improvement, and closer to a state of recovery. Typically, the average level of initial claims for a month peaks two months before the economy hits bottom. April looks like it was the highest month for initial claims, which signals an economic bottom should come in June. Millions fell behind on their mortgages.

Air traffic is up. The number of passengers passing through TSA checkpoints rose to 267,451 this past Sunday, versus a Sunday low of 90,510 on April 12, a near tripling of passenger activity. Yes, this past Sunday was a holiday weekend, but last Sunday (May 17) was already up 180% from the low. And in Congress, the House passed another stimulus bill, which the Senate shut down. Long story short, we still do not know what the future holds. Economic reporting is ugly, earnings reports are awful, and there is no forward guidance to stand on.

Week Ahead

Holiday shortened week, but plenty of economic reports to give insight into the strength of recovery. Along with continued weekly jobless claims, April new home sales reports and mortgage applications.

The recession started in March and is the deepest since the Great Depression. However, it may also be the shortest. A full recovery is a long way off. We won’t see the level of real GDP we had in late 2019 again until late 2021. We might not see an unemployment rate below 4.0% until 2024. With every passing day, the lockdowns take an increasing toll; the sooner they end, the better. Year-to-date index performance; Dow down 14.3%, S&P down 8.5%, and Nasdaq up 4.0%.

Have a safe week!

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This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

Market Brief May 18 2020

Market Brief May 18 2020

Fed Chair Powell reiterated the committee’s outlook for the economy was highly uncertain and that unemployment may peak in the coming month. Another 2.9 million Americans filed for unemployment benefits, bringing the 8-week total to nearly 37 million. The bright side, continuing claims ‘only’ rose to 22.8 million from 22.4 million. This is another week of increasing claims at a decreasing rate. The markets all finished down for the week. It was the Dow and Nasdaq’s worst week since week ended April 3, and the S&P 500’s worst week since March 20.

Last Week

Volatility rose last week as confidence in the recovery and re-openings went back and forth. With some parts of the country slowly opening, there are glimmers of hope. Consumer confidence, measured by the University of Michigan, rose slightly in the May preliminary reading. Mortgage applications rose for the fourth straight week. Refinancing slowed, but it is still up 200% compared to the previous year, spurred by low interest rates.

At the same time, U.S and China are back at each other. The Trump administration ordered the federal employee retirement fund not to invest in Chinese companies. Specifically, companies that could be sanctioned for actions supporting the spread of the coronavirus. The unemployment total for the last two months has now reached 36.5 million Americans. For the week, the Dow fell 2.7%, the S&P 500 fell 2.3%, and the Nasdaq fell 1.2%.

This Week

As the economy goes through an unsynchronized reopening process, it seems apparent that any decline in unemployment is unlikely to match the pace of its ascent higher. Economists are projecting the U.S. economy to contract at 6.6% this year. The previous estimate was a contraction of 4.9%. The high unemployment, coupled with declining consumption and a fresh spat between U.S./China keeps everything on the rocks.

Politically, lawmakers are weighing a fresh stimulus. The House passed the $3 trillion spending plan. On the data watch, U.S. building permits will be released on Tuesday. This gauge indicates housing activity as some states edge back to “normal”. Thursday, weekly unemployment claims will be released, and Fed Chair Powell speaks. Wall Street investors will be very tuned into what he has to say.

Year-to-date index performance; Dow down 17.0%, S&P down 11.4%, and Nasdaq up 0.5%.

Have a fun and safe Halloween week!

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This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

Market Brief May 11 2020

Market Brief May 11 2020

The markets finished up last week. Surprising to some investors as the unemployment numbers for April hit a record setting 20 million. This equates to an unemployment figure of 14.7%! To put the job loss in perspective, from October 2010 to February 2020, the economy added 22.1 million jobs. Last Thursday, 3.1m former workers filed for unemployment benefits. However, it was the 5th straight week when the number of applicants fell. For some, this is a signal of improvement. This also may point to the fact that the worst is behind us. The forward looking market is ready for a turnaround.

Last Week

States are re-opening and sharing their blueprints with others to follow. Companies reporting earnings last week continued to withdraw guidance. Companies are sharing less than optimistic commentary. Economic reports have met the ugly reality, but have not exceeded those benchmarks. This has helped prop up the markets for now. Along with positive news regarding potential vaccine for Covid. The Dow, S&P, and Nasdaq indexes all finished up last week – Dow up 2.6%, S&P 3.5%, and Nasdaq 6.0%.

During the earnings came the release of dividend status. The number of dividends increased in April totaled 19, down from 30 a year ago. Year-to-date, dividend increases totaled 144, down from 148 over the same period a year ago. Twelve dividends were cut in April, compared to one cut a year ago. Twelve dividends were suspended in April, bringing the total to 22 for 2020. This is a sign of uncertainty and caution among companies. Instead of paying a dividend, these companies are raising cash on hand, paying down debt, or using for day-to-day operating expenses until “normal” returns.

Week Ahead

Investors are currently looking at the bright side and trying to figure out when normal is back. Closely watching how states are re-opening and if Covid cases begin to increase in those states. The retail sales report on Friday will tell us one of two things. Is the consumer completely locked down, including their wallets? Or, has the quarantine led to regular or even higher spending with people sitting around their house all day? Other economic news, CPI and PPI will both be released next week as investors digest the impact of the slowdown on both the economy and the stock market.

Continued U.S. and China tension is back on the front burner. Similar to the back-and-forth in 2019, market swill ebb and flow with the latest tweet, response, and action taken by each side. Year-to-date index performance; Dow down -14.7%, S&P down -9.3%, and Nasdaq up 1.7%.

Have a safe week!

Click here if you would like to learn more about your options and if we can assist you with your wealth management, investment, and retirement planning.

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

Market Brief May 4, 2020

Market Brief May 4 2020

The markets are unsure. Strange to say it, but the markets do not know what to think of the current situation. The market makers are trying to figure out what happens next. Right now, we are sitting in no man’s land. The volatility has calmed down. Current volatility is less than half from the peak in March. Unemployment is through the roof. 30 million unemployment claims have been filed in the last 5 weeks. The Fed stepped in, like the knight in shining armor and made tremendous moves to help companies and individuals. However, we are not back to business as usual. And we do not have a definitive time frame to do so. And we still have people dying everyday and more are still contracting the virus.

Last Week

The markets went up as states slowing began allowing businesses to reopen. Better news came on Wednesday when the drug company Gilead, announced it’s drug met preliminary goals in a study. The end of the week was not as good. Thursday’s jobless claims piled on an already ridiculously high number. On Friday, news of the U.S. retaliating towards China sent the markets even lower heading into the weekend.

For the week, the Dow finished down 0.22%, S&P 500 down 0.21%, and the Nasdaq down 0.34%.

Looking Ahead

Focus will be on the states that reopened; Georgia, South Carolina, and Tennessee. If there is a spike in virus cases, restrictions may be imposed. If those states do not see a resurgence in virus cases, others might be encouraged to lift their restrictions sooner. The economic data is numbing. The has not been positive economic news as of late. Investors understand it is ugly, and the reports could get worse before improving.

Treasury Secretary Mnuchin has forecast a fall in 2nd-quarter growth, with a bounce back in July. For the year, the Dow is down 16.8%, S&P 500 down 12.4%, and Nasdaq down 4.1%.

Have a safe week!

Click here if you would like to learn more about your options and if we can assist you with your wealth management, investment, and retirement planning.

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

Market Brief April 13 2020

Market Brief April 13 2020

Looking for a job? So are the other 17 million that have lost their jobs in the last 3 weeks. COVID-19 confirmed cases passed 1.7 million, with almost 30% in the United States. And $62 billion was pulled from equity funds last week. Not to mention consumer sentiment fell to a 9 year low. So how did the markets finish the week before Easter? How about the best week since 1974! The Dow, S&P, and Nasdaq indexes all finished up last week. Dow up 12.7%, S&P 12.1%, and Nasdaq 10.6%.

The markets seem positive that the end is near. Stocks rally last week was mainly driven by the Federal Reserve action. Pumping $2.3 trillion in additional lending programs. The S&P 500 recorded the best week since October 1974. Why would the markets go up with all the bad news? Markets are forward looking. Pricing in all the information and looking through the mud ahead. Economist estimates for the second quarter are all over the board. All agree Q2 is in the tank. Q3 is where the predictions become less clear. Some believe a continued slowdown, while others expect a massive recovery. Hard to grasp to say the least.

The Week Ahead

Following updated COVID-19 updates will be oil and corporate earnings headlining the week. All economic data is basically factored in and the attention moves to the individual companies performance and expectation. How bad was Q1? What will happen in Q2? What changes were made to adjust to quarantine life? When can employees work full-time again? Bank reporting is heavy this week, led by JP Morgan, Wells Fargo, and Bank of America.

Unemployment numbers on Thursday will be watched closely. Two other economic reports worth noting are the Retail Sales on Wednesday and U.S. Building Permits on Thursday. These report will be for the month of March. Both expected to be ugly. Year-to-date index performance; Dow down 16.9%, S&P down 13.6%, and Nasdaq down 9.1%.

Have a safe week!

Click here if you would like to learn more about your options and if we can assist you with your wealth management, investment, and retirement planning.

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

Market Brief March 30 2020

Tiger King Market Update

Yes, Tiger King fans, this post is for you. Since the Tiger King rage went viral last week, the market has also hit record setting performance days! Is it safe to say Joe Exotic should be the next Fed Chairman? It’s not a bear market, not a bull market, but a Tiger market! I’m all in … to the show, not stocks…

OK, time to get serious. Market dip to market rip! The Dow soared by 21% over a 3-day span, closing up 12.77% for the week. The largest 3-day gain since October 8, 1931, during the Great Depression. The Dow’s weekly finish was the best weekly gain since 1938, despite losing 4% on Friday. The S&P and Nasdaq indexes also finished up for the week, 10.26% and 9.05%, respectively. The indexes ignored the record weekly unemployment claims of 3.28 million! A record setting number in it’s own right. The U.S. also passed China last week with the number of virus infection cases. The saving grace for markets last week was the announced $2.2 trillion relief plan.

Despite the market bounce that began last Tuesday and continued today, large and fast rallies are frequent characteristics of longer-term bearish periods in the market. The eventual recovery from this public health crisis will be gradual, similar to the financial crisis recovery. The recovery is still unknown, and according to Dr. Anthony Fauci, “the virus makes the timeline,” and that will probably determine the markets recovery as well.

The Bailout

Stimulus, bailout, virus relief, The CARES act, whatever you want to call, came to the rescue at the end of last week. The fiscal policy pumps trillions into the economy, aimed at providing liquidity to households and businesses. These include IRS checks, a major expansion in unemployment benefits, as well as a broad combination of grants, loans, and loan guarantees for businesses (large and small), hospitals, schools, and state and local governments. This stimulus is designed to buffer the economy in the short-term, as the virus hit the hard and fast across the country. Long-term the effects may linger for some time. The upcoming quarterly earnings season will provide investors better guidance on how hard companies have been hit.

The Week Ahead

Policymakers’ huge support has helped stabilize risk, but long-term market stability and declining volatility hinges on the apex of coronavirus infections being in the rear-view mirror. Economic reports for the week include a slew of data including manufacturing and employment. This week’s focus will be on the jobless claims number, showing a more clear picture of the economic state.

Year-to-date index performance; Dow down 24.2%, S&P down 20.96%, and Nasdaq down 16.4%. Volatility remains high and historically market rallies come back after volatility drops to normal range.

Have a safe week and remember to go for a walk outside (after finishing the Tiger King season on Netflix)!

Click here if you would like to learn more about your options and if we can assist you with your wealth management, investment, and retirement planning.

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

Coronavirus and Panic for Life Insurance

Life insurance and the panic for life insurance

The events of the last two months have brought plenty of craze to the insurance world, specifically life insurance. I am using this post to outline and provide clarity around life insurance planning during this time time of a virus outbreak.

People are looking for life insurance due to the coronavirus.
Should people panic and buy life insurance?

The best practice for whether to buy insurance depends on your individual needs. Despite coronavirus, you either need a policy to protect family, business, estate, etc., or you do not. The coronavirus certainly can cause you to think about your plan, as there is no cure at the moment, which draws concern to folks without a plan in place. However, the virus is no different from any other health scare or accident – cancer, heart attack, car crash – all these events will prompt you to rethink your plan and get coverage in place.

Follow this link to learn more about the different types of life insurance.

What should people know and look for that are interested in
buying a policy right away due to the pandemic?
 

Complete an application while you are healthy. If you wait and contract illness, the insurance companies will review your medical records and may have hesitation to approve your policy at the preferred rating. Worse yet, hospitalization or death could seriously impact your chances of an approved policy.

Are there any exclusions people should be aware of? 

If you are healthy and need coverage get it. Do not wait. The younger and healthier you are, the more favorable the cost. It is uncertain how the underwriters at the insurance companies will consider an illness, such as the coronavirus, when reviewing insurance applications. 

What could keep someone from being able to get a life
insurance immediately?
How long should they expect it to take
for the policy to start?

Insurance policies are largely based on your health and age. If you are old and have poor medical history, chances of getting a policy approved would be difficult. Previous medical history with life threatening illnesses, such as cancer, can also impact your ability to obtain coverage. Having bad habits, such as using tobacco, or a bad driving record, such as multiple DUI’s, also impact your ability to get an approved policy at the best rate. Policies can start at the time of application with what is referred to as “Temporary Life Insurance Coverage”. This coverage begins at the time of application, so the applicant has coverage while waiting for the full underwriting process to be complete. Applications can take a week to as long as a couple of months, depending on the applicant’s medical and lifestyle background. Also worth noting, if the applicant has recently traveled abroad to the virus hotspots, this too could cause a postponed application. Ultimately, the insurance companies are looking at the applicant and asking the question, how big of a risk is this person?

Click here if you would like to learn more about your life insurance options and planning.

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

Portfolio Management Perspective

Portfolio Management Perspective

Review of Benchmarks, Strategy, Risk, and Performance – Perspective from one of our Portfolio Manager’s – March 13, 2020

Whenever the topic of investing is discussed we are conditioned to think first of the New York Stock Exchange opening bell and Wall St. bankers in Brioni suits. And why shouldn’t we? Over the past 200 years, stocks have arguably been the most powerful generator of wealth.
 
That rosy conventional wisdom has the benefit of a perpetual time-horizon and an ambivalence towards risk. As we all know, stocks might be notorious for rising over time, but they also can produce nasty results if improperly managed. Very few of us are fortunate enough to be ambivalent towards risk or the trajectory of our investments – if we were, being 100% invested in the DOW or S&P 500 would be a fine strategy. That is where financial planning and asset management comes in.
 
As a conservative asset manager, we are tasked with two main objectives a) produce a rate of return that achieves an objective (generally retirement/self-sufficiency) and b) protect against downside and volatility.  Our definition of success in both goals is directly related to the specifics of your financial situation. 
 
Since the inception of our Total Return strategy in 2004, we’ve employed a mix of equities (stocks), commodities, fixed income, and cash to achieve the objectives stated above for clients. At any given point, we may be more dependent on one asset class or another to provide upside thrust or downside support for our clients’ portfolios. As you might expect, this asset mix is largely dependent on (among other things) the outlook for the economy, interest rates, and the inclination for risk in the markets.
 
In some environments, such as 2017, the stock market and high-quality individual equities genuinely are the best option for capital appreciation.  In other periods such as late 2018 and 2019, a choppy market and unclear fundamental prospects warranted a higher concentration in traditionally less economically sensitive asset classes like bonds, gold, and cash. No matter the environment, we are continually assessing our outlook and corresponding exposures.

In the client updates over the past week, we noted how our conservative positioning at the outset of this decline was yielding promising results. That remains the case, and when we evaluate client performance relative to equity benchmarks (DOW, S&P 500, NASDAQ), we are heartened by the fact that client accounts have a) declined substantially less than the benchmarks and b) exceeded the results previously experienced in similar periods of stress.
 
Since our inception, having a trained eye on risk management has allowed clients to generally experience asymmetric rates of upside and downside participation vs. equity benchmarks. In other words, we’ve consistently achieved more upside than downside through the course of market trends. 
 
Finally, we understand that the personal nature of the virus and the corresponding downside reaction in markets can be especially anxiety provoking.  And while this is everybody’s first time managing through a true pandemic, it is far from our first time managing through a panicked market.  We will get through this turbulent time and be prepared to deploy the capital we’ve preserved throughout the episode.

Click here if you would like to learn more about your options and if we can assist you with your wealth management, investment, and retirement planning.

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

Market Brief March 9 2020

Market Brief March 9 2020

The post today is to continue combating the chaos being reported. Markets dropped dramatically this morning as uncertainty around Coronavirus continues. Headlines I read this morning included Italy instituting the death penalty for buying surgical masks, fining people for leaving their houses, releasing 50,000 inmates from prison, USA having higher mortality rates than elsewhere in the world, new cases continuing to surge and spread to 100 countries, etc etc etc. I nearly found myself getting caught up in the concern. So, I started evaluating our portfolio positions, diversification, and performance. The results are quite helpful so I wanted to share.

The Market and Portfolio Allocation

From October to December 2018, the S&P 500 experienced a 17.51% drop. This time frame and index is being cited on the news as a comparison. As of right now the S&P 500 has experienced a total loss of 17.32% from the market high on Feb 19th. Although this drop occurred over a shorter period of time, this volatility is nothing new to those of us in the industry, but it also isn’t anything new to YOU. Majority of readers have been clients since Oct 2018, and many of you were uncomfortable, but really didn’t feel the weight of a 17.51% drop in the S&P 500 index.

This probably feels more substantial because of the constant bombardment of updates, but it has not been yet. We probably will get to the point where that will change, but remember that we are not investing in the S&P 500 index alone. The index is comprised of 505 (not a typo) large market cap U.S. domiciled companies, many of which are technology based. We are investing in many many more than 500 companies, we are investing in many different countries, we are investing in many different sectors, and we are investing in many different market cap sizes. As a result, our portfolios have continued to experience smaller losses than the S&P 500 alone. This is a very important piece of our overall strategy.

What is your plan? Volatility spikes, large selling occurs, and uncertainty is prevalent in the market and economy, schedule a call today. Let’s talk and determine how we can help you be prepared.

The Week Ahead

With that said, the market shockingly finished positive last week! As of close on Friday, the Dow finished up 1.8%, S&P 500 up 0.6%, and Nasdaq up 0.1% for the week. The Dow’s jump last Monday was the highest single day gain in the Dow history, finishing up 5.1%. This quickly evaporated due to the Fed’s actions of cutting interest rates 0.5% on Tuesday. The “Biden Bounce” lifted stock markets on Wednesday. The Coronavirus fears dominated headlines Thursday and Friday as cases in the U.S. increased.

Weaker economic data seems inevitable. Entities globally are taking cautionary steps to slow the virus and companies continue to lower guidance. The virus concerns overshadowed strong economic data last week from the non-manufacturing ISM and the February non-farm job reports. Unemployment rate dropped to 3.5%, mortgage applications and refinance activity surged.

The week ahead will duplicate last week. All eyes on the virus and reports of decline/improvement in cases around the world. On Saturday, the oil price war increased, as Saudi Arabia announced the largest price cuts in nearly 20 years. Oversupply of oil while demand is low? Complete opposite of Economics 101.

Year-to-date index performance through Friday, March 6; Dow down 9.37%, S&P down 8.00%, and Nasdaq down %.

Have a great week and keep your seat belt buckled!

Click here if you would like to learn more about your options and if we can assist you with your wealth management, investment, and retirement planning.

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.