“Your Financial Choices” The show airs on WDIY Wednesday evenings, from 6-7 p.m. The show is hosted by Valley National’s Laurie Siebert CPA, CFP, AEP®. This week, Laurie will discuss: “Family conversations and estate planning.”
Laurie will take your calls on this topic and other inquiries this week. This show will be broadcast at the regular time. WDIY is broadcast on FM 88.1 for reception in most of the Lehigh Valley; and, it is broadcast on FM 93.9 in the Easton and Phillipsburg area; and, it is broadcast on FM 93.7 in the Fogelsville and Macungie area – or listen to it online from anywhere on the internet. For more information, including how to listen to the show online, check the show’s website www.yourfinancialchoices.com and visit www.wdiy.org.
Valley National and I are pleased to announce we have converted to NaviPlan’s fantastic and powerful financial planning software. The most impressive aspect about NaviPlan’s approach is to give the financial planner the ability to keep things simple or, alternatively, drill down deep into the details – at a single click. NaviPlan provides the best calculation engine in the financial planning industry that easily compares “what if” scenarios, side by side comparison of Current situation versus Recommended, and many more benefits. It has received the financial planning industry’s best software award – and, we agree. Call or email me for details on how this tool can assist in your planning.
The stock market is breaking records this year faster than Barry Bonds. Are we implying that Fed Chairman Ben Bernanke is “juicing” the market? Let’s just say the recent leaps seem a bit unnatural.
For the 25th time this year, the Dow notched a new all-time closing record on Friday. The S&P 500 hit its 19th record close of the year, and the tech-heavy Nasdaq index hit its highest closing price since those bubbly dot-com days of September 2000.
Bernanke spoke at a conference this week and assuaged investor concerns that a tapering of bond purchases means that interest rates will rise next year. Even if the economy hits a 6.5% unemployment rate, the federal-funds rate might remain at 0%, he said.
Bernanke, in fact, has “ceded control of monetary policy to the markets,” wrote Michael O’Rourke, chief market strategist at Jones Trading. “The Fed has already admitted the exit strategy will no longer work and now the market doubts its ability to stop easing.”
Rate-sensitive stocks rallied on Bernanke’s assurances, with home builders spiking. “Reits [real-estate investment trusts], mortgage reits, utilities, and precious metals received a new reflationary bid after a nine-month correction,” he noted.
If builders keep rising, “that group will set up a tremendous shorting opportunity,” he says.
For the week the Dow rose 328.46 points, or 2.17%, to 15,464.30. The S&P 500 added 48.30 points to close at 1680.19, and the Nasdaq Composite gained 120.70 points, or 3.47%, to 3600.08.
Economic data and earnings results also helped inspire confidence in the markets last week. t (ticker: AA) unofficially kicked off earnings season on Monday with a solid report, and JPMorgan Chase (JPM) and Wells Fargo (WFC) beat analysts’ earnings estimates on Friday. Of course, analysts have been ratcheting down second-quarter earnings expectations for the past few months, meaning that earnings “beats” are not as impressive.
“While we’re beating expectations, it’s off of reduced expectations,” says Troy Logan, senior economist at financial advisor Warren Financial Service. Logan remains bullish on U.S. equities, and financials in particular ( Source: Barrons Online).
You may have seen recent newspaper headlines, “Interest Rates Are Rising!” You may have wondered how that could be the case since the FED has held interest rates steady for a total of 4 ½ years. The explanation is the FED controls short term interest rates that affect the interest rates on short term Treasury Bills, bank Savings Account rates, bank CD rates and money market account rates – these rates have not moved.
The newspaper headline, “Interest Rates Are Rising!” is describing longer term maturities like the U.S. Treasury Bond with a 10 year maturity, home mortgage interest rates, and commercial mortgages. The FED usually has only a small influence on the direction of these long term rates; but, the FED has been actively buying these long term maturity securities in the marketplace using an unconventional and questionable system that experts call “Quantitative Easing”. The FED continues to buy these longer term maturities at the same pace. Recently bond market speculators have been trying to jump in front of the FED tapering of Quantitative Easing to sell their present bond holdings. When more sellers exist in a marketplace than buyers, prices go down – in this case bond prices.
To understand bond prices and interest rates, click here:
Most of the time, the U.S. stock market looks to 3 factors to support its upward trend – let’s grade each of the factors:
CONSUMER SPENDING: I grade this factor a C (neutral).
THE FED AND ITS POLICIES: I continue to grade this factor an A+ (extremely favorable) because the FED cannot do much more than it is doing to support the stock market and asset prices.
BUSINESS PROFITABILITY: I graded this factor an A (very favorable). Many companies will be reporting their profits to the public shareholders in the next 5 weeks. We will monitor this very closely.
The big news last week was the report on jobs here in the U.S. The good news: This was the best first half for private employment gains since 1999. Also hourly and weekly wages increased 0.4% in June, and hourly wages are now up 2.2% over the last year (weekly wages are up 2.5% year-over-year).
Some bad news: a lower percentage of the 25 to 54 year old group (prime working age) were employed and the number of part time workers (for economic reasons) increased. (Source: Calculated Risk).
Last week, U.S. Stocks and Foreign Stocks increased. Bonds decreased. During the last 12 months, STOCKS outperformed BONDS.
LAST WEEK -Here is a look the cause of the volatility created this week by hedge funds, institutions, and those we call “traders”.
Returns through 5-17-2013
1-week
Y-T-D
1-Year
3-Years
5-Years
10-Years
Bonds- BarCap Aggregate Index
-1.0
-3.4
-2.0
3.2
5.0
4.5
US Stocks-Standard & Poor’s 500
1.6
15.7
22.0
19.4
7.6
7.3
Foreign Stocks- MS EAFE Developed Countries
.6
2.7
15.3
7.1
-2.8
4.7
Source: Morningstar Workstation. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. Three, five and ten year returns are annualized excluding dividends.
“Your Financial Choices” The show airs on WDIY Wednesday evenings, from 6-7 p.m. The show is hosted by Valley National’s Laurie Siebert CPA, CFP. This week, Laurie will discuss:
“Catching up – catching up on our retirement savings, catching up with our credit cards, catching up with our family members and other related issues.” Laurie will take your calls on this topic and other inquiries this week. This show will be broadcast at the regular time. WDIY is broadcast on FM 88.1 for reception in most of the Lehigh Valley; and, it is broadcast on FM 93.9 in the Easton/Phillipsburg area; and, it is broadcast on FM 93.7 in the Fogelsville/Macungie area – or listen to it online from anywhere on the internet. For more information, including how to listen to the show online, check the show’s website www.yourfinancialchoices.com and visit www.wdiy.org.
