According to the Society of Actuaries, An average American couple retiring at age 65 today would need a present value lump sum of $293,000 to cover future health insurance premiums and out-of-pocket medical expenses over the remainder of their lives, i.e., expenses not paid by Medicare. For more information, click : http://www.soa.org/Research/Research-Projects/Pension/research-post-retirement-needs-and-risks.aspx
Daily Archives: August 12, 2013
The “Heat Map”
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). 55% of companies reporting 2nd quarter earnings have beaten estimates ( the historical average is 53%).
The Economy
Those hoping for good economic news last week were rewarded. U.S. jobless claims four-week average falls to lowest level since November 2007. All 13 manufacturing categories increased in June — this is has not happened since 1992. The trade deficit narrows to $34.2B in June, narrowest it has been since 2009.
And, there was a lack of bad economic news during the week.
The Numbers
Last week, Bonds and Foreign Stocks increased, and U.S. Stocks 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 8-9-2013 1-week Y-T-D 1-Year 3-Years 5-Years 10-Years Bonds- BarCap Aggregate Index .1 -2.2 -1.3 3.2 5.2 4.8 US Stocks-Standard & Poor’s 500 -1.0 20.1 23.3 17.0 7.8 7.8 Foreign Stocks- MS EAFE Developed Countries .3 10.2 19.7 5.0 -.9 5.4
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”
“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: “Helpful websites for your financial education.”
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.
Motivational Quote of the Week
“The difference between ordinary and extraordinary is that little ‘extra’.” – Jimmy Johnson
Personal Notes
My wife Jo Anne, my daughter Erika, and I visited Pittsburgh during a short vacation Wednesday for the Pirates game and Thursday for the Steelers practice session with a visit to the Phipps Conservatory in between. I am happy to report the city of Pittsburgh was clean, vibrant, and friendly. And, the Phipps Conservatory is an outstanding treasure of botanical experiences. For more information, click: http://phipps.conservatory.org/
The Markets This Week
Obviously, the bulls went to the beach last week, leaving the markets in the grip of the bears.
Wall Street turned in its worst week since late June amid extremely light trading, dropping on four of five days, as investors’ preoccupation with all that could go wrong come autumn dominated the action.
The Dow Jones Industrial Average dropped 232.85 points, or 1.5%, on the week, to close at 15,425.51, ending a six-week winning streak. The Standard & Poor’s 500 fell 18.25, ending at 1691.42. The Nasdaq lost 29.48 points, or 0.8%, finishing at 3660.11.
From concerns stoked by two Federal Reserve regional presidents suggesting that the nation’s central bank would move sooner than expected to rein in its longtime efforts to stimulate the economy, to worries about another round of possible budget cuts under the so-called sequester as fiscal year 2014 looms, to a dismal outlook for back-to-school retail sales, investors grew more uneasy with the stock market’s recent record-setting levels.
Adding to the fretfulness, August’s claim to fame among traders is that it historically has been the worst-performing month since 1987, with the weakest results occurring in its first nine trading days, according to Stock Trader’s Almanac editor-in-chief Jeffrey Hirsch. On average, the Dow has declined 1% in August, while the S&P 500 has slid 0.8%.
Despite last week’s weakness, the S&P 500 rose 0.34% in the first nine trading days of August, defying the historical seasonality and reflecting the strength underpinning the market. In the past 21 years, there have been 11 positive starts in August; all but three preceded full-month gains.
The broad market averages wobbled early in the week before rebounding slightly Thursday, getting a lift from trade data from China that suggested its economy could be stabilizing after two quarters of declining growth. The data sparked a rally in materials stocks, such as Cliff’s Natural Resources (ticker: CLF) and Newmont Mining (NEM), as China is the biggest consumer of raw materials.
How sustainable the demand from China is remains uncertain. Chinese exports jumped 2% in July from the previous month’s total, but are still well below their January 2013 peak.
By Friday, jitters set in again, and investors chose to overlook the fact that of the 446 companies in the S&P 500 that reported quarterly results, 68% exceeded expectations, slightly more than the 67% of the past four quarters, according to Thomson Reuters (Source: Barrons Online).