The fact that the market made up its nearly 6% January
swoon in the absence of a clear catalyst is at least a good sign that the
market drop was, more likely than not, an ordinary correction.
Daily Archives: March 6, 2014
Pennsylvania Update: What’s New?
ID Validation – Personal
Income Tax Refund Fraud Prevention Efforts
Beginning with the 2014 income tax filing season,
the department instituted new security measures to identify and intercept
fraudulent refund filings. As part of
this initiative to ensure refunds are issued only to their rightful owners,
taxpayers may be asked to confirm their identities before refunds are issued.
In such cases, the taxpayer will be contacted by the
department by way of a letter sent to the address on the taxpayer’s personal
income tax return. The letter from the department will instruct the taxpayer to
call a designated number, where the taxpayer will speak to a representative of
a company the department has partnered with for its expertise in identity
verification. The taxpayer will be asked
to provide answers to questions to verify identity. Taxpayers who receive this
identity validation notice will authorize release of their refunds sooner if
they follow the instructions for verifying identity provided in the notice.
The “Heat Map”
Most
of the time the U.S. stock market looks to 3 factors (call them the “pillars”
that support the stock market) to support its upward trend – let’s grade each
of the pillars.
CONSUMER SPENDING: I grade this factor a C- (below average
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 continue to grade this factor an A (very favorable).
NOTE: no change from prior week.
The Economy
Economic
data released last week was mostly negative.
Housing sales and housing starts both fell in January. Economic activity in the Philadelphia region
(normally, a bell-weather for the entire U.S) declined in January. On the positive side the number of employed
individuals in the U.S. has climbed to a pre-recession high.
The numbers have been
influenced by bad weather. Many economic
experts expect the economy to pick up with improved weather. Manufacturers will ramp up in anticipation of
a strong rebound in consumer spending.
We should see the manufacturing sector pick up steam in the next few
weeks
The Numbers
Last week, U.S. Stocks, Foreign Stocks and Bonds all increased. During the last 12 months, STOCKS outperformed BONDS.
|
Returns through 2-28-2014 |
1-week |
Y-T-D |
1-Year |
3-Years |
5-Years |
10-Years |
|
Bonds- BarCap Aggregate Index |
.5 |
2.0 |
0.2 |
3.8 |
5.1 |
4.6 |
|
US Stocks-Standard & Poor’s 500 |
1.3 |
1.0 |
25.4 |
14.3 |
23.0 |
7.2 |
|
Foreign Stocks- MS EAFE Developed Countries |
.6 |
1.1 |
16.1 |
3.4 |
14.2 |
3.8 |
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®. Join
Laurie and her guest, Kevin Brosious, MBA, CPA/PFS, CFP® as they discuss: “What to consider when building
a portfolio.”
Laurie and Kevin will take your calls on these topics
and other inquiries this week. 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
“All our dreams can come true if we have the courage to pursue them.”
– Walt Disney
Personal Notes
It’s a tough time of
the year for sports. Olympics are
over. It’s too early for golf. Baseball starts 5 weeks from now. March Madness is around the corner yet. I can’t get into the NBA. And, hockey is on break. There is too much snow on the ground to do
anything outside. Oh well, let’s get
back to those tax returns!
The Markets This Week
The big question for investors on the sidelines over
the past two years has been: Am I late to the party?
Fret not. This party never seems to end.
The S&P 500 hit another new closing high on
Friday, and the Dow finished just 1.5% off its all-time peak. Importantly, the
S&P closed on Thursday above 1850, a technical level that investors have
been talking about for weeks.
Asked why everyone’s so bullish, several strategists
pointed to strong consumer confidence data and evidence of sales growth for
durable goods—major manufactured products like electronics and defense
equipment. Federal Reserve Chair Janet Yellen also helped lift markets in
testimony before Congress when she remarked that economic data had been
surprisingly weak for the past six weeks, opening the door to a pause in the
taper.
Results from retailers also indicated that Americans
are feeling confident. Macy’s(ticker:
M) reported better than expected earnings results and held the line on holiday
season discounts, even as its peers gave away the store.
But data and Fed-speak just added extra oomph to the
Street’s already-bullish sentiment. “I don’t think there was a
particularly strong positive catalyst,” said Paul LaFleche, who oversees a
$13 billion portfolio for insurer FM Global. “Maybe it’s the absence of
negatives. People continue to have a lot of cash and want to come back to
stocks.” La-Fleche says FM Global’s portfolio tends to hold 45% to 50% in
equities, but the firm has increased its equity weighting to more than 50%.
Sunday March 9 will mark the five-year anniversary
of the S&P 500’s closing low of 676.53. Including dividends, stock returns
have more than tripled since then. LaFleche says the growth has mostly been
driven by multiple expansion—investors willing to pay more for the same
earnings. He agrees with most strategists that stocks will rise by high single
digits this year, driven almost entirely by earnings growth.
For the week, the Dow Jones Industrial Average rose
1.4%, or 218 points, to 16,321.71. The Standard & Poor’s 500 index rose 23
points, to 1859.45. The Nasdaq Composite index climbed 1%, or 45 points, to
4308.12.
The Dow rose 4% in February, and the S&P 500 was
up 4.3%, its best February reading since 1998. Several stocks have considerably
outpaced the benchmark. In fact, 77 stocks have risen at least 10%, while only
30 have fallen that much. “Maybe it’s a stockpicker’s market,”
commented Howard Silverblatt, an analyst at the S&P Dow Jones Indices. (Source: Barrons Online).