Before you store your income tax return in your archives: now is a good time of the year to check your beneficiaries on IRA’s, Roth IRA’s, 401k’s, and life insurance or annuity policies. Confirm the Primary Beneficiaries are those persons you intend to be your heirs. And, check whether Contingent Beneficiaries exist in case the Primary Beneficiary passes before the account owner. It is important not to name your estate as beneficiary. And, keep in mind the beneficiary named on these types of accounts determines who receives the money when the account owner passes, not the deceased’s will.
Daily Archives: May 11, 2015
The Economy
The stock market soared Friday, in part, because of a “goldilocks” jobs report for April – not too cold, not too hot, just right. Given the downward revision to March’s report and slow GDP growth, employment looks set to be weaker in 2015 than it was last year, says Morningstar’s Bob Johnson.
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: This grade is a B (favorable) due to the a slowdown in spending. It may be weather related. We will find out in the next 2 months.
THE FED AND ITS POLICIES: We 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: This factor’s grade is a C (average). With about 90% of S&P 500 index companies having reported first quarter earnings, the blended growth rate is 0.1%, better than expectations of negative 4.7% on March 31, according to FactSet’s John Butters. EPS growth is 7.7% without the energy sector.
OTHER CONCERNS: The “Heat Map” is indicating the U.S. stock market is in OK shape ASSUMING no international crisis. On a scale of 1 to 10 with 10 being the highest level of crisis, we rate these international risks collectively as a 2, the same as last week. These risks deserve our ongoing attention.
The Numbers
Last week, U.S. Stocks and Foreign Stocks increased but Bonds decreased. During the last 12 months, STOCKS outperformed BONDS.
|
Returns through 5-8-2015 |
1-week |
Y-T-D |
1-Year |
3-Years |
5-Years |
10-Years |
|
Bonds- BarCap Aggregate Index |
-.1 |
.8 |
3.6 |
2.3 |
3.9 |
4.7 |
|
US Stocks-Standard & Poor’s 500 |
.4 |
3.5 |
15.1 |
18.3 |
16.2 |
8.4 |
|
Foreign Stocks- MS EAFE Developed Countries |
.8 |
9.7 |
1.6 |
12.9 |
9.8 |
5.6 |
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 and guest Donald Jean of Focused Buyer will discuss: “Entrepreneurship and innovation in today’s business climate”
Laurie and Don will take your calls on these topics and other inquiries this week. This show will be broadcast at the regular time. Questions may be submitted early through www.yourfinancialchoices.com by clicking Contact Laurie. 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
“Action is traction.”
– Rob Liano
The Markets This Week
After sliding 2% at one point last week, the stock market reversed and climbed within spitting distance of previous highs. Boosted by bullish employment data Friday and a softer dollar, the Dow Jones Industrial Average, made up of mega-caps with lots of overseas sales, rose 167 points, or nearly 1%, to 18191.11. A surprising electoral victory Thursday by the U.K. Conservative Party fuelled gains in Europe, which spilled over to U.S. stocks.
Despite the rally, the market was again unable to break out of a tight range that began last November. Investors aren’t enthusiastic enough about macroeconomic data to send shares to new highs. The Standard & Poor’s 500 index rose 8 points to close at 2116.10, just below the previous high, 2117.69. The Nasdaq finished flat, at 5003.55.
Friday, the Labor Department said the U.S. added 223,000 jobs in April, broadly in line with expectations and much better than the 85,000 in March. The unemployment rate fell to 5.4% from 5.5%.
Those numbers were warm enough to assuage slowdown fears caused by a rise of just 0.2% in first-quarter gross domestic product, reported late last month, says Daniel Morris, global investment strategist at TIAA-CREF. Yet they weren’t hot enough to spark worries that the Federal Reserve will raise interest rates sooner than September, marking the first rate hike in nine years.
There is strong resistance at the 2120 level on the S&P 500, says Yousef Abbasi, a market strategist at JonesTrading Institutional Services. “Investors don’t want to pay more than the market’s price/earnings ratio of 18 times, when the U.S. economy might grow in the range of 1% to 2% in the first half,” he says.
“It’s hard to come up with a scenario where you get a real positive surprise that would boost the market further,” adds Morris.
Brian Lazorishak, a portfolio manager at Chase Investment Counsel, is looking for a correction near-term, although perhaps not a 10% drop. “Valuations aren’t cheap; we’ve gone years without a real correction, and the May-October period is historically a weak period for equities,” he says.
Even a 5% pullback might be good for the bull, as it would “suck out some optimism and bring in enough pessimism” to set up the market for a rally in the back half of 2015, he says.
(Source: Barrons Online)