Last week,U.S. Stocks and Foreign Stocks and Bonds all increased. During the last 12 months, STOCKS outperformed BONDS.
Returns through 5-15-2015
1-week
Y-T-D
1-Year
3-Years
5-Years
10-Years
Bonds- BarCap Aggregate Index
.1
.9
3.2
2.3
3.9
4.7
US Stocks-Standard & Poor’s 500
.4
3.9
15.8
19.4
15.8
8.5
Foreign Stocks- MS EAFE Developed Countries
1.4
11.3
3.2
14.7
9.7
5.9
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.
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 her guest, Dan Banks of Silver Crest Insurance will discuss: “Medicare Insurance Plans and Planning.”
Laurie and Dan 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.
Undeterred by another round of soft economic data released last week, investors sent the Standard & Poor’s 500 index to an all-time high. This year’s new highs, however, have been modestly above previous records, unlike last year’s sharp moves. Chalk that up to perverse circumstance. In normal times, investors want a growing economy and rising corporate earnings. Today, however, that otherwise rosy scenario almost certainly would mean higher interest rates. Good news would be bad news.
Rates eventually will rise, but the market consensus is that the Federal Open Market Committee, the Fed’s policy-making arm, won’t raise interest rates at its next meeting, scheduled for June 16-17. That helps explain why the market has been scratching its way higher. A September hike remains an open question. While jobless claims last week were decent, the latest figures on U.S. retail sales, consumer sentiment, and industrial production were all weaker than expected.
“There’s nothing out there that’s changing the market narrative,” says Michael Matousek, head trader at U.S. Global Investors. The market range has gotten even tighter in recent weeks, like a spring coiling. “If you get a little trading volume, it could be the start of the next leg higher,” he says.
The Dow Jones Industrial Average gained 82 points, or 0.5%, on the week, to 18,272.56, and the Standard & Poor’s 500 index rose 7 to 2122.73. The Nasdaq added 45, or 0.9%, to 5048.29.
LAST WEEK’S ACTION says “the Fed hike is off the table for June, and perhaps even for September,” says Adam Sarhan, CEO of Sarhan Capital. “The Fed has said its action is data- dependent, and the data [are] weak.”Sarhan says that a catalyst to propel the market out of its range trading could be the growing conviction that a September rate hike won’t happen.
Following a weak first quarter, the economy hasn’t shown much verve, notes Anwiti Bahuguna, a senior portfolio manager at Columbia Threadneedle Investments. There’s no reason for the Fed to tighten, she says.Expectations for earnings growth haven’t improved in the current quarter, and consumers haven’t stepped up their spending, so that doesn’t bode well for second-quarter growth, Bahuguna says, adding, “It might be a rocky period.”
Significant sales gains, and thus profit growth, probably won’t be seen until the fourth quarter. Meanwhile, summer is a traditionally weak season for stocks, with lower trading activity. What’s to get excited about? For the time being, it’s low rates.
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.
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.
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.
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” 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.
