We are repeating this article from last week for emphasis. Surprisingly, few clients contacted our office to discuss their situation. Perhaps, it was the Holiday weekend.
It’s time to refinance your mortgages and any other “fixed-rate” loans. Interest rates have plummeted. The interest rates used by mortgage lenders to set mortgage interest rates have not been this low for over 60 years. Interest rates can vary rapidly and the size of the move can be large. Thus, we recommend you move quickly to refinance.
Contact our office if you wish to discuss your situation, various strategies, and how to save money on your refinancing.
Most of the time, the U.S. stock market looks to 3 factors (call them the “pillars” which support the stock market) to support its upward trend – let’s grade each of the pillars.
CONSUMER SPENDING: This grade is A- (very favorable). Favorable activity in the housing market continues to support growth in the level of spending.
THE FED AND ITS POLICIES: This factor is rated B (favorable). The U.S. economy can handle higher rates as long as the pace of future interest rate increases is slow. Fed Chair Janet Yellen made clear in her press conference after the June meeting that the path higher would be “gradual”. And, the BREXIT vote has reduced the possibility of a rate rise soon.
The Fed’s plan to gradually raise rates in the coming years won’t derail the economy and brings some certainty to the market, says Morningstar’s Bob Johnson.
BUSINESS PROFITABILITY: This factor’s grade is aC-(below average). Next week, corporations will start to release their second quarter corporate-earnings reports. We will monitor this closely.
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 4. These risks deserve our ongoing attention.
Last week, U.S. Stocks and Bonds increased. Foreign Stocks declined. During the last 12 months, STOCKS outperformed BONDS- a change from last week.
Returns through 7-8-2016
1-week
Y-T-D
1-Year
3-Years
5-Years
10-Years
Bonds- BarCap Aggregate Index
.6
6.2
6.2
4.6
3.8
5.2
US Stocks-Standard & Poor’s 500
1.3
5.4
6.4
11.4
12.0
7.6
Foreign Stocks- MS EAFE Developed Countries
-1.7
-5.4
-8.6
1.3
1.5
1.4
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.
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:
“Understanding employer retirement plans and your options”
Laurie will take your calls on these topics and other inquiries this week. Questions may be submitted early through www.yourfinancialchoices.com by clicking Contact Laurie. 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– 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.
After an uneven start to the week, U.S. stocks finished on a high note, thanks to a strong June jobs report that reassured investors about the health of the U.S. consumer.
“Today’s report helped alleviate those concerns that the economy was rolling over,” Mike Ryan, chief investment strategist at UBS Wealth Management, said on Friday.
Powered by that good news, the Standard & Poor’s 500 index finished the week at 2129.90, just shy of its all-time closing record of 2130.82, set in May 2015. The index rose 32 points, or 1.53%, on Friday.
Eight of 10 sectors ended the holiday-shortened week in positive territory. The best performers were consumer-discretionary stocks, up 2.27%, and health care, which gained 1.99%. Materials, industrials, and technology also did well, each rising more than 1%. Telecommunications and energy each finished the week down a little more than 1%, and utility stocks were up slightly.
Energy stocks came under pressure as oil prices, which had rallied recently, fell back to the mid-$40s on news that oil inventories were higher than expected.
It was a solid week overall for the big U.S. stock indexes. The Dow Jones Industrial Average closed at 18,146.74, up 1.1% for the week, with all 30 of its constituents posting gains on Friday. The Nasdaq Composite, a technology bellwether, advanced 1.94%, to 4956. The gains stretched across market capitalizations; the Russell 2000 Index, a small-cap benchmark, closed at 1177, up 1.78%.
U.S. markets were closed last Monday, July 4.
THE BIG DRIVER behind Friday’s gains was the much-anticipated U.S. Labor Department jobs report. In June, nonfarm payrolls increased by 287,000, easily surpassing the consensus estimate of 180,000. The results marked a reassuring turnaround from May, when only 11,000 jobs were added.
“The job gains were broad-based outside of construction in June,” notes Jason DeSena Trennert, CEO of Strategas, an investment research firm. Trennert describes the U.S. economy as “a workhorse against a tepid global backdrop.” He adds, “Job growth is OK, but there’s still no rush for higher rates in a maturing cycle with a flattening yield curve.”
Indeed, the yield on the 10-year U.S. Treasury settled on Friday at 1.366%, a record low, as stocks sold off earlier in the week amid further concerns about the vote in the United Kingdom to exit the European Union.
Dennis DeBusschere, head of global portfolio strategy at Evercore ISI, attributes the low yields to more of a “money-flow, central-banking issue than a sign that the U.S. economy is in trouble.” With yields so low in other developed countries, U.S. Treasuries look relatively attractive, he says.
The market didn’t seem to mind that the U.S. unemployment rate ticked up to 4.9% from 4.7%; this was mainly attributed to more people entering the job market.
The jobs report was a referendum of sorts on the U.S. consumer, whose durability has been called into question by the market, given how long the current recovery has lasted.
“It was a strong enough report to reduce any recession fears that might have increased due to extended labor-market weakness,” says DeBusschere.
