Tamarac is honored to receive the 2017 Family Wealth Report Award for Best Portfolio Management Application for our Advisor View™ software. And, just last winter, Advisor Rebalancing® received the best-in-class award from WealthMangement.com.
Valley National Financial Advisors uses this software to help manage our relationship with you. We really look at Tamarac as a strategic partner to our business. We think of Tamarac as thought leaders because they are always looking for innovative products and solutions to help us better service clients. That’s the reason we chose them a couple years ago after a long a due diligence project.
Tamarac supplies the e-Vault client portal for your use. During 2017, Tamarac and Valley National Financial Advisors will be rolling out important and useful advancements in the client portal. Stay tuned for more information.
The U.S. stock market has jumped since the November 8th election. We identified 4 initiatives on which the U.S. stock market is speculating to be successfully accomplished early in the Trump administration. What will happen next? TBD
The 4 initiatives will have a tremendous influence on the “Heat Map” which forms the basis of our forward looking view of the U.S. economy. I consider the success or failure of the 4 initiatives to be “leading” indicators for the Heat Map.
Below are the 4 Trump administration initiatives upon which the stock market is speculating and what progress, if any, has been made:
Tax cuts and tax reforms benefiting most individuals and businesses- NO PROGRESS RECENTLY. CUMULATIVE PROGRESS TOWARD GOAL: 0%
Infrastructure spending of up to $1 Trillion over the upcoming 7 to 10 years. NO PROGRESS RECENTLY. CUMULATIVE PROGRESS TOWARD GOAL: 0%
Affordable Care Act amendment, reform or reorganization. BOTH THE HOUSE AND THE SENATE TOOK THE FIRST STEPS TO REPEAL THE ACT. NO REPLACEMENT HAS BEEN FINALIZED BUT A BILL IS WORKING ITS WAY THROUGH CONGRESS. CUMULATIVE PROGRESS TOWARD GOAL: 15%
Roll back of government regulations and Executive Orders considered to be difficult for businesses. ROLL BACKS HAVE CONTINUED AND SEVERAL TRUMP NOMINEES HAVE BEEN SUCCESSFULLY CONFIRMED BY THE SENATE. CUMULATIVE PROGRESS TOWARD GOAL: 15%
As the action happens in Washington on these 4 initiatives, don’t be surprised if the political “tug and pull” contest results in a wilder than normal stock and bond market.
We will continue to report in future issues on the progress on each initiative.
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. This category’s grade will improve if and when the Trump legislation is passed.
THE FED AND ITS POLICIES: This factor is rated C-. The FED’s Open Market Committee meets this week and Bond Market overwhelmingly expects the FED to raise rates .25%.
BUSINESS PROFITABILITY: This factor’s grade is raised to a B (above average). Fourth-quarter earnings are on pace to grow by 8.4%, according to Thomson Reuters I/B/E/S, nearly double the 4.3% gain reported during the third. And analysts see earnings advancing at a double-digit clip during 2017’s first two quarters. Now it’s earnings that are driving shares higher. “With earnings turning positive,” they said, “we have a solid catalyst for 2017 turning out to be a good year.”
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 3. These risks deserve our ongoing attention.
Last week, U.S. Stocks and Bonds declined. During the last 12 months, STOCKS outperformed BONDS.
Returns through 3-10-2017
1-week
Y-T-D
1-Year
3-Years
5-Years
10-Years
Bonds- BarCap Aggregate Index
-.6
-.3
.5
2.4
2.0
4.2
US Stocks-Standard & Poor’s 500
-.4
6.4
21.8
10.4
14.1
7.7
Foreign Stocks- MS EAFE Developed Countries
.4
5.1
12.5
.1
5.6
1.1
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:
“What is a Schedule K-1 and why might you get one? And, other odd-ball questions.”
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.
The Standard & Poor’s 500 index ended a six-week winning streak as tumbling oil prices and a looming Federal Reserve rate hike caused stocks to stumble.
The S&P 500 fell to 2,372.60 last week, while the Dow Jones Industrial Average dropped 102.73 points, or 0.5%, to 20,902.98, their largest declines so far this year. The Nasdaq Composite dipped 0.2% to 5,861.73, its first weekly decline in seven weeks.
It’s a wonder the losses weren’t any bigger. The week started with the release of the widely criticized Republican plan to repeal and replace Obamacare, finished with a jobs report that virtually guarantees a rate hike at next week’s Federal Open Market Committee meeting, and saw oil drop below $50 a barrel. The downward pressure on the market, however, was limited.
That was, in part, because of the strength of the employment data, which was neither too hot nor too cold. The U.S. economy added 235,000 jobs in February, beating economist forecasts for 200,000, but not the blowout number that could have forced the Fed to raise rates by more than a quarter percentage point. If anything, the data just confirm what we’ve known for a while now: The economy is growing, and one rate hike is unlikely to do much damage, says MKM Partners strategist Michael Darda, who called the March Fed meeting “largely irrelevant.”
There’s still a strong likelihood of some sort of economic stimulus plan from the Trump administration sometime this year. Yes, it might be delayed by wrangling over the Republican proposal to repeal and replace the Affordable Care Act, which was met with derision from Democrats, moderate Republicans, and hardcore conservatives. But the fact that tax cuts and infrastructure projects are even being considered at a time when the U.S. economy is adding 200,000-plus jobs a month is “unprecedented,” says Richard Bernstein, chief investment officer at Richard Bernstein Advisors. “We’re going to add more stimulus on top of this.”
Still, a sense of unease hangs over the market, especially after the price of oil fell 9.1% last week, sinking to its lowest level since November. And the market is certainly overdue for a selloff. The S&P 500 generally drops 3% to 5% every two to three months, says Binky Chadha, chief global strategist at Deutsche Bank. The index has now gone more than four months without such a decline. Tumbles of 5% or more, meanwhile, have historically occurred every five to six months, Chadha says, something that hasn’t occurred since the Brexit vote eight months ago.
But just because the market is due for a correction doesn’t mean it will get one. While sentiment has played a big part in the rally, so has the fact that investors didn’t appreciate recent economic strength, says Chadha. As long as that continues, bouts of weakness should remain relatively muted. “Consensus forecasts have underestimated the recent rebound in growth and remain subdued, suggesting positive surprises are likely to continue in the very near term, so we don’t expect a pullback,” he says.
