“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 discussed: “Retirement
planning for every stage of your life.” For
more information, including how to listen to past shows online, check the show’s
website www.yourfinancialchoices.com and visit www.wdiy.org.
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.
I am happy to announce that my older daughter Erika
Riddle Petrozelli, CPA, has joined the staff of Lehigh Valley Community
Foundation as the Director of Donor Services.
At Lehigh Valley Community Foundation she will focus on maintaining and
expanding philanthropic relationships for the Foundation.
Prior to joining the Foundation, Erika was Vice
President of Investor Relations at Magnitude Capital, LLC, a fund of hedge
funds based in New York City. In this
role, she was responsible for client service and content management for the
firm’s global investor base. Erika and
her husband Matt presently reside in Saucon Valley. For more information about the Foundation,
click: http://www.lehighvalleyfoundation.org/
Another Friday fade wasn’t enough last week to reverse the
market’s momentum, as stocks held on to a 1% gain for the five-day stretch,
despite slipping in the final session. The Dow Jones Industrial Average
finished the week slightly below a new record high reached Wednesday. As has
been the case numerous times in the recent past, stocks fell Friday and
investors sold down some positions ahead of a weekend of potentially renewed
geopolitical tension.
Despite the release of mostly positive economic data, particularly
on Friday, traders say that escalating tensions in Ukraine are causing
investors to hesitate. In recent days, insurgents reportedly have shot down
Ukrainian helicopters, and Russia warned Ukraine Friday of “catastrophic
consequences” unless it halted a military operation against pro-Russian
insurgents in the eastern part of the country.
During a week of low trading volume, the Dow finished up 0.9%,
or 151 points, to 16,512.89. On Wednesday, it hit an all-time high of
16,580.84. The Standard & Poor’s 500 index increased nearly 18 to 1881.14.
The Nasdaq Composite index added 48, or 1.2%, to 4123.90.
Friday, the Labor Department said American job growth in April
was the biggest in more than two years. At the same time, the unemployment rate
fell to 6.3% last month from 6.7% in March, a low not seen since the bad old
days of September 2008. Payrolls grew by 288,000 from March and trounced
expectations of about 210,000 to 220,000. There was some confusion in equity
markets caused by the bond market’s rise in the face of Friday’s strong jobs
report. Some argued that the data below the headline numbers, such as a decline
in the participation rate, weren’t as good.
The problems in Ukraine “seem to be accelerating from
rhetoric to reality,” says Jason Weisberg, a partner at Seaport
Securities. That seemed to spook investors Friday. Troops are on the move,
aircraft have been shot down, and suddenly things have worsened, he says.
“It seems like on every Friday since mid-February there has
been a partial or full selloff,” says one investment strategist. That
suggests traders are unwilling to hold stocks during the weekend. If Ukraine
weren’t an issue, bond yields would have crashed through 3% instead of falling,
as they did Friday. (Bond prices move inversely to yields.)
Stock investors have to be wondering about a clarification
here. Maybe the Ukraine issue will fade
in the face of more good news on the economic front, but it’s hard to see how
the situation will improve.
The data, at least, were good, says Michael Shaoul, chairman of
Marketfield Asset Management. The April figures are strong enough to silence
fears about the economy’s weakness in January and February. “There’s no
sense that the economy is decelerating,” he says.
As we have discussed several times in the past,
the FED’s efforts to keep interest rates low will stimulate spending indirectly
by increasing the “wealth effect” of American consumers who account for
two-thirds of our economy. Americans
generally feel wealthier when their home value and investment portfolio
increase.
If Americans feel wealthier, they will spend more,
thus stimulating the economy. As the
economy heats up, more jobs are created, adding to household formations thus
increasing real estate values again as well as lifting stock prices higher.
Report on REAL ESTATE: Almost all areas of the US
are showing modestly higher home values.
Some areas have witnessed increases over 15% during the past year. Source:
Case Shiller Index.
Report on the US STOCK MARKET: The total stock market value now stands at
$23 Trillion (a new all-time high) up from a mere $8 Trillion in March of 2009
(which had declined from $20 Trillion in October of 2007). Source: The World Bank.
CONCLUSION: The
FED’s monetary policy of low interest rates is raising Americans’ wealth
effect. As a consequence, we can expect
moderate to high increases in consumption for the remainder of this year.
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 have
upgraded this factor toB (above
average) based upon the increase in retail sales as reported in recent economic
reports.
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 rate this factor B- (slightly above average). U.S.
corporations are in the midst of the first quarter’s earnings reporting season. About 90 of the S&P 500 companies have
reported their earnings. 66% have
exceeded expectations but this is slightly below average. We will continue to follow this closely.
Economic
data last week indicated a significant increase in retail sales – a month over
month rise of 1.14%. Other reports
indicated an improving jobs market and tame inflation. Manufacturing activity is on the rise.
On
the negative report side, home sales were lower than expected (still weather
related?).
Last week, U.S. Stocks and Foreign Stocks increased but Bonds declined. During the last 12 months, STOCKS outperformed BONDS.
Returns through 4-18-2014
1-week
Y-T-D
1-Year
3-Years
5-Years
10-Years
Bonds- BarCap Aggregate Index
-.4
2.2
-.6
4.4
4.8
4.7
US Stocks-Standard & Poor’s 500
1.7
1.5
22.7
14.7
19.0
7.3
Foreign Stocks- MS EAFE Developed Countries
1.1
.1
14.9
4.4
10.6
3.7
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’s special edition takes
a look back at some of the best recent segments hosted by Laurie Seibert, CPA, CFP®, AEP®. Since the show will not be live, any listener
questions submitted
online will be answered on the April 30th broadcast.
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.
