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.
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.
On Friday, we emailed a special notice to our clients concerning the UK vote on BREXIT. Here it is again in case you missed the email:
“The BREXIT vote was a big surprise. We can’t know exactly how things are going to turn out. But we have faith in the future to know that things are going to turn out all right. The prosperity of the world’s richest, deepest, most entrepreneurial, most productive, and most flexible, most transparent capitalist economy – ours- will continue to advance.
We are closely monitoring the effects of the vote and will implement adjustments as needed in your portfolio. Now is not the time to make a knee-jerk reaction to sell large parts of an investment portfolio”
AND, HERE IS SOME ADDITIONAL COMMENTS FROM MORNINGSTAR: It’s easy to say that you’re invested for the long term and that you’re going to ignore any short-term noise in the market. It’s much harder to stick to that discipline when the Dow is down over 600 points in a day and there is mounting uncertainty about the future of the global economy. Our initial take is that the exit will have a meaningful impact on some sectors (like U.K. banks) but is unlikely to cause a dramatic change to our view of most companies or the value of a broadly diversified portfolio. That being said, more volatility in the days and weeks to come is a distinct possibility, and on the whole we don’t see equities as being significantly undervalued. Patience and selectivity will be important virtues for any bargain-hunters.
We have analyzed the last 18 presidential election years since the mid-1940’s. Presidential election years produced positive returns for 16 of those 18 years for the S&P 500 stock index or about 89% of the time.
Starting with July statements delivered in August, Charles Schwab will issue monthly statements only for accounts that have a qualifying transaction—such as a deposit or a withdrawal—within the reporting month. All accounts will continue to receive quarterly statements as usual, regardless of their activity level.
Based on client feedback and industry standards, Charles Schwab believes that this can provide a streamlined experience for clients.
Below, I’ve included some of the important points from the original communication we received from Charles Schwab:
This change will apply to e-Statements, paper statements, and bundled statements;
Clients who receive bundled statements will only see balances on their bundled statement summary for accounts that have qualifying activity;
Inserts in your May account statements (sent in June) will let you know that this policy change is coming.
If you have any other questions please feel free to contact your service team. Some of you may wish to continue to receive monthly statements for accounts without qualifying activity – we would be happy to arrange that for you. Please contact us prior to July 15 so you do not experience any changes to your current statement experience. If you have already spoken with your service team, you do not need to take further action.
Two gauges tracking home sales surged last week. New-home sales rose to the highest rate since January 2008. Also, an index tracking contract signings of previously owned homes hit its highest level in a decade. Job growth and fear of higher rents and mortgage rates may be spurring purchases. Momentum will support a further expansion of sales this summer.
An improving real estate market will support faster growth in the U.S. economy.
The pace of drilling new oil wells in the U.S. has slowed dramatically due to lower oil prices and the perceived risk that oil prices may crash again. The U.S. rig count (the number of drilling rigs in use in the U.S.) has dropped from 1,811 on 1/1/2015 to 406 rigs on Friday. That is a drop of 78%.
Many oil experts feel the reason for the oil price crash in 2014 and 2015 stems from new U.S. production this decade. The new U.S. production resulted in too much oil production worldwide. Now, with the downturn in drilling activity in the U.S. it is no wonder why oil prices have been trending up in 2016 (Source: Baker Hughes).
The 2014 – 2016 collapse in domestic oil prices and related investment spending has proved to be far greater in scale and duration than what had occurred in prior cycles. History shows that sharp and large declines in energy prices tend to result in a substantial deceleration in nominal GDP growth, which also impacts both investment and consumption channels. With most of the negative effects of the oil-price collapse already absorbed, the cash flow benefit to households, transportation companies and a wide swath of industrial companies is yet to be realized.
If we assume no further substantial drops in domestic oil prices and capital spending plans, then the vast majority of the negative effects have probably already been absorbed. It’s the beneficial effects of lower oil prices that have yet to be fully realized. As a result, we believe nominal GDP growth should accelerate through the end of 2016. Source, in part: AB Global.
The Gross Domestic Product (“GDP”) economic report has been released for the first quarter 2016. It shows a meager .5% increase. But, we do not put much faith in its accuracy. The Bureau of Economic Analysis, according to the Wall Street Journal, uses a flawed calculation for the seasonal adjustment. The Bureau could make an adjustment but it has chosen not to thus far.
Given the math of seasonal adjustments, the first quarter growth is being understated and the three remaining quarters understated.
The take-away is to keep in mind the economy is stronger than it seems in the economic reports.
Government-bond yields are heading higher around the world, a move typically linked to rising expectations of economic growth and inflation. When interest yields rise, bond prices decline. Some market forecasters worry the recent run-up of yields is just the latest in a series of false starts. In three of the last four years, bond yields jumped sharply only to drop later as economic and geopolitical concerns took over investor minds.
There is a strong felling of déjà vu in markets right now. But, every pattern has an end and the U.S. economy, in 2016, may provide the springboard for real economic growth and higher yields stretching far into the future.
