careertech-banking-financial-meeting-analysts.jpg
SUBSCRIBE

Wealth Management

WEALTH MANAGEMENT

Weekly Market Update, November 12, 2018

Posted by Paul Miller

General market news        

  • The yield curve flattened late last week, and the bond market is closed on Monday due to Veterans Day. On Friday, the 2-year closed at 2.92 percent, the 10-year at 3.18 percent, and the 30-year at 3.38 percent. The conclusion of the midterm elections and the Federal Reserve (Fed) pausing on rates until December, at the very least, have answered some lingering questions. But volatility should continue, as will the flattening of the curve, in the weeks and months to come.
  • The three major U.S. markets were all up last week, with the Dow Jones Industrial Average and the S&P 500 leading the way. The tech-oriented Nasdaq Composite continues to lag, with Apple Inc. (AAPL), Alphabet Inc. (GOOG/GOOGL), and Netflix (NFLX) continuing to be out of favor following their October sell-offs. The more traditional value and defensive sectors outperformed, with health care, REITs, utilities, consumer staples, and financials leading the gains.
  • Last week’s two major events—the midterm elections and the November Federal Open Market Committee (FOMC) meeting—both went as expected. The Democrats regained control of the House, while the Republicans added to their existing control in the Senate. Turning to the FOMC meeting, the committee made only minor changes to its policy statement and continued to describe economic activity as strong; however, it did see some moderation from the “rapid” business investment earlier in the year.
  • On Monday, the Institute for Supply Management Nonmanufacturing index was released, declining to 60.3 from 61.6. This result was above expectations for a decline to 59.
  • On Friday, the Producer Price Index showed inflation of 2.9 percent, which was above expectations for a 2.5-percent gain. Excluding food and energy, the gain was 2.6 percent, coming in above expectations for a 2.3-percent gain.

 

Read More

Weekly Market Update, November 5, 2018

Posted by Paul Miller

General market news        

  • As expected, the volatility in the markets continued. The 10-year Treasury yield was back up to 3.20 percent on Monday morning after being as low as 3.05 percent last week. Meanwhile, the 30-year opened at 3.44 percent and the 2-year at 2.89 percent. With elections on Tuesday and the Federal Reserve (Fed) rate announcement on Thursday, the market will be full of new data this week—and we can expect continued volatility in interest rates.
  • Global markets were up across the board as they recovered from the sell-off at the end of October. There were several reasons for the support, including strong earnings and share buybacks following the end of the blackout period. Despite missing consensus estimates, Facebook’s earnings proved to be a positive contribution to the FANG stocks (i.e., Facebook, Amazon, Netflix, and Google). Additionally, according to FactSet, 74 percent of S&P 500 companies are now reporting a blended growth rate of 24.9 percent, which is higher than the expected 19.3 percent at the end of September. General Motors (GM), DowDuPont (DWDP), and Coca-Cola (KO) were among those that beat their earnings estimates.
  • U.S.-China trade talks were mixed last week. President Trump threatened $257 billion in additional tariffs if a deal is not completed following the upcoming G20 meeting. Despite this threat, President Trump tweeted out that his discussions with Chinese President Xi Jinping were “moving along nicely.”
  • Last week was a busy one for economic updates. On Monday, personal spending growth came in at 0.4 percent, while personal income rose by 0.2 percent. These results follow solid growth for both figures the month before.
  • On Thursday, the Institute for Supply Management (ISM) Manufacturing index declined slightly, going from 59 to 57.7. This still represents a healthy level of confidence for manufacturers.
  • On Friday, the October employment report was released. Overall, 250,000 new jobs were added during the month, and the unemployment rate stayed steady at 3.7 percent. Average hourly earnings rose to 3.1 percent on a year-over-year basis.

 

Read More

Weekly Market Update, October 29, 2018

Posted by Paul Miller

General market news        

  • The 10-year Treasury yield was back to 3.05 percent late Friday and early Monday; 3.05 percent is a resistance level both on the way up and on the way down. Meanwhile, the 2-year opened at 2.82 percent and the 30-year at 3.23 percent. The 10-year was as high as 3.25 percent two weeks ago when bonds sold off. The volatility in the rates market is a result of global uncertainty and mixed economic numbers.
  • U.S. equity markets were largely down last week, as earnings could not dispel investors’ numerous fears, including peak margins, decelerating Chinese growth, and waning benefits from tax reform. Two of the larger companies to report earnings were Amazon (AMZN) and Alphabet (GOOG/GOOGL). Unfortunately, Amazon (the nation’s largest online retailer) did not quell investor fears, as international sales growth and Prime subscribership slowed more than expected. The company also slightly lowered guidance for the holiday quarter. Google cited the strength of the U.S. dollar as a headwind for its miss on revenues. This week will see earnings for Facebook (FB), another large Internet advertiser, and for Apple (AAPL), a large tech retailer. Investors will have a keen eye on their earnings, as these names have been leaders through much of the bull market up until this point.
  • There were a number of important data releases last week. On Wednesday, new home sales fell by 5.5 percent in September, as a slowdown in the Northeast affected overall sales.
  • On Thursday, September’s durable goods orders came in better than expected, with 0.8-percent growth against expectations for a decline of 1.5 percent.
  • On Friday, the first estimate of third-quarter gross domestic product growth was released. Overall economic activity expanded by 3.5 percent on an annualized basis. This result was better than the expected 3.4-percent growth, but it was down from 4.2 percent in the second quarter.
Read More

Year-End Tax Planning

Posted by The Axial Company

As the end of the year approaches, it's time to consider strategies that could help you reduce your tax bill. But most tax tips, suggestions, and strategies are of little practical help without a good understanding of your current tax situation. This is particularly true for year-end planning. You can't know where to go next if you don't know where you are now.

Read More

Weekly Market Update, October 22, 2018

Posted by Paul Miller

General market news        

  • The 10-year Treasury yield opened at 3.19 percent early Monday, while the 30-year opened at 3.37 percent and the 2-year at 2.90 percent. The yield curve flattened last week. It is off its recent lows of late September but lower than the level seen after the Federal Reserve (Fed) raised rates a couple of weeks ago. With the Fed apparently ready to raise rates again in December, rate volatility is likely as the market attempts to balance economic growth and the effect of Fed action.
  • U.S. equity markets were mixed last week, as investors favored more defensive investments. Not surprising, then, the more defensive Dow led the way for the three major U.S. markets, while the tech- and growth-oriented Nasdaq Composite Index lagged. Consumer staples, REITs, and utilities were among the top three performers. Consumer discretionary, energy, and materials were among the top laggards.
  • After last week’s steep sell-off, earnings still remain strong at approximately 19.5 percent for the third quarter, per FactSet estimates. Although this result is a sign that strength remains for U.S. markets, China saw its gross domestic product (GDP) growth fall to 6.5 percent in the third quarter compared with 6.7 percent in the second quarter. The Chinese economy continues to take actions to promote growth, including lowering its reserve requirement ratio.
  • Last week saw the release of only a handful of notable economic updates. On Monday, September’s retail sales data came in lower than expected, with 0.1-percent growth for the month. This follows several months of strong growth, so this is not an immediate concern but should be monitored.
  • On Wednesday, both housing starts and building permits declined, as the slowdown in new housing growth continues.
  • On Friday, existing home sales disappointed, falling 3.4 percent against expectations for a more modest loss of 0.9 percent.
Read More

Weekly Market Update, October 15, 2018

Posted by Paul Miller

General market news        

  • The 10-year U.S. Treasury yield reached a current cycle high of 3.25 percent last Tuesday. It then moved lower to 3.15 percent, where it opened on Monday morning. The 30-year opened at 3.32 percent, while the 2-year opened at 2.84 percent. The 2-year was as high as 2.90 percent last week, which is where the 10-year stood about a month ago. As the Federal Reserve (Fed) continues to raise rates, it has added uncertainty and, therefore, volatility in the markets. With more rate increases ahead, the market will have bigger movements as we inevitably approach the next recession.
  • Last week, equities across the globe sold off as U.S. markets experienced a pickup in volatility, with bond yields rising and investors rotating away from growth. The 10-year bond yield rose to levels as high as 3.25 percent, leading investors to take a look at growth prospects moving forward. The worst performers on the week were materials, industrials, and financials. The top performers were utilities, consumer staples, and REITs.
  • The People’s Bank of China cut its reserve requirement ratio by 1 percent, as China looks to continue to support its domestic economy following U.S.-China trade tensions. There was one bright spot in the U.S.-China trade talks, however, as President Trump and Chinese President Xi will meet at November’s G20 summit.
  • Last week was another relatively slow week on the economic update front. On Wednesday, the Producer Price Index slowed to 2.6-percent growth on a year-over-year basis. On Thursday, the Consumer Price Index also showed slower inflation, with year-over-year growth of 2.3 percent. Rising inflation was a minor concern earlier in the year, so these results were welcome.
  • On Friday, the University of Michigan consumer sentiment survey showed a slight decline, going from 100.1 for September to 99 in October. This still represents a strong reading that shows consumers are confident in the current economic expansion.
Read More

A Bad Day in the Market: Is It a False Alarm?

Posted by Paul Miller

Yesterday was a bad day in the market. The Dow was down more than 800 points (800 points!), and the S&P was down almost 100 points (100 points!). Surely, this is the beginning of the end. 

Maybe so. But if you turn those drops into percentage terms, of just more than 3 percent, they don’t look nearly as scary. 

Read More

Weekly Market Update, October 8, 2018

Posted by Paul Miller

General market news        

  • Rates have moved higher recently, and with the bond market closed on Monday, yields are as of October 5. The 10-year Treasury stands at 3.23 percent, and the 30-year and 2-year are at 3.40 percent and 2.88 percent, respectively. The yield curve—which had been flattening, leading to worries about inversion—has steepened over the last week or so. The Federal Reserve’s (Fed’s) optimism about the economy has helped. On top of a September hike in the federal funds rate to 2.25 percent, the Fed has expressed plans to raise rates in December, as well as three times in 2019.
  • U.S. equity markets were mostly down last week. Investors appear to be moving out of equities in the face of rising Treasury yields and higher borrowing costs. Comments from Fed Chair Jerome Powell were seen as potentially hawkish; he stated that rates are still accommodative, and while they are moving toward a neutral level, they are still “a long way from neutral at this point.”
  • Markets also were likely reacting to the new trade agreement announced by President Trump—the U.S.-Mexico-Canada Agreement (USMCA)—which, if approved, will replace NAFTA. Although this is viewed as a win for the U.S., some language in the agreement could indicate an even greater divergence between North American and Chinese trade deals in the future.
  • Last week was a relatively quiet one for economic updates. On Monday, the Institute for Supply Management (ISM) Manufacturing index declined slightly, as expected, going from 61.3 to 59.8. This is a diffusion index, where values greater than 50 indicate expansion, so this is still a strong level. On Wednesday, the ISM Nonmanufacturing index surprised by rising to 61.6 from 58.5.
  • On Friday, the September employment report came in with mixed results: 134,000 new jobs were added, short of the expected 185,000. This headline miss is likely not as bad as it seems at first glance. Previous months were revised up by 87,000, which helps offset the shortfall. The unemployment rate fell to 3.7 percent, which is the lowest rate since 1969.
Read More

Weekly Market Update, October 1, 2018

Posted by Paul Miller

General market news        

  • Volatility was back last week. The 10-year Treasury rate bounced between 3.11 percent and 3.02 percent. Given how flat the yield curve is today—with a difference of only 25 basis points between the 2-year and 10-year—a move of 9 basis points on the 10-year is significant. Further, the Federal Reserve (Fed) raised rates last week and is projected to raise them again over the next 12 months. As such, the longer end of the curve will see volatility, while the short end will move up in tandem with the federal funds rate. One note from last week’s Fed meeting is that the Fed no longer considers its stance as accommodative. Also, with the federal funds rate above 2 percent and the long-term target at 3 percent, the Fed is likely in the later stages of raising rates.
  • U.S. equity markets were mixed last week, as trade tensions and eurozone financial uncertainty weighed on the markets. The Wall Street Journal reported that China canceled its upcoming trade talks with the U.S., as China was displeased with the recent additional $200 billion in tariffs. It is expected that President Trump may soon offer a final $267 billion in tariffs. The news weighed heavily on the materials sector, which was down more than 4.4 percent on the week. The financials sector was also down by more than 4 percent on the week.
  • The Italian government agreed to a 2.4-percent budget deficit target, which could potentially be a breach of its EU obligations. Adding to the European volatility was continued uncertainty over Brexit, as Theresa May and her cabinet continue to work to come to an agreement with Europe.
  • Last week was a busy one for economic updates. On Tuesday, the Conference Board Consumer Confidence Index defied expectations for a slight pullback, instead rising to an 18-year high. On Wednesday, new home sales also came in better than expected, with 3.5-percent growth against expectations for 0.5-percent growth.
  • On Thursday, the final measure of second-quarter gross domestic product growth came in at 4.2 percent. Also on Thursday, August’s durable goods orders came in at a very strong 4.5 percent due to a large uptick in aircraft orders.
  • On Friday, the August personal income and personal spending reports both showed growth of 0.3 percent.
Read More

Weekly Market Update, September 24, 2018

Posted by Paul Miller

General market news        

  • Rates continue to move higher, testing certain resistance levels. The 10-year Treasury yield opened at 3.07 percent on Monday; less than a month ago, it was at 2.80 percent. The 2-year now stands at 2.80 percent, while the 30-year is at 3.20 percent. The difference in rates between the short end and the long end moved slightly higher last week but, in general, continues a downward trend. The Federal Reserve (Fed) is likely to raise the federal funds rate on Wednesday, which could tighten the spread.
  • U.S. equity markets were mixed last week. The Dow Jones Industrial Average and the S&P 500 both hit new all-time highs, while the tech-oriented Nasdaq Composite Index posted a small loss. Despite an escalation in U.S.-China trade tensions, markets seemed to shrug off the news.
  • On Monday, President Trump announced plans to impose tariffs on an additional $200 billion in imported Chinese goods. The tariffs would go into effect this week and begin at 10 percent, before ramping up to 25 percent in 2019. China responded with an additional 5-percent to 10-percent tariff on $60 billion in U.S. imports. It remains uncertain whether the U.S. or China will move forward with these plans, but the market seemed to shrug off the news or take peace in the lower rates. In other news, a 0.7-percent decline in the U.S. dollar helped support emerging market stocks last week, easing the burden of their dollar-denominated debt.
  • Last week, several housing-related economic updates were released. On Tuesday, the National Association of Home Builders Housing Market Index remained flat at 67. This result is down from highs earlier this year but still signals confidence among home builders.
  • On Wednesday, housing starts increased, while building permits declined slightly. On Thursday, existing home sales came in unchanged for the month, against expectations for a slight increase.

Read More

Weekly Market Update, September 17, 2018

Posted by Paul Miller

General market news        

  • Rates moved higher last week. The 10-year Treasury yield went from 2.87 percent to more than 3 percent this morning. The 3-year bond is now yielding what the 10-year was last week, and the 2-year is yielding what the 10-year was two weeks ago. As rates continue to compress and push up closer to a ceiling, the bond market seems to be telling us that while the economy looks good, there are factors indicating a recession in the future. The Federal Reserve (Fed) seems committed to raising rates. Keep in mind, however, that the Fed uses its “language” as a policy tool as well.
  • All three major U.S. indices, the Russell 2000, and both the MSCI EAFE and MSCI Emerging Markets indices were up last week. Both improvement in fundamentals and the expectation of resumed trade talks between the U.S. and China were also in the news. The Wall Street Journal reported on Wednesday that Treasury Secretary Steven Mnuchin had reached out to continue trade talks with China. This was confirmed by the Chinese Foreign Ministry, which had reportedly welcomed the offer. Further, the Turkish Central Bank surprised last week when it increased the one-week repo rate by 625 basis points. This move followed the country’s continued currency weakness after the U.S. doubled its tariffs of Turkish steel and aluminum last month.
  • Despite both Goldman Sachs and Stifel raising concerns over a potential peak in the memory chip cycle, the S&P 500’s technology sector posted a 1.83-percent gain. This move was supported both by Qualcomm announcing $16 billion of its common stock as the first phase of its $30 billion buyback plan and by a 1.2-percent move in Apple following the release of three new iPhones and a new version of the Apple watch.
  • Economic news regarding inflation and consumer spending was released last week. On Wednesday, the Producer Price Index declined by more than expected, leaving annual inflation for producers at 2.8 percent. On Thursday, the Consumer Price Index showed a similar decline, with annual inflation of 2.7 percent.
  • On Friday, August retail sales came in lower than expected at 0.2-percent growth month-over-month. July’s figure was revised upward, however, accounting for the lower-than-expected growth in August.

Read More

Weekly Market Update, September 10, 2018

Posted by Paul Miller

General market news                                  
      • Rates finished last week by moving higher. Short rates moved the most, as the 2-year Treasury yield opened on Monday at 2.70 percent. The 10-year had been at 2.80 percent a week and a half ago but opened Monday at 2.93 percent. The 30-year opened at 3.09 percent. The curve-flattening process is getting upward pressure from short rates as the market anticipates the Federal Reserve (Fed) moving short rates higher this fall. Long rates seem to be hitting a ceiling for the time being.
      • All three major U.S. averages moved lower last week. The tech-heavy Nasdaq Composite Index had the largest loss in months, as technology shares had a large sell-off. Facebook and Twitter executives testified before Congress about foreign interference in U.S. elections and what steps are being taken to mitigate that, and investors responded negatively to the outcome. The energy sector further pressed U.S. markets lower as investors sold off in response to rising U.S. oil inventories. Finally, Chinese tariff talks have weighed on markets recently, but nothing has been implemented. The U.S. administration is evaluating the effects of the latest proposed round of tariffs before acting.
      • Last week, several important economic reports were released. On Tuesday, the Institute for Supply Management (ISM) Manufacturing index defied expectations and rose to 61.3 from an already strong 58.1. On Thursday, the ISM Nonmanufacturing index also came in better than expected, jumping from 55.7 to 58.5. These positive results show that business confidence remains high.
      • On Friday, the August employment report came in better than expected, with 201,000 new jobs added during the month. The underlying data was also strong, with unemployment remaining steady at 3.9 percent and average wage growth increasing to 2.9 percent annualized.


Read More

Weekly Market Update, September 4, 2018

Posted by Paul Miller

General market news                  
  • Volatility was back in rates last week. The 10-year Treasury yield went from as low as 2.80 percent to as high as 2.90 percent; it ended the week at 2.86 percent, where it opened on Monday. Meanwhile, the 30-year was at 2.95 percent early last week before selling for 3.03 percent midweek; it was back to 2.97 percent by Friday and opened at 3.04 percent on Monday morning. The uncertainty here stemmed mostly from unclear political direction, tariffs, and trade wars.
  • All three major U.S. markets moved higher last week. The Nasdaq Composite Index led the way, with technology, consumer discretionary, and health care among the top performers. Bond proxies (telecom, utilities, staples) lagged, however, as the week favored a risk-on rally ahead of a widely expected September rate hike. The major news last week was the U.S.–Mexico trade agreement, which seemed to ease the minds of investors, even as trade concerns between the U.S. and China continued to grab headlines. Meanwhile, the U.S. and Canada are set to resume their trade talks this week.
  • Last week was active on the economic update front. On Tuesday, the Conference Board Consumer Confidence Index surprised to the upside. It jumped from 127.4 to 133.4—the highest level in nearly 18 years.
  • On Wednesday, the second estimate of second-quarter gross domestic product growth also came in better than expected. This measure of overall economic activity was revised up to 4.2-percent annualized growth.
  • Finally, on Thursday, personal income and spending figures from July were released. These came in at 0.3 percent and 0.4 percent, respectively, which represents healthy growth levels.

What to look forward to 

Read More

Weekly Market Update, August 27th 2018

Posted by Paul Miller

GENERAL MARKET NEWS
  • On Monday morning, the 10-, 30-, and 2-year Treasuries opened at 2.81 percent, 2.96 percent, and 2.62 percent, respectively. The spread between the 2- and 10-year notes is again at its flattest level in this economic cycle. Historically, an inverted yield curve—where rates on the short end are higher than on the long end—has been a very strong indicator of an economic recession. We seem to be getting much closer to an inversion as we head into fall. Usually, once the curve inverts, a recession occurs within the following 12 to 18 months.
  • S. markets moved higher last week, ignoring domestic political concerns and a midweek trade discussion between the U.S. and China. The energy and technology sectors helped fuel the uptick. A move in oil was supported by a 4.3-percent increase in West Texas Intermediate crude, which bounced back after dropping for six of the previous seven weeks. Sector laggards for the week included consumer staples, utilities, and REITs.
  • Last week also saw the release of a handful of important economic data points. On Wednesday, existing home sales disappointed, declining 0.7 percent against expectations for a modest 0.4-percent increase. On Thursday, new home sales also came in below expectations, falling 1.7 percent, against expectations for a 2.2-percent uptick. Given climbing home prices, low supply, and rising interest rates, a slowdown in housing growth may be in the cards.
  • On Friday, durable goods orders for July came in below expectations, down 1.7 percent. The drop follows several months of robust growth, so this result is not a cause for concern.
  • Finally, also on Friday, Federal Reserve (Fed) Chair Jerome Powell made his first speech at the annual Jackson Hole Economic Policy Symposium. Many interpreted his remarks to be slightly dovish, suggesting that the Fed would continue its gradual path of rate hikes.

What to look forward to

Read More

Weekly Market Update, August 20th 2018

Posted by Paul Miller

 General market news               

  • On Monday morning, the yield for the 10-year Treasury opened at 2.85 percent, closer to the bottom of the range in which it had been trading in recent days. The yields for the 30- and 2-year Treasuries were 3.01 percent and 2.6 percent, respectively. Most parts of the curve opened at or close to the flattest they’ve been in this cycle, with the spread between the 2- and 10-year notes at less than 24 basis points (bps). The difference between yields on the 2- and 30-year Treasuries was down to only 39 bps—just above its most recent low.
Read More

Weekly Market Update, August 13th 2018

Posted by Paul Miller

 

General market news                

  • Rates opened lower across the curve on Monday, with yields for the 10-, 30-, and 2-year Treasuries at 2.84 percent, 3.02 percent, and 2.58 percent, respectively. The spread between short and long rates continued to be off its July 9 low, although it has come down considerably from its late July widening. Investors seem to be debating whether to bet on a strong U.S. economy or volatile global markets. The uncertainty surrounding policy continues to complicate the decision.
Read More

Weekly Market Update, August 6th 2018

Posted by Paul Miller

General market news           

  • After jumping as high as 3.01 percent last Wednesday—the same day that the Federal Reserve (Fed) decided not to raise rates—the yield for the 10-year Treasury opened at 2.95 percent this morning. The yield for the 30- and 2-year Treasuries opened at 3.09 percent and 2.64 percent, respectively.
Read More

Market Thoughts for August 2018 - Video

Posted by Paul Miller

Brad McMillan, Commonwealth’s CIO, recaps the market and economic news for July. It was a great month for U.S. markets, as the Dow, S&P 500, and Nasdaq were all up. And after a terrible June, both developed and emerging markets bounced back as well. This performance was supported by a strong economy. GDP growth for the second quarter came in at the highest level since 2014, both employment and inflation are in healthy territory, and corporate earnings continue to beat expectations. Can this positive momentum continue?

 

Market Thoughts for August 2018 from Commonwealth Financial Network on Vimeo.

Read More

Weekly Market Update, July 30th 2018

Posted by Paul Miller

 General market news          

  • Rates were up across the curve last week, as the 10-year, 30-year, and 2-year Treasuries reached 2.98 percent, 3.10 percent, and 2.67 percent, respectively. The yield curve did steepen, but it remains close to cycle lows. With the recent market resistance, it will be interesting to see if rates move above resistance levels or if the curve continues to flatten.
Read More

The Basics of Credit Scores and Credit Reports

As consumers, we know that having a good credit score is important. Whether you are applying for a loan or signing up for a credit card, your credit score plays a major role in determining if you will be approved. Your credit score can also have a significant impact on loan terms and borrowing costs. 

Read More