Data Drives More Growth

The Weekly Update

Week of October 30, 2017
By Christopher T. Much, CFP®, AIF®

Another week, another round of positive market performance. The 3 major domestic indexes again ended the week with gains and new record highs. The S&P 500 rose 0.23% and marked a 7th-straight week of increases—its longest string of weekly gains in almost 3 years. The Dow added 0.45%, and the NASDAQ grew by 1.09%. Meanwhile, international stocks in the MSCI EAFE slipped slightly, losing 0.35% for the week.

On October 25, we learned that September home sales were higher than anticipated and durable goods orders grew by 2.2% in the same month. This data provided more evidence that the economy is on solid ground. However, two other occurrences last week contributed even more to the continuing market gains: 1) Q3 GDP numbers and 2) tech companies’ corporate earnings reports.

What Drove Markets Last Week?

  1. Economic growth beat expectations.
    We received the first 3rd-quarter Gross Domestic Product (GDP) readings, and the results strongly beat expectations. Despite hurricanes Harvey and Irma causing billions of dollars of damage, the U.S. economy grew by 3% between July and September. Combined with the 3.1% growth in Q2, the economy has now experienced its best 6 months since 2014.
  2. Tech stocks surged.
    Last week, 180 companies in the S&P 500 released their 3rd-quarter earnings data—marking the busiest week of this earnings season. Among the releases, several major tech companies reported much higher-than-expected earnings, contributing to the NASDAQ’s biggest daily gain since 2016. With approximately 30% growth this year, the tech sector has grown at around twice the rate of 2017’s overall market.

What Is on the Horizon?

This week, the Federal Reserve has two milestones ahead:

  1. On Wednesday, we will learn whether the Fed plans to raise benchmark interest rates in November.
  2. On Friday, President Trump will name a new head of the central bank. Janet Yellen’s term expires in early February 2018, and the new Fed Chair will affect monetary policy for at least the next 4 years.

Now that we are 8 years into the economic recovery, we understand that people are looking for reasons to doubt how long this stage will go on. As we saw last week, earnings growth and solid economic data are continuing to emerge, contributing to positive market performance.

If you have any questions about what you are reading in the headlines or experiencing in your own financial life, we are always here to talk.

ECONOMIC CALENDAR
Tuesday: Employment Cost Index, Consumer Confidence
Wednesday: PMI Manufacturing Index, ISM Mfg Index, Construction Spending
Thursday: Jobless Claims, Productivity and Costs
Friday: Employment Situation, PMI Services Index, Factory Orders, ISM Non-Mfg Index

Past performance is no guarantee of future results. Data collected from Investors FastTrack software.
https://www3.troweprice.com/usis/personal-investing/planning-and-research/t-rowe-price-insights/markets/global-markets-weekly-update.html
http://performance.morningstar.com/Performance/index-c/performance-return.action?t=SPX&region=usa&culture=en-US
http://performance.morningstar.com/Performance/index-c/performance-return.action?t=%21DJI&region=usa&culture=en-US
http://performance.morningstar.com/Performance/index-c/performance-return.action?t=@CCO
https://www.msci.com/end-of-day-data-search
https://www3.troweprice.com/usis/personal-investing/planning-and-research/t-rowe-price-insights/markets/global-markets-weekly-update.html
https://www.bloomberg.com/news/articles/2017-10-26/stock-gains-to-extend-to-asia-on-profit-u-s-tax-markets-wrap
https://www.cnbc.com/2017/10/27/first-reading-on-third-quarter-gdp-up-3-point-0-percent-vs-2-point-5-percent-rise-expected.html
http://www.npr.org/sections/thetwo-way/2017/10/27/560403221/u-s-gdp-beats-expectations-growing-at-3-percent
https://www3.troweprice.com/usis/personal-investing/planning-and-research/t-rowe-price-insights/markets/global-markets-weekly-update.html
https://www.cnbc.com/2017/10/27/tech-stocks-leaping-higher-after-blowout-earnings-from-amazon-alphabet-and-microsoft.html
https://www.bloomberg.com/news/articles/2017-10-26/stock-gains-to-extend-to-asia-on-profit-u-s-tax-markets-wrap
https://www.federalreserve.gov/aboutthefed/bios/board/yellen.htm
https://www.federalreserve.gov/aboutthefed/bios/board/default.htm
https://www.cnbc.com/2017/10/27/tech-stocks-leaping-higher-after-blowout-earnings-from-amazon-alphabet-and-microsoft.html
Data Drives More Growth2017-10-30T12:42:02-04:00

Taking an Active Role in Your Family’s Wealth Management Process

Four tangible steps to follow your family’s financial roadmap

Likely, your parents haven’t shared their financial goals, intentions and legacy wishes with you. A discussion of family financial values and wealth transfer plans is an inherently difficult, albeit necessary, conversation. While no one wants to have this conversation with their parents or loved ones, we think it’s a necessary step that can provide you with the roadmap you need to follow and thoughtfully execute your family’s financial plan.

We are excited to share with you our latest piece, Taking an Active Role in Your Family’s Wealth Management Process, which suggests four tangible steps for starting this process. Download a copy of this piece now http://bit.ly/2h8Bpsd.

Taking an Active Role in Your Family’s Wealth Management Process2017-10-25T14:23:25-04:00

Another Banner Week for Markets

The Weekly Update

Week of October 23, 2017
By Christopher T. Much, CFP®, AIF®

Last week, all 3 major U.S. markets hit record highs once again. The Dow added 2.00% to notch both intraday and closing records, the S&P 500 rose 0.86%, and the NASDAQ gained 0.35%. International stocks in the MSCI EAFE dipped by 0.32% for the week.

On Thursday evening, the senate passed the blueprint for a $4 trillion budget. The vote sets the stage for a tax overhaul that could lower taxes for many families and businesses. In addition, some investors believe the promise of tax cuts could push market valuations even higher.

Other investors, however, have expressed concern about the continuing market highs. Although the economy is growing and corporate earnings are up, they fear a potential market correction.

Against this backdrop, last week marked a key milestone in financial history: the 30th anniversary of Black Monday – the largest single-day market percentage drop in history. Remembering the over 22% loss the Dow experienced that day, some investors may worry about whether the same type of precipitous drop is possible today.

Why Today Is Different

In the wake of the 1987 crash, regulators implemented a series of “circuit breakers” to avoid anxiety-induced sell-offs. These rules required a pause in trading if the Dow dropped by 10, 20, or 30%. Since implementing the circuit breakers, only one market-wide pause has occurred – in 1997.

Over the years, regulators have updated the circuit breakers and connected them to S&P 500 performance rather than the Dow. But their function remains the same: to allow time to help understand and react coolly to dramatic market declines. These rules help prevent unnecessary fear and instability from taking over the markets.

Putting Performance in Perspective

While the recent market performance is impressive, it is not unprecedented. Hitting record highs doesn’t have to mean that a correction is ahead. In fact, a year after reaching a new peak, the S&P 500 has had positive growth 72% of the time. Rather than allowing fear or euphoria to drive choices, focusing on data and strategy remains important in every market.

Looking ahead, this week will give us a clearer picture of our economic growth as the first readings of third quarter GDP come out on Friday. Many economists are predicting that the data will show another quarter of strong growth.

We encourage you to contact us if you have any questions about how market highs may affect your portfolio or long-term strategy. We are here to focus on your financial goals and investments, so you can focus on what truly matters to you.

ECONOMIC CALENDAR
Tuesday: PMI Composite Flash
Wednesday: Durable Goods Orders, FHFA House Price Index, New Home Sales
Thursday: Jobless Claims, Pending Home Sales Index
Friday: GDP, Consumer Sentiment

Past performance is no guarantee of future results. Data collected from Investors FastTrack software.

https://www.cnbc.com/2017/10/20/us-stocks-tax-reform-senate-budget.html
http://performance.morningstar.com/Performance/index-c/performance-return.action?t=%21DJI&region=usa&culture=en-US
https://www.cnbc.com/2017/10/20/us-stocks-tax-reform-senate-budget.html
http://performance.morningstar.com/Performance/index-c/performance-return.action?t=SPX&region=usa&culture=en-US
http://performance.morningstar.com/Performance/index-c/performance-return.action?t=@CCO
https://www.msci.com/end-of-day-data-search
https://www.cnbc.com/2017/10/19/senate-passes-a-budget-moving-the-gop-closer-to-tax-reform.html
https://www.cnbc.com/2017/09/27/read-the-full-gop-tax-proposal-here.html
https://www.forbes.com/sites/adamsarhan/2017/09/28/will-the-tax-cut-send-stocks-higher/#53857bd249bb
https://finance.yahoo.com/news/could-1987-stock-market-crash-050919703.html
http://www.npr.org/2017/10/19/558625600/the-30th-anniversary-of-black-monday-a-day-that-made-wall-street-quake
http://www.npr.org/2017/10/19/558625600/the-30th-anniversary-of-black-monday-a-day-that-made-wall-street-quake
https://finance.yahoo.com/news/could-1987-stock-market-crash-050919703.html
https://finance.yahoo.com/news/could-1987-stock-market-crash-050919703.html
https://www.bloomberg.com/news/articles/2017-10-20/a-record-in-records-for-u-s-stocks-rallying-sixth-straight-week
http://wsj-us.econoday.com/byshoweventfull.asp?fid=477656&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top
http://wsj-us.econoday.com/byshoweventfull.asp?fid=477656&cust=wsj-us&wiconly=1&lid=0#top
https://finance.yahoo.com/news/amazon-alphabet-gdp-need-know-week-ahead-162749555.html
Another Banner Week for Markets2017-10-23T14:31:30-04:00

More Record Highs

The Weekly Update

Week of October 16, 2017
By Christopher T. Much, CFP®, AIF®

Last Friday, all 3 major domestic indexes continued their streak of weekly gains and record highs. The S&P 500 added 0.15%, and the Dow was up 0.43%. Meanwhile, both indexes posted their 5th weekly gain in a row. In addition, the S&P 500 and Dow each hit intraday trading records on Friday. The NASDAQ also increased 0.24%, ending on a record high with a 3rd straight week of growth. International stocks in the MSCI EAFE rose as well, gaining 1.61% for the week.

What drove market performance last week?
We received a number of new reports last week, including data showing jumps in the Producer Price Index, Consumer Price Index, and Retail Sales. Recovery efforts from hurricanes contributed to the gains in all three of these readings. And they could continue to affect the markets for a while.

In addition to this new data, two key events contributed to the markets’ continuing growth: 1) a positive start to earnings season and 2) high consumer sentiment numbers.

  1. Earnings Season Started Strong
    Companies have started releasing their 3rd quarter earnings reports, and so far, 87% of them beat bottom-line expectations. Corporate earnings have been strong since Q4 2016, and this quarter will likely continue that trend. However, the growth rate may not match what we have seen for the past few earnings seasons.
  2. Consumer Sentiment Hit 13-Year High
    After 8 years of economic growth, many consumers are feeling more content about their circumstances. The University of Michigan’s consumer sentiment poll for September revealed that consumers held positive perspectives overall—across income, age, and political spectrums. Last month’s reading has the highest consumer sentiment since 2004.

We believe that the ongoing record highs we are witnessing are a good reminder to not let headlines or fear drive your financial choices. This year has certainly provided a variety of geopolitical drama to distract from the economic fundamentals. Nonetheless, in 2017, U.S. share prices have gained $3 trillion in value so far. At the same time, investors have taken $45 billion out of their ETFs and mutual funds—essentially missing this market rally.

Investors exit markets for myriad reasons. But when emotion drives choices, rather than true strategy, those decisions can have a lasting effect on long-term goals. If you have questions about how the markets are performing—or what choices you should be considering right now—we are always here to talk.

ECONOMIC CALENDAR
Tuesday: Industrial Production, Housing Market Index
Wednesday: Housing Starts
Thursday: Jobless Claims
Friday: Existing Home Sales

Past performance is no guarantee of future results. Data collected from Investors FastTrack software.

http://performance.morningstar.com/Performance/index-c/performance-return.action?t=!DJI&region=usa&culture=en-US
http://performance.morningstar.com/Performance/index-c/performance-return.action?t=SPX&region=usa&culture=en-US
http://performance.morningstar.com/Performance/index-c/performance-return.action?t=@CCO
https://www.cnbc.com/2017/10/13/us-stocks-earnings-season-wall-street.html
https://www.msci.com/end-of-day-data-search
http://www.ftportfolios.com/Commentary/EconomicResearch/2017/10/12/the-producer-price-index-rose-0.4percent-in-september
http://www.ftportfolios.com/Commentary/EconomicResearch/2017/10/13/the-consumer-price-index-rose-0.5percent-in-september
http://www.ftportfolios.com/Commentary/EconomicResearch/2017/10/13/retail-sales-increased-1.6percent-in-september
https://www.cnbc.com/2017/10/13/us-stocks-earnings-season-wall-street.html
http://www.marketwatch.com/story/consumer-sentiment-surges-to-13-year-high-in-october-2017-10-13
https://www.bloomberg.com/news/articles/2017-10-13/even-bulls-getting-left-in-dust-as-s-p-500-climbs-for-fifth-week
More Record Highs2017-10-16T14:02:44-04:00

Third Quarter Review

The Weekly Update

Week of October 9, 2017
By Christopher T. Much, CFP®, AIF®

This Monday, October 9, marks the 10-year anniversary of the S&P 500’s highest point before the Great Recession. While the ensuing decade has provided quite a rocky road for the markets at times, the recovery is undeniable. The S&P 500 is now double its peak 10 years ago.

In fact, last week, markets posted one record high after another—and the S&P 500 had its longest streak of record closes since 1997. At the markets’ close, the S&P 500 added 1.19%, the Dow gained 1.65%, and the NASDAQ grew by 1.45%. International stocks in the MSCI EAFE lost 0.07%.

These domestic gains came despite stocks stumbling slightly on Friday in reaction to disappointing jobs numbers. After 7 years of monthly growth, the September jobs report indicated the first labor market contraction since 2010, with 33,000 jobs lost. The decrease was largely due to the aftermath of Hurricanes Harvey and Irma. Despite this unexpected contraction, however, the unemployment rate fell to its lowest level in 16 years, and average hourly earnings increased by 2.9%.

We also began the first trading week of the 4th quarter last Monday, so we will review Q3’s performance and what lies ahead for Q4.

How did the markets perform in Q3?

If we had to pick one word to describe performance in Q3, it would be: positive.

1. Sustained Market Growth
Throughout the quarter, all four indexes we track in this weekly update had solid showings and hit many record highs. The S&P 500 was up 3.96%, the Dow rose 4.94%, the NASDAQ jumped 5.79%, and the MSCI-EAFE gained 4.81%. Both the Dow and S&P 500 marked their 8th straight quarter of gains, and the NASDAQ was not far behind with its 5th positive quarter in a row. The S&P 500 even had its least volatile September in over 47 years.

2. Continued Global Gains
Globally, European and emerging markets posted their 3rd straight quarters of impressive gains. In September, Chinese manufacturing experienced its fastest growth since 2012.

What drove the markets in Q3?

Rather than last quarter’s growth rallying around a few sectors, markets advanced broadly in Q3, with 10 of the 11 S&P 500 sectors gaining. This positive performance reflects solid corporate earnings, stronger oil prices, and impressive core capital goods orders—though inflation remained below the Fed’s target of 2%.

What is on the horizon for Q4?

By most accounts, betting against a strong 4th quarter seems like a bad idea: The S&P 500 has grown during Q4 in 7 out of the past 8 years. Americans remain generally bullish on the economy and continue to increase their spending as their incomes grow and inflation remains low.

In addition, manufacturing, services, and housing all seem to be supporting economic expansion. This growth is not limited to the United States; globally, 94% of countries are experiencing year-over-year economic growth.

Of course, the coming weeks will give us an even clearer understanding of Q3 performance—and Q4 expectations. If you have questions about how the markets are affecting your portfolio and future, please let us know. We are here to provide the guidance you need and help clarify your investment process.

ECONOMIC CALENDAR
Monday: Banks Closed for Columbus Day Holiday
Wednesday: JOLTS
Thursday: Jobless Claims
Friday: Consumer Price Index, Retail Sales, Consumer Sentiment

Past performance is no guarantee of future results. Data collected from Investors FastTrack software.
https://www.ft.com/content/f1220e04-aad7-11e7-ab55-27219df83c97https://www.cnbc.com/2017/10/06/us-stocks-jobs-report-sp-winning-streak.html
http://performance.morningstar.com/Performance/index-c/performance-return.action?t=!DJI&region=usa&culture=en-US
http://performance.morningstar.com/Performance/index-c/performance-return.action?t=SPX&region=usa&culture=en-US
http://performance.morningstar.com/Performance/index-c/performance-return.action?t=@CCO
https://www.msci.com/end-of-day-data-search
https://www.cnbc.com/2017/10/06/us-stocks-jobs-report-sp-winning-streak.html
http://performance.morningstar.com/Performance/index-c/performance-return.action?t=SPX&region=usa&culture=en-US
http://performance.morningstar.com/Performance/index-c/performance-return.action?t=%21DJI&region=usa&culture=en-US
http://performance.morningstar.com/Performance/index-c/performance-return.action?t=@CCO
https://www.msci.com/end-of-day-data-searchhttps://www.cnbc.com/2017/09/29/stock-markets-wrap-up-solid-third-quarter.html
http://money.cnn.com/2017/09/29/investing/dow-longest-quarterly-win-streak-20-years/index.html
http://www.marketwatch.com/story/what-rose-in-the-third-quarter-stocks-bondsbasically-everything-2017-09-29
http://www.reuters.com/article/us-china-economy-pmi-official/chinas-factories-grow-at-fastest-pace-in-over-five-years-as-prices-surge-idUSKCN1C5027
http://www.marketwatch.com/story/what-rose-in-the-third-quarter-stocks-bondsbasically-everything-2017-09-29
http://money.cnn.com/2017/09/29/investing/dow-longest-quarterly-win-streak-20-years/index.html
https://www.cnbc.com/2017/09/28/oil-mixed-but-set-for-weekly-gain-on-improving-market-outlook.html
http://wsj-us.econoday.com/byshoweventarticle.asp?fid=483784&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top
https://www.bloomberg.com/news/articles/2017-09-29/kindest-quarter-arrives-for-stock-market-that-nothing-can-rattle
https://www.bloomberg.com/news/articles/2017-09-29/kindest-quarter-arrives-for-stock-market-that-nothing-can-rattle
http://wsj-us.econoday.com/byshoweventarticle.asp?fid=483784&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top
http://wsj-us.econoday.com/byshoweventarticle.asp?fid=483728&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top
https://www.gsam.com/content/gsam/us/en/advisors/market-insights/market-strategy/market-know-how/2017/Q42017.html
Third Quarter Review2017-10-09T14:49:08-04:00

Another Week of Highs

The Weekly Update

Week of October 2, 2017
By Christopher T. Much, CFP®, AIF®

Before we begin our usual weekly commentary, we wanted to take a moment to honor the victims of Sunday’s terrible attack in Las Vegas. Though details are still scarce, it is the most devastating mass shooting in U.S. history. Our thoughts are with the victims, their families, and with the community that now must cope with the aftermath of the tragedy. As we look for answers, let’s also remember to be grateful for the ones we love.

Last week’s final performance of Q3 saw the S&P 500 hit a new high and finish up 0.68%. Meanwhile, the Nasdaq beat previous records with a 1.07% gain, and the Dow notched a 0.25% increase to come within 0.1% of its all-time high. International markets, however, experienced a slight dropthe MSCI EAFE fell 0.19% for the week.

As the country continues its recovery from Hurricanes Harvey, Irma, and Maria, the economy keeps revealing positive strides. A few specific performance factors rounded out the week:

  • Small Cap Gains Post Strong Returns
    Small cap gains hit record highs last week. Some analysts think the gain is partially a result of President Trump’s proposed tax code changeswhich offers tax cuts to corporations and individuals. Because small cap companies often have limited international resources, they often benefit the most from tax cuts. That said, rising interest rates and a higher dollar are also factors to consider.
  • Dollar Is on the Rise
    The dollar index fell on Friday, but the buck still points towards weekly and monthly highs. Despite dipping after news of slow consumer spending, the greenback responded positively to increases in consumer sentiment and the Chicago Purchasing Managers Index. The Chicago Purchasing Managers Index matters to investors because it measures manufacturing and non-manufacturing activity in the greater Chicagoland area. These numbers tend to closely mirror the rest of the country.
  • Corporate Earnings Hit New Highs
    Corporate earnings are a signifier of how well corporate stocks perform. Last week, earnings posted back-to-back double-digit gains for the first time since 2011. This performance helped push markets beyond geopolitical affairs and concerns from the recent devastation caused by hurricanes.

What Is Ahead?

Markets will continue to watch out for Harvey, Irma, and Maria’s influence on this week’s key economic reports. Analysts expect strong data from manufacturing to vehicle sales, though damages to ports may affect international trade.

Further, we are watching the Fed’s decisions to shrink its balance sheet and raise interest rates. We will also continue following how President Trump’s recent announcement to possibly replace Fed Chair Janet Yellen (whose tenure ends in February) affects the markets.

As always, we continue our focus on helping you meet your long-term goals. If you have any questions as to how last week’s news may affect your portfolio, let us know. We are here to answer questions and help your investment process run smoothly.

ECONOMIC CALENDAR
Monday: PMI Manufacturing Index, ISM Manufacturing Index, Construction Spending
Tuesday: Motor Vehicle Sales
Wednesday: ADP Employment Report, ISM Non-Mfg Index
Thursday: Factory orders
Friday: Employment Situation

Past performance is no guarantee of future results. Data collected from Investors FastTrack software.
https://www.cnbc.com/2017/09/29/stock-markets-wrap-up-solid-third-quarter.html
http://performance.morningstar.com/Performance/index-c/performance-return.action?t=SPX&region=usa&culture=en-US
http://performance.morningstar.com/Performance/index-c/performance-return.action?t=@CCO
http://performance.morningstar.com/Performance/index-c/performance-return.action?t=%21DJI&region=usa&culture=en-US
https://www.cnbc.com/2017/09/29/stock-markets-wrap-up-solid-third-quarter.htmlhttps://www.msci.com/end-of-day-data-search
https://www.cnbc.com/2017/09/28/us-stocks-open-lower-after-gop-tax-plan-reveal-interest-rates-eyed.html
https://www.cnbc.com/2017/09/28/us-stocks-open-lower-after-gop-tax-plan-reveal-interest-rates-eyed.html
https://www.cnbc.com/2017/09/29/us-futures-point-to-cautious-open-concerns-over-trump-tax-proposals.html
https://www.thestreet.com/story/14322912/1/small-cap-stocks-catch-fire-amid-trump-s-big-six-tax-cut-plan.html
https://www.cnbc.com/2017/09/28/us-stocks-open-lower-after-gop-tax-plan-reveal-interest-rates-eyed.html
http://www.marketwatch.com/story/dollars-bouncing-but-dont-call-it-a-comeback-2017-09-29
https://www.cnbc.com/2017/09/28/dollar-set-for-best-weekly-gain-in-2017-euro-struggles.html
http://wsj-us.econoday.com/byshoweventfull.asp?fid=477952&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top
https://www.bloomberg.com/news/articles/2017-09-29/kindest-quarter-arrives-for-stock-market-that-nothing-can-rattle
http://wsj-us.econoday.com/byshoweventfull.asp?fid=477756&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top
https://www.bloomberg.com/news/articles/2017-09-29/kindest-quarter-arrives-for-stock-market-that-nothing-can-rattle
http://wsj-us.econoday.com/byshoweventarticle.asp?fid=483784&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top
https://www.nytimes.com/2017/09/26/us/politics/janet-yellen-fed-interest-rates-inflation.html?_r=0
https://www.cnbc.com/2017/09/29/kevin-warsh-is-far-from-a-lock-to-replace-janet-yellen-as-fed-chair.html
Another Week of Highs2017-10-02T15:36:35-04:00