Managing Held Away Assets

Investment Gaps & Overlaps

By the age of 50, the average person will have 11.9 jobs. Along the way, you may collect smaller retirement plan accounts at your previous employers. However, as a group, these accounts may amount to one of your largest assets. Are you allowing these assets to go unmanaged? Consolidating them under the watchful eye of a trusted financial guide just may be the answer.

Managing Held Away Assets2018-05-31T10:37:09-04:00

Stocks Up, Signals Mixed

The Weekly Update

Week of May 29, 2018
By Christopher T. Much, CFP®, AIF®

Geopolitical uncertainty affected stocks last week, as the historic summit between the U.S. and North Korea began to look less likely. On Thursday, May 24, President Trump announced that the summit was off, and stocks stumbled in reaction. The next day, Trump said the meeting might still occur next month, leaving investors questioning the eventual outcome.

Also, on the geopolitical front, an announcement that Saudi Arabia and Russia would consider easing back oil supply restrictions affected stocks. U.S. crude oil prices dropped in response, pulling energy stocks down with them.

Despite these developments, major domestic indexes increased last week. The S&P 500 gained 0.31%, the Dow added 0.15%, and the NASDAQ grew by 1.08%. International stocks dropped, with the MSCI EAFE decreasing by 1.60%.

What kept U.S. stocks in positive territory for the week?

Solid corporate earnings helped drive upward movement.

Several companies experienced double-digit stock growth last week after releasing their latest data. This strong performance helped balance the declines and uncertainty that the week’s geopolitical headlines created.

What other economic perspectives did we receive?

From durable goods to home sales, various data came out last week:

  • The factory sector could drive economic growth, as steel and aluminum tariffs are contributing to rising value of orders and inventories for metals.
  • Business confidence and 2nd-quarter investment could increase, as strong core durable goods orders may indicate good news for companies.
  • Housing is underperforming, as growth in home sales volume and prices have softened recently.

Overall, last week provided a mix of insight about the current economic strength and geopolitical environment. In this week’s 4 trading days, we’ll gain more perspectives on consumer confidence, Gross Domestic Product, manufacturing, and employment. We will use this data to continue building our understanding of what may lie ahead in the markets—and how to prepare our clients for the future. If you have any questions, we are here to talk.

Monday: U.S. Markets Closed for Memorial Day
Tuesday: Consumer Confidence
Wednesday: GDP, ADP Employment Report
Thursday: Jobless Claims
Friday: Employment Situation, PMI Manufacturing Index, ISM Mfg Index, Construction Spending

Past performance is no guarantee of future results. Data collected from Investors FastTrack software.
Stocks Up, Signals Mixed2018-05-29T12:29:59-04:00

Tackling Trade & Treasuries

The Weekly Update

Week of May 21, 2018
By Christopher T. Much, CFP®, AIF®

Major domestic indexes went down last week after all three gained more than 2% the previous week. The S&P 500 dropped 0.54%, the Dow gave back 0.47%, and the NASDAQ lost 0.66%. International stocks also stumbled; the MSCI EAFE decreased by 0.61%.

Two familiar topics were on many investors’ minds last week: trade and treasuries. Here is a recap of the key details and their market impacts.

1. U.S. and China Resumed Trade Talks

Tension between the world’s 2 largest economies continued last week as the U.S. and China launched another round of trade discussions. Both countries have threatened billions of dollars of tariffs on the other’s products, but so far, neither has acted.

On Saturday, May 19, the countries released a joint statement saying they would take measures to “substantially reduce the United States’ trade deficit in goods with China.” The Chinese state media called the agreement a “win-win.” Then, on Sunday, May 20, U.S. Treasury Secretary Steven Mnuchin announced that they had “put the tariffs on hold.” The weekend’s developments imply both countries will continue working to close the trade deficit by increasing China’s imports of U.S. agricultural commodities and energy.

Market Impact:
As the trade talks unfolded on Thursday and Friday, investors received very little information. This uncertainty affected investor sentiment and contributed to stocks ending lower on Friday. Now that the countries have shared some details about the negotiations, we will focus on how investors digest the news in next week’s trading. Mnuchin’s assertion that the trade war is on hold for now should be welcome news for investors.

2. U.S. Treasury Yields Spiked

The 10-year Treasury yield closed at 3% or higher every day last week. Early Friday, it reached its highest point in almost 7 years as data continued to demonstrate the labor market’s strength. We learned last week that the number of people receiving jobless benefits is at its lowest since 1973. Unemployment is also currently at an almost 17-year low. The numbers suggest the economy is likely reaching full employment.

So, how does labor data affect Treasuries? Typically, employers pay higher wages when unemployment is low. As wages increase, other prices in the economy often rise, which can trigger inflation. This can cause Treasury prices to suffer as their fixed payments become less valuable, causing yields to rise.

Market Impact:
Treasury yields affect markets in a variety of ways. When they increase quickly, concerns can arise that the economy is accelerating too fast, which can cause the Federal Reserve to raise interest rates. In addition, for 10-year Treasuries, yields above 3% are a psychological benchmark. Some people believe stocks become less appealing when Treasuries can provide this level of income.

What’s Ahead:
For now, we will continue to analyze whether yield increases are a sign of a strengthening economy or rising inflation rates.

We know that trade disputes and Treasury yields are complex, constantly changing topics. So, if you have questions about how these details affect your financial life, we are here to talk.

Wednesday: New Home Sales, FOMC Minutes
Thursday: Existing Home Sales, Jobless Claims
Friday: Durable Goods Orders, Consumer Sentiment

Past performance is no guarantee of future results. Data collected from Investors FastTrack software.
Tackling Trade & Treasuries2018-05-21T12:32:24-04:00

Markets Post Week of Growth

The Weekly Update

Week of May 14, 2018
By Christopher T. Much, CFP®, AIF®

On Friday, the markets closed the week gaining traction. The Dow had 7 days of consecutive growth, rising 2.34%—its largest weekly gain since March. Meanwhile, the S&P 500 rose 2.41%, the NASDAQ jumped 2.68%, and the MSCI EAFE increased 1.41%.

Various factors came together to support the growth. From geopolitical topics to strong corporate earnings, we’ll focus on 3 key developments that drove movement.

1. Energy Shares Boosted by Iran Nuclear Deal Withdrawal

President Trump’s decision on Tuesday to withdraw from the Iran nuclear deal helped push the energy sector higher. With the possibility of renewed sanctions on the horizon, the anticipation of a pullback from global oil supplies helped boost prices. Though oil prices fell from a 3½-year high on Friday, it was the 2nd week of growth, driving energy shares to rise 3.8%.

2. Technology Sector Jumps Amid Strong Corporate Earnings

After the technology sector’s months of stagnation—fueled in part by recent fears over privacy—it is now approaching all-time highs. Since April 25, the information technology sector has increased 9%. The movement is driving many investors to join the rally, while many analysts remain cautious. Overall, the growth contributed 3.5%.

This rally happened on the back of strong corporate earnings. Over 70% of total S&P 500 companies reported earnings growth that exceeded expectations. Last week’s positive reports helped push the index past 50- and 100-day moving averages.

3. Inflation Remains Steady

The Consumer Price Index (CPI), which measures the price of goods and services, rose only 0.2% for the month in April and 2.5% over the year. These reports both missed and met expectations, respectively. The tepid growth caused some investors to worry that the Federal reserve would raise interest rates more quickly, as the U.S. dollar fell and held below its 2018 high. Some analysts, however, believe that the missed expectations should ease the Fed’s pressure to fast-track interest rates.

Looking Ahead

We will continue tracking geopolitical developments—from potential actions against Syria, tariffs on Iran, and preparations for President Trump’s upcoming meeting with North Korea’s Kim Jong-un. In addition, key discussions around the American Free Trade Act and trade relationships with China remain on the horizon. We also will gain our first insights on how well consumer spending performed in the 2nd quarter.

If you would like to discuss any developments or gain a clearer understanding of how these issues may affect your portfolio, contact us today. We are always here to help you make sense of your financial life and gain clarity for the road ahead.

Tuesday: Retail Sales, Housing Market Index
Wednesday: Housing Starts
Thursday: Initial Jobless Claims, Philadelphia Fed Business Outlook Survey, Bloomberg Consumer Comfort Index

Past performance is no guarantee of future results. Data collected from Investors FastTrack software.
Markets Post Week of Growth2018-05-14T13:33:35-04:00

Announcing the Launch of the CTS Resource Center

Announcing the Launch of the CTS Resource Center

We focus on overall financial health, helping you meet your financial goals and live your best financial life. We believe that a financial life well-lived is collaborative and informed, empowering investors with the proficiency to ask the right questions of the right people. With this in mind, we are excited to launch the CTS Resource Center, focused on financial education 24-7.

Announcing the Launch of the CTS Resource Center2018-05-10T09:01:42-04:00

Examining Unemployment

The Weekly Update

Week of May 6, 2018
By Christopher T. Much, CFP®, AIF®

Domestic indexes posted strong results on Friday, May 4, as the latest labor report data lessened investors’ concerns about inflation and interest rates. Nonetheless, stocks had mixed results last week. The S&P 500 dropped 0.24% and the Dow gave back 0.20%, which marked both indexes’ 2nd week of losses in a row. Thanks to a bounce in tech stocks, however, the NASDAQ gained 1.26%. International stocks in the MSCI EAFE decreased by 0.57%.

Amid this relatively tepid performance, we reached a big milestone on May 1: Our current economic expansion is now officially the 2nd longest on record. For 8 years and 10 months, the economy has been growing, and many sectors still have room to advance.

As we look to better understand where we stand today, Friday’s employment report provides key insights into our economic health.

What We Learned About Employment – 

  1. Growth Slowed
    The report indicated that the economy added fewer jobs than expected in April, and average hourly wage growth also grew more slowly than forecast. Federal Reserve members watch this data closely to help anticipate changes in inflation.
  2. Participation Dropped
    The percentage of working-age people participating in the labor force dropped by 0.1%. This decline may result from people retiring or returning to school but can also come from people choosing to stop looking for work. The lower participation rate may contradict some of the more positive trends we’ve seen recently.
  3. Unemployment Declined
    Despite missing growth projections, unemployment fell to 3.9%, the lowest point in 18 years. The rate has only dropped below 4% during 3 other periods. The low unemployment numbers came more from the lower labor force participation rate than from more people finding jobs.

Key Takeaway
Lower participation rates could affect long-term economic growth. However, the combination of low unemployment and reasonable wage growth are likely a positive scenario for the economy. Many people who want jobs are already employed, but inflation should remain under control.

As the bull market lumbers toward its 9th year, many reports continue to indicate a solid economy. If the economic expansion continues through July 2019, it would be the longest in history (with records going back to the 1850s). While that accomplishment would be noteworthy, our focus remains on current circumstances, and striving to find insight that affects your financial future. From trade to jobs to manufacturing and beyond, we have many details to watch on your behalf.

Tuesday: JOLTS
Thursday: Consumer Price Index, Jobless Claims
Friday: Consumer Sentiment

Past performance is no guarantee of future results. Data collected from Investors FastTrack software.
Examining Unemployment2018-05-07T13:16:16-04:00