The S&P 500 has had a 3-week run for the record books. In the last 15 trading days, the stock index has set 12 all-time record closes, including last Friday’s (5/17/13) finishing value of 1667. That’s 990 points and 170% (total return) removed from a bear market low of 677 that occurred 50 ½ months ago. Market momentum has pushed the S&P 500 into uncharted territory and a +17.9% YTD gain (source: BTN Research).
The current bull market has been remarkable not only for its gains but for its limited volatility. From 1970-2007 (i.e., 38 years), the S&P 500 either gained or lost at least 3% in a single trading day 98 times or just over 1% of trading days (i.e., measurement based upon the closing value of the index on consecutive trading days). During 2008-11, the index gained or lost at least 3% in a single trading day 85 times or more than 8% of trading days. But from 1/01/12 through Friday (5/17/13), the S&P 500 has not gained or lost at least 3% in any single day, a stretch of 345 trading days (source: BTN Research).
Our nation’s “credit card limit” has been reinstated as of yesterday (5/19/13) equal to our outstanding debt total (approximately $16.7 trillion) from the day before. However our best fiscal month in 5 years (an April 2013 surplus of $113 billion) may regrettably provide elected officials in Washington the political cover they need to delay any meaningful discussion about our nation’s spending habits (source: Treasury Department).
Notable Numbers for the Week:
FLAT, THEN NOT FLAT - Over the 11-year period from the end of calendar year 1967 to the end of calendar year 1978, the value of the S&P 500 changed by less than 1 point (i.e., an index value of 96.47 on 12/31/67 to an index value of 96.11 on 12/31/78). Over the subsequent 34 years (1979-2012), the S&P 500 index value grew nearly 15-fold, gaining +11.4% annually on a total return basis. The S&P 500 consists of 500 stocks chosen for market size, liquidity and industry group representation. It is a market value weighted index with each stock’s weight in the index proportionate to its market value (source: BTN Research).
BEST OF THE REST - The yield on the 10-year Treasury note was 2.57% on 8/05/11, the day that S&P announced a downgrade of the USA from AAA to AA+. Now 21 months later, the yield on the 10-year Treasury note closed last Friday (5/17/13) at 1.95% as global bond investors continue to buy US debt (source: Treasury Department).
BUT WHAT IF? - The average interest rate that Uncle Sam is paying on its interest bearing debt is 2.464% as of 4/30/13, approximately half the cost the government was paying (4.838%) as of 12/31/07 (source: Treasury Department).
NOT TOGETHER - From 6/30/04 to 6/29/06, the Fed raised short-term interest rates from 1% to 5.25%, but over the same period the yield on the 10-year Treasury note rose only from 4.62% to 5.22% (source: Federal Reserve).
*Partners Wealth Management, Inc. (PWM) is an independent wealth management firm dedicated to serving affluent clients by providing comprehensive, integrated planning and investment services. We act as advocates on behalf of individuals, families, and businesses who require highly specialized financial and advisory services. LEARN MORE>
This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed by NFP Securities, Inc. as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. The indices mentioned are unmanaged and cannot be directly invested into. Past performance does not guarantee future results. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the US stock market. Copyright © 2013 Michael A. Higley. All rights reserved.
*Securities and Investment Advisory Services offered through NFP Securities, Inc. a Broker/Dealer, Member FINRA/SIPC and Federally Registered Investment Advisor. Partners Wealth Management is an affiliate of National Financial Partners Corp., the parent company of NFP Securities, Inc.
The bull market for stocks shows no sign of slowing. The S&P 500 gained another +1.3% last week (total return), bringing the index’s YTD gain to +15.4%. Friday’s (5/10/13) close of 1634 was the S&P 500’s highest close ever and its 12th record close this year. Investors that have participated in the rally from the beginning (stocks have gained +164% from a bear market low on 3/09/09) are deciding if the 50-month bull market will continue. Investors that have missed out on the rally are deciding if they should jump in now or wait for a correction that would provide a cheaper entry point. The fear of “staying in and going down” is as paralyzing as the fear of “staying out and missing out” (source: BTN Research).
During Alan Greenspan’s 18 ½ years as chairman, the Fed’s party line was that their role was not to try and identify asset bubbles before they ruptured but rather to provide liquidity after the bubble burst. As a result, Greenspan’s term was marked by “boom to bust” cycles in the stock, real estate and credit markets. In a Chicago speech last Friday, current Fed Chairman Ben Bernanke described a different Fed philosophy regarding bubbles. Bernanke acknowledged that the central bank is proactively monitoring a wide range of financial markets, looking for signs of excessive risk taking by speculative investors frustrated over the low level of interest rates (source: Federal Reserve).
The US government reported a $113 billion surplus for April 2013, its 2nd surplus month this year and its largest monthly surplus in 5 years. The $407 billion of tax receipts was the largest monthly total ever collected (source: Treasury Department).
Notable Numbers for the Week:
1. OPTIMISTIC - 100 of 135 money managers in the USA (74%) surveyed in mid-March 2013 were either “bullish” or “very bullish” on the US stock market through December 2013 (source: Barron’s).
2. CAN I TAKE A MULLIGAN? - At Friday’s (5/10/13) close of 1634, the S&P 500 is at a higher value than what 9 of 10 Wall Street equity strategists forecasted for the stock index for 12/31/13. The year-end 2013 predictions were made on 12/17/12. The close of stock trading last Friday completes just 19 weeks of calendar year 2013 (source: Barron’s).
3. GOOD AND BAD YEARS - There were only 10 failed banks nationwide during the 5 calendar years of 2003-07. By comparison, a total of 465 banks failed during the last 5 calendar years of 2008-12 (source: Federal Deposit Insurance Corporation).
4. LOOKING FOR A JOB - 1.8 million students will graduate from college as part of the Class of 2013 (source: National Association of Colleges and Employers).
*Partners Wealth Management, Inc. (PWM) is an independent wealth management firm dedicated to serving affluent clients by providing comprehensive, integrated planning and investment services. We act as advocates on behalf of individuals, families, and businesses who require highly specialized financial and advisory services. LEARN MORE>
This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed by NFP Securities, Inc. as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. The indices mentioned are unmanaged and cannot be directly invested into. Past performance does not guarantee future results. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the US stock market. Copyright © 2013 Michael A. Higley. All rights reserved.
*Securities and Investment Advisory Services offered through NFP Securities, Inc. a Broker/Dealer, Member FINRA/SIPC and Federally Registered Investment Advisor. Partners Wealth Management is an affiliate of National Financial Partners Corp., the parent company of NFP Securities, Inc.
The close of stock trading last Friday (5/03/13) capped yet another remarkable week for investors. At 1614, the S&P 500 is at its highest closing value ever (the index began in 1957) and is up +14.0% YTD (total return) through just 18 weeks in calendar year 2013. The week’s biggest gains came on Friday after the government announced that employers added +165,000 new jobs in April 2013, a larger than expected result. Private sector employers have added +4.65 million new workers in the last 2 years. The bull market for the S&P 500 stock index that began on 3/09/09 and has produced +161% of gains will reach 50 months in duration during the upcoming week, still short of the average length for a bull market (57 months) since 1950 (source: BTN Research).
The Federal Reserve concluded a 2-day meeting last week and released their widely expected statement that they will continue to purchase $85 billion of bonds each month in order to maintain the ultralow interest rates that have been in place since December 2008. What wasn’t expected was the Fed’s admission that the central bank would consider increasing their monthly asset purchases to a level above $85 billion if weakness in the US economy required even more intervention (source: Federal Reserve).
The government’s announcement last Monday (4/29/13) that they will retire $35 billion of Treasury bills, notes and bonds in the 2nd quarter 2013 (instead of rolling the debt over with newly borrowed funds) was a small victory (the USA last paid down debt in 2007). The $35 billion represents just 0.2% of America’s $16.8 trillion national debt total. The debate in Congress over our country’s spending habits will begin anew this upcoming week as the nation approaches 5/19/13, the date when our debt ceiling will be reinstated (source: Treasury Department).
Notable Numbers for the Week:
1. ON A ROLL - Although the S&P 500 has been “up” (on a total return basis) in 10 of the last 11 months through 4/30/13, the split between “up” and “down” months over the last 25 years is 64/36 (source: BTN Research).
2. MANY LESS - As of 3/31/13, there were 1.93 million existing homes for sale in the USA. Just 4 years earlier (3/31/09), the number of homes on the market was 3.65 million (source: National Association of Realtors).
3. MUCH WORSE THERE - The unemployment rate in the United States is 7.5% today. The unemployment rate in the Eurozone is 12.1% (source: Department of Labor).
4. CHANGE OF ATTITUDE - The first oil refinery built in the United States in 37 years broke ground in March 2013 in North Dakota and is expected to be operational in 2014 (source: Department of Energy).
*Partners Wealth Management, Inc. (PWM) is an independent wealth management firm dedicated to serving affluent clients by providing comprehensive, integrated planning and investment services. We act as advocates on behalf of individuals, families, and businesses who require highly specialized financial and advisory services. LEARN MORE>
This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed by NFP Securities, Inc. as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. The indices mentioned are unmanaged and cannot be directly invested into. Past performance does not guarantee future results. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the US stock market. Copyright © 2013 Michael A. Higley. All rights reserved.
*Securities and Investment Advisory Services offered through NFP Securities, Inc. a Broker/Dealer, Member FINRA/SIPC and Federally Registered Investment Advisor. Partners Wealth Management is an affiliate of National Financial Partners Corp., the parent company of NFP Securities, Inc.
A computer hacker demonstrated how fleeting success can be on Wall Street last week. The Twitter account of the news organization AP was hacked for mere minutes last Tuesday (4/23/13), allowing just enough time for a fake tweet to be released that stated the White House had been bombed and that President Obama had been injured in the blast. 3 minutes and $200 billion of stock losses later, the tweet was discredited and the stock market recovered. By week’s end, the S&P 500 was up +11.7% YTD (total return), including a gain of +0.9% for the month of April (source: BTN Research).
The US economy grew by +2.5% during the 1st quarter 2013 (i.e., quarter-over-quarter change expressed as an annualized result), a solid if yet unspectacular performance. The US government also announced changes to its methodology in calculating the size of the economy (i.e., GDP) that will take effect in July 2013. The modifications, the first major adjustments made since 1999, are expected to increase the size of the US economy by approximately +3% (i.e., $475 billion) to $16.3 trillion. The changes will be applied retroactively to GDP numbers back to 1929 (source: Commerce Department).
The jobless rates throughout much of Europe have reached historic levels. Spain’s 27.2% unemployment rate at the end of the 1st quarter 2013 is greater than the USA’s 25% jobless rate that was reached during America’s Great Depression of the 1930s. Surprisingly, Spain’s cost of borrowing seems disconnected from its current economic woes. The yield on Spanish 10-year paper was 4.28% at week’s end, down from 5.31% at the close of calendar year 2012 (source: BTN Research).
Notable Numbers for the Week:
1. EITHER ONE OR THE OTHER - Based upon the last 80 years (1933-2012), the S&P 500 is as likely to gain at least +26% (total return) in any single calendar year as it is to have a negative total return for the year. Both events have occurred 20 times over the 80-year period (source: BTN Research).
2. SIX YEARS - The median sales price ($247,000) of new homes sold in the USA during March 2013 is below the median sales price ($254,000) of new homes sold in March 2007 (source: Census Bureau).
3. HEALTH CARE - The average premium in 2012 for an employer-sponsored health plan covering a family of 4 was $1,312 per month. On average, an employee pays 27% of the total premium (i.e., $360 per month) and the employer pays the remaining 73% (i.e., $952 per month) (source: Kaiser Family Foundation).
4. LARGE PEOPLE - 42% of US adults at least age 20 are projected to be obese by 2030, i.e., a body mass index of at least 30. Only 15% of US adults were obese in 1980 (source: American Journal of Preventive Medicine).
*Partners Wealth Management, Inc. (PWM) is an independent wealth management firm dedicated to serving affluent clients by providing comprehensive, integrated planning and investment services. We act as advocates on behalf of individuals, families, and businesses who require highly specialized financial and advisory services. LEARN MORE>
This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed by NFP Securities, Inc. as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. The indices mentioned are unmanaged and cannot be directly invested into. Past performance does not guarantee future results. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the US stock market. Copyright © 2013 Michael A. Higley. All rights reserved.
*Securities and Investment Advisory Services offered through NFP Securities, Inc. a Broker/Dealer, Member FINRA/SIPC and Federally Registered Investment Advisor. Partners Wealth Management is an affiliate of National Financial Partners Corp., the parent company of NFP Securities, Inc.
It was a week filled with troubles outside the world of finance. 2 bombs exploded near the finish line of the Boston Marathon on Monday (4/15/13), killing 3 spectators and wounding at least 180. The terrorist attack led to a late night shootout and a house-to-house search that wasn’t resolved until the end of the week. A massive explosion that rocked a fertilizer plan in a small Texas town killed 14 on Wednesday (4/17/13). The blast was fueled by explosive material 13.5 times larger than that of the 1995 Oklahoma City bombing. The Senate, with the unsolved Boston bombings as a backdrop, then failed midweek on a contentious vote to expand background checks on gun purchases. The S&P 500, which had already started to falter before the Monday Boston bombings, fell 2.1% for the week (total return), including its worst trading day of the year. The index however remains up +9.7% YTD (source: BTN Research).
The International Monetary Fund (IMF) issued a warning last Tuesday (4/16/13) that countries around the world need to reconsider the belt-tightening they are implementing (i.e., higher taxes and lower spending), advising that too much austerity and not enough growth initiatives will only deepen the recession in many parts of the globe. The IMF, an organization representing 188 countries that works to foster global monetary cooperation, specifically called out the USA and Germany in its semiannual report (source: IMF).
The team of Bowles-Simpson, having first proposed a debt reduction plan in December 2010, continues to beat the drum with yet another plan that was released last week. There are now 4 separate spending plans (versions from the House, Senate, Bowles-Simpson and the White House) on the table, setting the stage for a national discussion on how much government do Americans want to pay for (source: BTN Research).
Notable Numbers for the Week:
1. LABOR PROGRESS - During the 1st quarter of 2013, +30,000 manufacturing jobs were created in the USA. 638,000 manufacturing jobs were eliminated during the 1st quarter of 2009 (source: Department of Labor).
2. MUCH LARGER - For the 17 years from 1965-1981, the top individual marginal tax bracket paid by American taxpayers was 70%, much greater the 39.6% top rate effective for 2013 (source: IRS).
3. YOU’VE GOT IT, I WANT IT - 52% of Americans surveyed believe that the US government should redistribute wealth by increasing taxes on affluent Americans (source: Gallup).
4. CLOSE THE DOORS - 5 banks have failed YTD as of 4/15/13. 51 banks failed in all of 2012. There are 7,083 insured banks nationwide (source: Federal Deposit Insurance Corporation).
*Partners Wealth Management, Inc. (PWM) is an independent wealth management firm dedicated to serving affluent clients by providing comprehensive, integrated planning and investment services. We act as advocates on behalf of individuals, families, and businesses who require highly specialized financial and advisory services. LEARN MORE>
This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed by NFP Securities, Inc. as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. The indices mentioned are unmanaged and cannot be directly invested into. Past performance does not guarantee future results. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the US stock market. Copyright © 2013 Michael A. Higley. All rights reserved.
*Securities and Investment Advisory Services offered through NFP Securities, Inc. a Broker/Dealer, Member FINRA/SIPC and Federally Registered Investment Advisor. Partners Wealth Management is an affiliate of National Financial Partners Corp., the parent company of NFP Securities, Inc.
At 1589, Friday’s (4/12/13) close of the S&P 500 is higher after just 15 trading weeks this year than where 6 of 10 Wall Street equity strategists polled in Barron’s in December 2012 had forecasted for year-end 2013. The stock index’s +12.1% YTD performance (total return) has left scores of “out-of-the-market” investors frustrated as they wait for the correction that hasn’t occurred (source: BTN Research).
President Obama released his long awaited budget plan last Wednesday (4/10/13), an annual February requirement that was as much scrutinized for its 10-year projection (2014-2023) as it was for the upcoming fiscal year (2014). The White House proudly announced its proposal would reduce our nation’s debt by $1.4 trillion over the next decade. However, when Washington says they are “reducing” our nation’s debt total, in reality they are projecting our debt to increase by $5.27 trillion by 2023 instead of growing by $6.68 trillion as is the estimate in the current “baseline” projection, i.e., our debt continues to grow, albeit at an amount $1.4 trillion less than previously forecasted. Budget wonks will now compare Obama’s 244-page 10-year plan to the House and Senate proposals that were passed in late March 2013 (source: White House).
The price of gold plunged last week, finishing Friday at $1,501 an ounce, its low close of the year. The precious metal is down 10% YTD and down 21% from its August 2011 peak of $1,889. The price drop was driven by reports that the Fed is considering ending QE3 by December 2013, suggesting that our economy has improved enough to bring to a close the central bank’s easy monetary policy and causing investors to shed safe havens such as gold (source: Federal Reserve).
Notable Numbers for the Week:
1. IN AND OUT - President Obama’s FY 2014 budget proposal calls for $3.778 trillion of outlays, offset by $3.034 trillion of tax receipts, resulting in a $744 billion deficit, equal to 4.4% of GDP (source: White House).
2. PEANUTS - The mandatory 30% tax rate on household income above $1 million (aka the “Buffett Rule”) is projected to raise just $53 billion in new tax revenue over 10 years (source: White House).
3. STOP SMOKING - President Obama’s proposed increase in federal tobacco taxes raises more new tax revenue ($78 billion) over the next decade than does the “Buffett Rule” ($53 billion) (source: White House).
4. EVERY DAY - President Obama’s long-term budget plan calls for $46.5 trillion of spending over the next decade, equal to $12.7 billion of daily spending for the next 10 years (source: White House).
*Partners Wealth Management, Inc. (PWM) is an independent wealth management firm dedicated to serving affluent clients by providing comprehensive, integrated planning and investment services. We act as advocates on behalf of individuals, families, and businesses who require highly specialized financial and advisory services. LEARN MORE>
This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed by NFP Securities, Inc. as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. The indices mentioned are unmanaged and cannot be directly invested into. Past performance does not guarantee future results. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the US stock market. Copyright © 2013 Michael A. Higley. All rights reserved.
*Securities and Investment Advisory Services offered through NFP Securities, Inc. a Broker/Dealer, Member FINRA/SIPC and Federally Registered Investment Advisor. Partners Wealth Management is an affiliate of National Financial Partners Corp., the parent company of NFP Securities, Inc.
The S&P 500 has alternated between “up” days and “down” days for 13 consecutive trading days as of the close of the stock market last week. The index’s 1.0% loss (total return) on Wednesday (4/03/13) was its 4th “1% or more loss” day this year, a total matched by an equal number of trading days that have produced a “+1% or greater gain.” After 14 weeks this year, the S&P 500 is up +9.5% YTD (source: BTN Research).
The nation’s jobs report disappointed investors when US employers added only +88,000 new workers in March 2013, half of what had been expected. Although the national unemployment rate dropped to 7.6% (its lowest level since December 2008), the USA’s true unemployment rate may be masked by a “participation rate” (i.e., the number of people who are either employed or are actively looking for work stated as a percentage of the working-age population) that has dropped to 63.3%, its lowest level since May 1979. During a recession, workers may get discouraged and stop looking for employment, thus lowering the “participation rate” (source: Department of Labor).
By law, the President is required to submit to Congress a proposed budget no later than the first Monday in February. President Obama will finally present his fiscal year 2014 plan this Wednesday (4/10/13). Although an early release of his proposal did not include a balanced budget in any fiscal year over the next decade, President Obama is likely to recommend limits on entitlement benefits, a suggestion that many Democrats will resist. Republicans will also be asked to compromise because higher taxes are part of the president’s 10-year plan, including a limitation ($3 million) on amounts that can be accumulated on a tax-deferred basis in a retirement account (source: White House).
Notable Numbers for the Week:
1. BACK-TO-BACK? - The S&P 500 produced a double-digit total return performance in the 1st quarter 2013, gaining +10.6%. The stock index has gained at least +10% in consecutive quarters just 3 times in the last 25 years. The S&P 500 consists of 500 stocks chosen for market size, liquidity and industry group representation. It is a market value weighted index with each stock’s weight in the index proportionate to its market value (source: BTN Research).
2. DOUBLE PLUS - The total market capitalization of the US stock market was $19 trillion as of 3/31/13. At its bear market low on 3/09/09, the total market capitalization was $8 trillion (source: BTN Research).
3. MORE OWNERS, LESS RENTERS - 3 out of every 4 American households added in the last 2 decades were homeowners as opposed to renters (source: Department of Housing and Urban Development).
4. WHERE IT COMES FROM - Almost three-fourths of the oil that the United States imports (72%) comes from the 5 countries of Canada, Saudi Arabia, Venezuela, Nigeria and Mexico (source: EIA).
*Partners Wealth Management, Inc. (PWM) is an independent wealth management firm dedicated to serving affluent clients by providing comprehensive, integrated planning and investment services. We act as advocates on behalf of individuals, families, and businesses who require highly specialized financial and advisory services. LEARN MORE>
This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed by NFP Securities, Inc. as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. The indices mentioned are unmanaged and cannot be directly invested into. Past performance does not guarantee future results. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the US stock market. Copyright © 2013 Michael A. Higley. All rights reserved.
*Securities and Investment Advisory Services offered through NFP Securities, Inc. a Broker/Dealer, Member FINRA/SIPC and Federally Registered Investment Advisor. Partners Wealth Management is an affiliate of National Financial Partners Corp., the parent company of NFP Securities, Inc.
It took 1,997 days but the wait is finally over. After nearly 5 ½ years, the most widely followed stock index on Wall Street closed at an all-time high last Thursday (3/28/13) before the equity markets recessed for the Easter Holiday weekend. The S&P 500 closed at 1569, eclipsing the previous record of 1565 set on 10/09/07. Throughout the country’s housing and credit crisis, the S&P 500 fell 57% from its 2007 peak, bottoming on 3/09/09 at 677. The bull market for the S&P 500 that began the next day is now in its 49th month, gaining +153% (total return) and $8 trillion of market value, reaching $14 trillion in total market capitalization as of the end of last week (source: BTN Research).
Today marks 1-month since $85 billion of sequestration spending cuts kicked in on 3/01/13. The claim from Washington politicians that these cutbacks (amounting to 2.3% of our projected $3.75 trillion government spending in fiscal year 2013) would inflict irreparable damage to our economy has become soft background noise in the rush of rallying stocks and reappearing problems in Europe. Time will tell if the spending cuts were indeed cruel and severe or if they amount to simply modest reductions for a government that was too big to begin with (source: BTN Research).
Global bond investors are voting with their money, selling the debt instruments of perceived weaker countries (i.e., most European countries) and buying the paper of perceived stronger countries (e.g., the United States and Germany), pushing US interest rates lower. The yield on America’s 10-year Treasury note closed at 1.85% last week, down 0.21% in the last 3 weeks (source: BTN Research).
Notable Numbers for the Week:
1. CRAVING FOR CRUDE - The United States consumes more barrels of oil per day (18.9 million barrels) than the next 3 largest world consumers combined. China (9.8 million), Japan (4.5 million) and India (3.4 million) rank 2-3-4 on the list of largest oil consumers (source: Department of Energy).
2. MORE GAS, LESS COAL - 68% of electricity in the USA was generated by coal (52%) and natural gas (16%) in 2000. 68% of electricity in the USA was generated by coal (38%) and natural gas (30%) in 2012 (source: Department of Energy).
3. MORE BUYERS THAN SELLERS - The number of existing homes for sales in the USA has been cut in half over the last 6 years. There were 3.805 million homes for sale as of 2/28/07, reducing to 1.940 million as of 2/28/13 (source: National Association of Realtors).
4. RICH NEIGHBORS - 1 out of every 13 households in the United States has a net worth of at least $1 million not counting the value of the family’s primary residence (source: Census Bureau, Spectrem Group).
*Partners Wealth Management, Inc. (PWM) is an independent wealth management firm dedicated to serving affluent clients by providing comprehensive, integrated planning and investment services. We act as advocates on behalf of individuals, families, and businesses who require highly specialized financial and advisory services. LEARN MORE>
This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed by NFP Securities, Inc. as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. The indices mentioned are unmanaged and cannot be directly invested into. Past performance does not guarantee future results. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the US stock market.
*Securities and Investment Advisory Services offered through NFP Securities, Inc. a Broker/Dealer, Member FINRA/SIPC and Federally Registered Investment Advisor. Partners Wealth Management is an affiliate of National Financial Partners Corp., the parent company of NFP Securities, Inc.
Even though the S&P 500 suffered its first 3-day loss streak of 2013 and the index fell last week (only its 2nd down week this year), the weekly decline amounted to only ¼ of 1% on a total return basis. With just 1 trading week remaining in the 1st quarter of 2013, the S&P 500 is up +9.7% YTD, giving the index a chance to achieve a double-digit gain in the first 3 months of a calendar year, something that has occurred only 1 time in the last 14 years (source: BTN Research).
Once again Americans are wondering why they should care about the financial plight of a relatively small, faraway country. The eyes of the financial world are focused on Cyprus, a Mediterranean island country with an economy smaller than any US state but with banking assets 8 times the size of their economy (US banks hold assets less than 1 time the size of our economy). A last ditch effort to avoid a collapse of Cypriot banks failed over the weekend when depositors were asked to pay for the rescue with a portion of their bank savings. This bailout was different from the rescues of Greece, Ireland and Portugal in that it had political overtones when Russia was identified as the possible source of the monetary help that Cyprus desperately needed. The fear across Europe is that the Cypriot levy on depositors could lead to a run on banks in other countries, weakening already financial distressed entities (source: BTN Research).
Congress waited until the 11th hour but ultimately did pass legislation to avoid a potential government shutdown that would have taken place this week (3/27/13). The new funding bill will keep the government running through the end of fiscal year 2013 (the 12 months ending 9/30/13) and at the same time will not adjust any the $85 billion of sequestration spending cuts that became effective on 3/01/13 (source: Congress).
Notable Numbers for the Week:
1. BANKING - 51 federally insured banks failed in the USA last year (2012), down from 92 bank failures the year before (2011). Just 3 banks have failed in the first 2 months of 2013. The FDIC was established 80 years ago in 1933 (source: Federal Deposit Insurance Corporation).
2. A MAJORITY BUT NOT ALL - Medicare pays for 60% of the average healthcare costs for an American senior (source: American Journal of Law & Medicine).
3. BOUNCE BACK - The value of Americans’ equity in their real estate peaked at $10.5 trillion as of 12/31/07, fell to $6.6 trillion a year ago (12/31/11), then climbed back to $8.2 trillion as of 12/31/12 (source: Federal Reserve).
4. LIVING IN THE MOMENT - 43% of American workers surveyed are not saving (or their spouse is not saving) for their future retirement (source: Employee Benefit Research Institute).
*Partners Wealth Management, Inc. (PWM) is an independent wealth management firm dedicated to serving affluent clients by providing comprehensive, integrated planning and investment services. We act as advocates on behalf of individuals, families, and businesses who require highly specialized financial and advisory services. LEARN MORE>
This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed by NFP Securities, Inc. as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. The indices mentioned are unmanaged and cannot be directly invested into. Past performance does not guarantee future results. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the US stock market. Copyright © 2013 Michael A. Higley. All rights reserved.
*Securities and Investment Advisory Services offered through NFP Securities, Inc. a Broker/Dealer, Member FINRA/SIPC and Federally Registered Investment Advisor. Partners Wealth Management is an affiliate of National Financial Partners Corp., the parent company of NFP Securities, Inc.
The S&P 500 seemingly refuses to give back any of the gains it has achieved thus far in 2013. The stock index realized its 2nd highest closing value ever last Thursday (3/14/13) before slipping back to a 1561 closing value on Friday. The index’s YTD total return of +10.0% (through just 11 weeks this year) is greater than the S&P 500’s trailing 50-year average annual performance of +9.8% over the last half century (source: BTN Research).
Americans may not be interested in reducing the government services provided to them, but that has not stopped Washington from placing the topic of government spending high on their priority list for the current session of Congress. For the 3rd consecutive year, House Budget Committee Chairman Paul Ryan (R-WI) proposed a reduction of government expenditures, this time by $4.6 trillion over the next 10 years. His current plan is relatively similar to previous proposals he made in April 2011 and March 2012. Ryan’s 91-page plan last week included no cuts to defense spending and no new income taxes beyond what was agreed to at the end of 2012. Senate Democrats immediately countered with their own 10-year plan that favored a combination of spending cuts and tax increases totaling $1.85 trillion. Still to be released in the coming weeks will be President Obama’s plan for deficit reduction for the upcoming decade (source: Congress).
The real question may not revolve around the size of the spending cuts that Washington will agree to, but what kind of government do Americans really want? What services do we want our government to provide? What risks/threats do we want our government to protect us from? We seem to want Uncle Sam to cut spending but not to cut spending programs (source: BTN Research).
Notable Numbers for the Week:
1. GET YOUR OWN - Only 1 in 7 Americans seniors (14%) age 72 and older believe that they owe their children or grandchildren an inheritance (source: Allianz).
2. AND BORROW WE DO - The yield on the 10-year Treasury note was 1.76% on 12/31/12. The yield on the 10-year Treasury note was 3.82% on 12/31/02. Thus for the same annual cost of money, our government can borrow +117% more money today than we did 10 years ago (source: BTN Research).
3. TAX DOLLARS - Tax receipts collected by the US government through 5 months of fiscal year 2013 (through 2/28/13) are up +$117 billion (+13.1%) vs. the same 5 months in fiscal year 2012 (source: Treasury Department).
4. BORROWING - Total consumer credit nationwide (i.e., consumer debts excluding home mortgages and home equity loans) increased by $153 billion over the 12 months ending 1/31/13, equal to $1,333 of debt increase for each of the 114.8 million households in the country (source: Federal Reserve).
*Partners Wealth Management, Inc. (PWM) is an independent wealth management firm dedicated to serving affluent clients by providing comprehensive, integrated planning and investment services. We act as advocates on behalf of individuals, families, and businesses who require highly specialized financial and advisory services. LEARN MORE>
This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed by NFP Securities, Inc. as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. The indices mentioned are unmanaged and cannot be directly invested into. Past performance does not guarantee future results. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the US stock market. Copyright © 2013 Michael A. Higley. All rights reserved.
*Securities and Investment Advisory Services offered through NFP Securities, Inc. a Broker/Dealer, Member FINRA/SIPC and Federally Registered Investment Advisor. Partners Wealth Management is an affiliate of National Financial Partners Corp., the parent company of NFP Securities, Inc.
