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Data Drives More Growth – October 31, 2017

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.1https://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 The Dow added 0.45%, and the NASDAQ grew by 1.09%.2http://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 Meanwhile, international stocks in the MSCI EAFE slipped slightly, losing 0.35% for the week.3https://www.msci.com/end-of-day-data-search

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.4https://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

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.5https://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 Combined with the 3.1% growth in Q2, the economy has now experienced its best 6 months since 2014.6http://www.npr.org/sections/thetwo-way/2017/10/27/560403221/u-s-gdp-beats-expectations-growing-at-3-percent

  1. 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.7https://www3.troweprice.com/usis/personal-investing/planning-and-research/t-rowe-price-insights/markets/global-markets-weekly-update.html 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 so far this year, the tech sector has grown at around twice the rate of 2017’s overall market.8https://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

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.9https://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

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.10https://www.cnbc.com/2017/10/27/tech-stocks-leaping-higher-after-blowout-earnings-from-amazon-alphabet-and-microsoft.html

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.

Robert Roman
CEO, Managing Director
MGO | Wealth Advisors

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


Notes: All index returns exclude reinvested dividends, and the 5-year and 10-year returns are annualized. Sources: Yahoo! Finance, S&P Dow Jones Indices and Treasury.gov. International performance is represented by the MSCI EAFE Index. Corporate bond performance is represented by the SPUSCIG. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly.
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“The best way to cheer yourself is to try to cheer somebody else up.”

 Mark Twain

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Penne With Spinach and Sausage

Serves 6

Ingredients:

  • Salt and pepper
  • 1 pound penne pasta
  • 1 pound Italian sausage, casings removed
  • 1 clove garlic, minced
  • 2 14.5-ounce cans tomatoes, diced (with juice)
  • 1 teaspoon dried basil
  • 1 teaspoon dried oregano
  • 5 ounces baby spinach
  • 1 cup mozzarella cheese, shredded
  • ½ cup Parmesan cheese, grated (plus extra for serving)

Directions:

  1. Bring salted water to a boil in a large pot.
  2. Add penne pasta, and cook until al dente (or still firm); roughly 11 minutes. Drain pasta once done.
  3. Sauté sausage in skillet over medium-high heat until it browns, breaking up sausage in small chunks as you cook.
  4. Add minced garlic to sausage, and sauté for 30 seconds.
  5. Pour the two cans of tomatoes with juice into the sausage, and add the oregano and basil.
  6. Bring tomato-sausage mixture to a boil, then turn heat down to medium and simmer for about 2 minutes, stirring occasionally until sauce thickens slightly.
  7. Add cooked pasta into sauce, and stir until combined.
  8. Toss in the baby spinach, and cook until just wilted.
  9. Sprinkle salt and pepper to taste, and remove skillet from the heat.
  10. Add shredded mozzarella, and combine into pasta.
  11. Serve and top with grated Parmesan cheese.

Recipe adapted from My Recipes11http://www.myrecipes.com/recipe/penne-spinach-sausage

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Prepare for 2018 Tax Filing

With the 2016 filing extension behind us, now is the time to start prepping your 2017 tax files. Here are a couple items you can prepare for now:

  • Name Changes: Taxpayers that had legal name changes in 2017 should make sure they report their new names to the Social Security Administration. You also need to update name changes for any dependents. If your legal name differs from what the SSA has on file, tax delays can emerge.
  • Individual Taxpayer Identification Number (ITIN) Renewal: If you are one of the taxpayers who use an ITIN provided by the IRS for filing taxes, be sure to check whether yours expired in 2016. You can renew your ITIN today online.

Other details may apply, and you can find more information on the IRS website.

* This information is not intended to be a substitute for specific individualized tax advice. We suggest you discuss your specific tax issues with a qualified tax advisor.

Tip adapted from IRS.gov12https://www.irs.gov/newsroom/what-taxpayers-can-do-now-before-filing-their-return-in-2018

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Try Putting From Above the Hole

When you have to hit your ball from above the hole, many golfers prefer to chip toward the pin. However, this setup is one of the toughest shots around the green. Instead, why not putt?

To putt from above the hole, you first need to familiarize yourself with the feel of the rough. The “ole Texas wedge” can help you increase your chances of a successful putt. By using the longer grass, you will slow your ball down and help you lose momentum, even when going downhill.

You need two factors to make the putt work:

  1. A decent lie
  2. Enough green to work with

With these factors in place, you can play for plenty of break—and perhaps never go back to hitting chips again.

Tip adapted from A.J. Bonar | Golf Tips Magazine13https://www.golftipsmag.com/instruction/slicing/10-best-tips/

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How to Have More Energy as You Age

As we age, our energy levels tend to decrease. But that does not mean we have to stop feeling energetic. With some tweaks to our lifestyles, we can improve energy levels and boost our mood along the way. Follow these tips to get started:

  1. Diet: Avoid eating high-glycemic foods, including rice, white bread, and sugar-sweetened beverages. These foods can spike blood sugar levels and cause energy crashes. You also want to eat the right amount of calories for your energy output. Talking with a dietician can help you properly manage your diet.
  2. Exercise: Physical activity is important for maintaining proper health as you age. While you may not be able to do the same activities as before, you can still stay active—whether through walking regularly, going to the gym, or other activities. Be sure to consult your doctor before doing any new exercise.
  3. Sleep: Most people need at least 7 hours of sleep each night to feel energized the next day. If you are having trouble sleeping, try to change your routine¾go to bed and wake up at the same times each night and morning. You may also want to avoid caffeine in the evening and keep your bedroom cool and dark.

Tips adapted from WebMD14https://www.webmd.com/healthy-aging/guide/tips-more-energy – 1

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Eco-Friendly Fall Lawn Tips

Autumn is a great time to do yard work and prep for spring growth. You can minimize the pollution and waste you create with these tweaks to your lawn care:

• Avoid gas-powered tools: Whether you need to rake your leaves or clear your gardens, the tools you use can make a green difference. Gas-powered tools are real energy hogs and can create as much pollution as 80 cars. Opt instead to use manual tools (such as rakes) or electric-powered tools for cleaning up around the yard.

• Fertilize with organic products: Slow-release, organic fertilizers are great for your yardthey’re made from natural materials and have essential nutrients. By using these products, you will enrich the earth rather than pollute it.

• Compost leaves: Fallen leaves are great for the yard, since they can decompose and deliver important nutrients back to the earth. Rather than collect them into a plastic bag to throw away, try composting them. By the spring, you’ll have healthy soil to add to your lawn and garden.

Tip adapted from EarthShare

 

 

 

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Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

Diversification does not guarantee profit nor is it guaranteed to protect assets.

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors.

The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ. The DJIA was invented by Charles Dow back in 1896.

The Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of stocks of technology companies and growth companies.

The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indices from Europe, Australia and Southeast Asia.

The S&P U.S. Investment Grade Corporate Bond Index contains U.S.- and foreign-issued investment-grade corporate bonds denominated in U.S. dollars.

The SPUSCIG launched on April 09, 2013. All information for an index prior to its Launch Date is back-tested, based on the methodology that was in effect on the Launch Date. Back-tested performance, which is hypothetical and not actual performance, is subject to inherent limitations because it reflects application of an Index methodology and selection of index constituents in hindsight. No theoretical approach can take into account all of the factors in the markets in general and the impact of decisions that might have been made during the actual operation of an index. Actual returns may differ from, and be lower than, back-tested returns.

The S&P/Case-Shiller Home Price Indices are the leading measures of U.S. residential real estate prices, tracking changes in the value of residential real estate. The index is made up of measures of real estate prices in 20 cities and weighted to produce the index.

The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.

Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

Past performance does not guarantee future results.

You cannot invest directly in an index.

Consult your financial professional before making any investment decision.

Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.

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References   [ + ]

1. 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
2. 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
3. https://www.msci.com/end-of-day-data-search
4. 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
5. 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
6. http://www.npr.org/sections/thetwo-way/2017/10/27/560403221/u-s-gdp-beats-expectations-growing-at-3-percent
7. https://www3.troweprice.com/usis/personal-investing/planning-and-research/t-rowe-price-insights/markets/global-markets-weekly-update.html
8. 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
9. 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
10. https://www.cnbc.com/2017/10/27/tech-stocks-leaping-higher-after-blowout-earnings-from-amazon-alphabet-and-microsoft.html
11. http://www.myrecipes.com/recipe/penne-spinach-sausage
12. https://www.irs.gov/newsroom/what-taxpayers-can-do-now-before-filing-their-return-in-2018
13. https://www.golftipsmag.com/instruction/slicing/10-best-tips/
14. https://www.webmd.com/healthy-aging/guide/tips-more-energy – 1