Questions? Let's Talk

(888) 880-5724

Contact Us Online &
Sign Up for Email Updates

Fed Cuts Rates, Stocks Retreat – August 5, 2019

The Week on Wall Street

Last week, the Federal Reserve cut interest rates for the first time in more than a decade, in line with Wall Street’s expectations. Ironically, stocks had their worst week of 2019.

The S&P 500 finished the week 3.10% lower. The Dow Jones Industrial Average and the Nasdaq Composite also posted weekly losses; the blue chips fell 2.60%, while the premier tech benchmark slumped 3.92%. International stocks tracked by MSCI’s EAFE index dipped 1.06%.1https://www.apnews.com/e15c18b9dbc44efab400d2214e2cb6f9,2https://www.wsj.com/market-data,3https://quotes.wsj.com/index/XX/990300/historical-prices

Fed Cuts Benchmark Interest Rate

On Wednesday, the central bank reduced the federal funds rate by 0.25%. The latest Fed policy statement noted that “global developments” and “muted inflation” influenced the decision.

Addressing the media, Fed Chairman Jerome Powell described the cut as a “mid-cycle adjustment.” After that comment, Wednesday’s trading session turned volatile on the interpretation that the cut was a “one and done” move, instead of what might be the first in a series.4https://www.forbes.com/sites/jjkinahan/2019/07/31/feds-quarter-point-rate-cut-weak-global-growth-trade-tensions-muted-inflation-cited

More Tariffs Planned

Shares also fell Thursday, after a White House tweet indicated that the U.S. would put a 10% tariff on another $300 billion of goods coming from China, effective September 1.

Practically speaking, this would mean a tariff on nearly all Chinese products arriving in America. So far, the announcement has not affected plans for trade delegates from both nations to continue negotiations in September.5https://www.cnn.com/2019/08/01/investing/asian-market-latest-trade-war/index.html

The Latest Hiring Data

Payrolls expanded with 164,000 net new jobs in July, according to the Department of Labor. The headline jobless rate stayed at 3.7%; it has now been under 4% for 17 months. The U-6 jobless rate, which counts both underemployed and unemployed Americans, dipped to 7.0%, a level unseen since December 2000.

Monthly job growth has averaged 140,000 over the past three months, compared to 187,000 in 2018.6https://www.cnn.com/2019/08/02/economy/july-jobs-report/index.html

Robert Roman
CEO, Managing Director
MGO | Wealth Advisors

THE WEEK AHEAD:

KEY ECONOMIC DATA

Monday: The Institute for Supply Management releases its latest Non-Manufacturing Purchasing Managers Index, its monthly gauge of business activity in America’s service sector.

Source: Econoday / MarketWatch Calendar, August 2, 2019

The Econoday and MarketWatch economic calendars list upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Monday: Marriott International (MAR), Tyson Foods (TSN)

Tuesday: Walt Disney Co. (DIS)

Wednesday: American International Group (AIG), CVS Health (CVS)

Thursday: Booking Holdings (BKNG), Uber (UBER)

Source: Zacks, August 2, 2019

Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

quote_banner

“Friendship is born at that moment when one person says to another, ‘What! You too? I thought I was the only one.’”

– C.S. Lewis

tax_banner

Roth vs. Traditional IRAs: What’s the Difference?

Roth and Traditional IRAs are popular retirement savings accounts and have some similarities and differences. Here are a few:

Income Limits

Anyone who has earned income and is younger than 70½ can contribute to a Traditional IRA. Roth IRAs have income eligibility limits for contributions. Single filers can’t earn more than $137,000, and married couples can’t earn more than $203,000.

Tax Incentives

Traditional IRA contributions are generally tax deductible when you make the contributions, and withdrawals in retirement are taxed at the current income tax rate. Contributions to a Roth IRA aren’t tax deductible, but earnings and withdrawals are generally tax free.

Withdrawal Rules

Traditional IRAs require you to start taking minimum distributions at age 70 ½. Roth IRAs don’t have any required minimum distributions.

Deciding which retirement savings account is right for you is a personal decision and will depend on your income tax bracket (both now and when you retire), your income, and other criteria. A skilled financial advisor can help you decide which option, if any, is right for you.

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

Contributions to a traditional IRA may be tax deductible in the contribution year, with current income tax due at withdrawal. Withdrawals prior to age 59 ½ may result in a 10% IRS penalty tax in addition to current income tax. The Roth IRA offers tax deferral on any earnings in the account. Withdrawals from the account may be tax free, as long as they are considered qualified. Limitations and restrictions may apply. Withdrawals prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Future tax laws can change at any time and may impact the benefits of Roth IRAs. Their tax treatment may change.

Tip adapted from IRS.gov7https://www.irs.gov/retirement-plans/traditional-and-roth-iras

golf_banner

Stick Your Finish

There are many mechanics to consider in a golf swing, from the tee up to the follow through. But one of the most important parts of the swing is often overlooked – the finish. Professional golfers have mastered how to swing with speed and power, but still slow down at the end of their swing to remain balanced and poised.

To achieve this for yourself, make sure you stick your finish throughout your whole swing and put the majority of your weight in your front foot. Not only will this help stop you from topping the ball, but it will give your shot the maximum amount of power through that front leg. You should also be driving power through your hips and glutes, not your momentum or lower back. This will help you stick your finish like a champ (and protect your back)!

Tip adapted from Golf Digest8https://www.golfdigest.com/story/breaking-90-tim-cooke

healthy_banner

Eat This, Not That: Easy Food Swaps Anyone Can Do

    Eating healthier doesn’t have to be hard! In fact, you might not have to make any major changes in your current diet! By swapping out unhealthy options for healthier picks, you can cut the bad stuff and still enjoy your meal. Here are some of our favorite food swaps:

    • Mustard instead of mayonnaise (0 calories vs. 90 calories)
    • Scrambled eggs with green onions instead of cheese (170 calories vs. 275 calories)
    • Sparkling water instead of soda (0 calories vs. 140 calories)
    • Fresh fruit instead of dried fruit (69 calories vs. 325 calories)
    • Greek yogurt instead of sour cream (28 calories vs. 60 calories)
    • Olive oil spray instead of a tablespoon of olive oil (5 calories vs. 120 calories)
    • Corn tortillas instead of flour tortillas (100 calories vs. 280 calories)
    • All-bran cereal instead of granola (80 calories vs. 200 calories)
    • Goat cheese instead of Brie cheese (70 calories vs. 100 calories)

    There are lots of healthy swaps, like these, that can help you reduce your caloric intake, consume less sugar, and make it easy to create a more-balanced meal.

    Tip adapted from Eat This, Not That9https://www.eatthis.com/food-swaps-cut-calories/

    green_banner

    Composting 101: Turn Waste Into Reward

    Composting is an easy way to turn extra food, yard waste, and even some used paper into nutrient-rich mulch you can use for your garden. Plus, it’s great for the environment and helps reduce landfill waste.

    It’s easy to compost at home. All you need is a compost bin, which you can make yourself or buy online. Compost bins usually need to turn in order to aerate the waste.

    You can compost lots of items, including:

    • Wood chips and pellets
    • Table scraps
    • Shredded newspaper
    • Leaves and yard waste
    • Dryer lint

    The mulch made from these compostable materials is great for your garden because it helps aerate the soil, break down organic material for plant use, and ward off plant disease. It also offers a natural alternative to chemical fertilizers, reduces landfill waste, and may help to prevent global warming and climate change.

    Tip adapted from Earth Easy10https://learn.eartheasy.com/guides/composting/#compostingmethods

    Share the Wealth of Knowledge!

    Please share this market update with family, friends or colleagues. If you would like us to add them to our list, simply click on the “Forward email” link below. We love being introduced!

    If you would like to opt-out of future emails, please reply to this email with UNSUBSCRIBE in the subject line.
    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.

    By clicking on these links, you will leave our server, as they are located on another server. We have not independently verified the information available through this link. The link is provided to you as a matter of interest. Please click on the links below to leave and proceed to the selected site.

    Our Firm

    Headquartered in Newport Beach, California, MGO Wealth Advisors, LLC is a very different kind of investment management firm. more >>>

    References   [ + ]