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Markets Remain Bullish – August 7, 2017

Another week of economic performance brought more news that the markets continue their bullish streak. After eight consecutive record-high closings, the Dow rose above 22,000 for the first time ever and finished the week up 1.20%.1https://www.cnbc.com/2017/08/04/us-stocks-jobs-report-beats-fed.htmlhttp://performance.morningstar.com/Performance/index-c/performance-return.action?t=%21DJI&region=usa&culture=en-US The S&P 500 was up 0.19% for the week, and the NASDAQ slightly fell by 0.36%.2http://performance.morningstar.com/Performance/index-c/performance-return.action?t=SPX&region=usa&culture=en-UShttp://performance.morningstar.com/Performance/index-c/performance-return.action?t=@CCO Meanwhile, the MSCI EAFE closed with a 0.82% increase.3https://www.msci.com/end-of-day-data-search

The positive news continued with other upbeat reports. Manufacturing and employment each posted impressive numbers, suggesting a favorable Q3 start.4http://wsj-us.econoday.com/byshoweventarticle.asp?fid=482480&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top And investors are looking ahead to possible Fed action on unwinding its balance sheet and bumping interest rates up again in December.5http://wsj-us.econoday.com/byshoweventarticle.asp?fid=482480&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#tophttps://www.cnbc.com/2017/08/04/us-stocks-jobs-report-beats-fed.html

Here are key market developments that emerged last week:

Manufacturing Is On the Rise

Manufacturing is gaining speed as a key economic factor for Q3 and Q4.6http://wsj-us.econoday.com/byshoweventfull.asp?fid=477422&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top In June, new factory orders rose to almost a 10% annual increase, the best rate in the last 3 years.7http://wsj-us.econoday.com/byshoweventarticle.asp?fid=482480&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top Unfilled orders also jumped 1.3% on rising demand for transportation equipment and capital goods.8http://wsj-us.econoday.com/byshoweventfull.asp?fid=477915&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top In addition, business confidence is at a 6-month high and inventories are up, though inflationary pressure remains soft.9http://wsj-us.econoday.com/byshoweventfull.asp?fid=478123&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp – top As a result, factory payrolls jumped 16,000 in July on top of June’s 12,000 increase.10http://wsj-us.econoday.com/byshoweventfull.asp?fid=478123&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top

Jobs Reports Remain Robust

Last Friday’s Employment Situation report marks the 5th time this year that payroll growth surpassed 200,000.11http://wsj-us.econoday.com/byshoweventarticle.asp?fid=482480&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top While analysts predicted payrolls would grow by an additional 178,000, the actual number came in at 209,000.12http://wsj-us.econoday.com/byshoweventfull.asp?fid=477422&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top The solid employment increase helped lower the unemployment rate to 4.3%—the best rate since 2001.13http://wsj-us.econoday.com/byshoweventarticle.asp?fid=482480&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top

Average hourly earnings also rose last week. The welcomed 0.34% increase on the month was the highest increase since October. Analysts hoped that low unemployment numbers would push yearly wage growth to over 3%, but year-to-date numbers continue to hover around growth of 2.5%.14http://wsj-us.econoday.com/byshoweventarticle.asp?fid=482480&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top

Federal Reserve Weighs Options

Expect the Fed to raise interest rates in December by an additional ¼ point, though Fed Chair Janet Yellen has indicated that low inflation remains a concern for the economy. Despite robust financial markets, low unemployment, and a flourishing job market, inflation sits below the targeted 2% increase, with modest increases in both wage growth and consumer spending.15https://www.cnbc.com/2017/08/04/mystery-of-slow-wage-growth-keeps-market-doubting-fed-can-hike-rates.htmlhttp://www.reuters.com/article/us-usa-economy-idUSKBN19L1RY Some analysts think that soft inflation could give pause to a year-end Fed rate hike.16https://www.cnbc.com/2017/08/04/mystery-of-slow-wage-growth-keeps-market-doubting-fed-can-hike-rates.html

Many observers believe the Federal Reserve will begin in September to shrink its $4.5 trillion balance sheet.17https://www.cnbc.com/2017/08/04/mystery-of-slow-wage-growth-keeps-market-doubting-fed-can-hike-rates.html The Fed balance sheet consists primarily of U.S. treasury bonds and mortgage-backed securities. To reduce this position, the Fed can either sell those securities, or it can opt not to reinvest securities as they mature.18http://www.investopedia.com/insights/how-will-fed-reduce-balance-sheet/

What Is Ahead

Domestically

Widespread positive indicators are at the heart of a solid start to Q3. In addition to rebounding manufacturing activity and robust employment data, other aspects of the economy are brightening:

Internationally

In addition, economies around the world are moving in the right direction. The euro economies are showing continued strength, while emerging economies are expanding at their fastest rate since 2014.23https://www.bloomberg.com/news/articles/2017-08-01/euro-area-economy-steams-ahead-as-ecb-awaits-inflation-to-follow?cmpid=BBD080117_MKT&utm_medium=email&utm_source=newsletter&utm_term=170801&utm_campaign=marketshttps://www.cnbc.com/2017/08/04/global-investors-find-a-new-love-as-consumer-conference-soars-in-emerging-markets.html

As always, we encourage you to continue focusing on your long-term goals. Should you have any questions about the economy or your financial life, we are here for the conversation.

Robert Roman
CEO, Managing Director
MGO | Wealth Advisors

ECONOMIC CALENDAR:

Tuesday: Job Openings and Labor Turnover Survey (JOLTS)
Thursday: Jobless Claims
Friday: Consumer Price 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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“It takes as much courage to have tried and failed as it does to have tried and succeeded.”

– Anne Morrow Lindbergh

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Fish with Fire-Roasted Summer Veggies

Serves 4

Ingredients:

4 ears shucked corn
Cooking spray
3 cups cherry tomatoes, divided
2 TBSP canola oil, divided
4 oz shallots, peeled and halved lengthwise
1 tsp kosher salt, divided
¾ tsp black pepper, divided
4 6-oz halibut fillets, skinned
2 tsp balsamic glaze
2 TBSP chopped fresh basil (optional)

Directions:

  1. Preheat grill to medium (350°F to 400°F) and coat ears of corn with cooking spray.
  2. Place 1 cup tomatoes, 1 TBSP oil, and shallots in a bowl; toss to coat. Place tomato mixture in a grill basket.
  3. Add corn to grill; cook 6 minutes or until lightly charred, turning occasionally.
  4. Add tomato mixture to grill; cook 4 minutes or until tomatoes blister and turn lightly brown.
  5. Shave off corn kernels from ears; discard cobs.
  6. Coarsely chop shallots; set aside.
  7. Place grilled tomatoes, remaining 1 TBSP oil, ¼ tsp salt, and ¼ tsp pepper in a food processor; process until smooth.
  8. Coat fillets with cooking spray; sprinkle with ½ tsp salt and ¼ tsp pepper. Add fillets to grill; cook 3 minutes on each side or until desired doneness. Remove them and keep warm.
  9. Slice remaining 2 cups tomatoes in half. Combine them with corn, shallots, 2 TBSP pureed tomato mixture, remaining ¼ tsp salt, and remaining ¼ tsp pepper in a bowl.
  10. Place 1 cup corn mixture on each of 4 plates. Top each serving with 1 fillet, 1 TBSP pureed tomato mixture, and ½ tsp balsamic glaze. Top with basil, if desired.

Recipe adapted from Cooking Light24http://www.cookinglight.com/recipes/fish-fire-roasted-summer-veggies

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Summer Newlyweds Should Think About Taxes

Newlyweds have good reason to consider how their marriage may affect their tax situation. The IRS offers these tips to help in planning:

Report changes in:

Name. When your name changes through marriage, it is important to report that change to the Social Security Administration. Your name on your tax return must match what is on file at SSA. If it doesn’t, it could delay your refund. To update your information, file Form SS-5, Application for a Social Security Card. It is available on SSA.gov, by calling (800) 772-1213, or at a local SSA office.

Address. If your marriage means you have moved, the IRS and U.S. Postal Service need to know. To do that, send the IRS Form 8822, Change of Address. Notify the postal service by going to USPS.com or a local post office.

Consider changing withholding. Newly married couples must give their employers a new Form W-4, Employee’s Withholding Allowance Certificate, within 10 days of the marriage. If both of you work, you might move into a higher tax bracket or be affected by the Additional Medicare Tax. Use the IRS Withholding Calculator at IRS.gov to help complete a new Form W-4. See Publication 505, Tax Withholding and Estimated Tax, for more information.

Decide on a new filing status. Married people can choose to file their federal income taxes jointly or separately each year. While filing jointly typically is more beneficial, figure the tax both ways to find out which works best for your situation. Remember, even if you married on Dec. 31, for tax purposes, the law says you are married for the whole year.

Choose the right tax form—it could help save money. Newly married taxpayers may find they now have enough deductions to itemize them on their tax returns. Newlyweds can claim itemized deductions on Form 1040, but not on Form 1040A or Form 1040EZ.

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 courtesy of IRS.gov25https://www.irs.gov/uac/newsroom/summer-newlyweds-should-also-think-about-taxes

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Lose the Golf Fat and Thin Shots

The two main causes of fat and thin shots are poor weight distribution and early release of the hands.

Make sure your weight is not behind the ball line and your club face is not ahead of your hands. One or both of these mistakes will cause the fat or thin shot. The center of your hips and sternum should not be behind the ball. To eliminate this problem, you must have at least 70% to 80% of weight on the forward side at impact. Your hands also should be slightly ahead of the club face with some shaft lean.

If you shift your weight and hands forward, the center of your hips will be past the ball and your sternum will be in line with or slightly ahead of the ball. This produces more of a downward strike, creating better contact, power, and distance.

The Fix

From the top of the swing, start down by driving your right hip down toward the ball. This will move your weight left and through the ball. At the same time, swing your arms down, keeping your forearms close together, and swing through the ball with the handle leading the club face. This will help you to develop a late release of the club head.

Tip courtesy of Stan Moore | Golf Tips Magazine26https://www.golftipsmag.com/instruction/faults-and-fixes/lose-the-golf-fat-and-thin-shots/

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Prevent Drowning

Splashing and playing in natural bodies of water can be a great way for families and friends to spend time together. Be sure you take precautions if you plan to swim or ride in a boat, canoe, or other water vehicle. Here are important tips to heed to protect yourself and others from drowning.

  • Wear a U.S. Coast Guard-approved life jacket. Make sure all passengers put on a life jacket, regardless of distance to be traveled, size of boat, or swimming ability of boaters.
  • Know the meaning of and obey warnings represented by colored beach flags. These may vary from one beach to another.
  • Watch for dangerous waves and signs of rip currents. Some examples are water that is discolored and choppy, foamy, or filled with debris, and moving in a channel away from shore.
  • If you are caught in a rip current, swim parallel to shore. Once free of the current, swim diagonally toward shore.
  • Do not use air-filled or foam toys, such as water wings, noodles, or inner-tubes, in place of life jackets. These toys are not designed to keep swimmers safe.
  • Do not drink—alcohol is involved in about one-third of all recreational and boating fatalities.

Tips courtesy of CDC27https://www.cdc.gov/family/minutes/tips/preventdrownings/index.htmtreatment#1

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Green Your Pets

Are you looking for ways to reduce your pet’s pawprint on the environment? These tips can help ensure your pet is living green, which could mean a healthier pet, too.

  1. Look for eco-friendly pet toys and beds. Give your furry pals products made from recycled materials or sustainable fibers such as hemp, and made with nontoxic ingredients. A hemp collar and leash is hypoallergenic and the fabric gets softer with wear and tear. For bedding, look for pet beds made with organic cottons.
  2. Put No. 2 in its place. When you are walking your dog, be a good neighbor and environmental steward—pick up their poo using a biodegradable bag so that your dog’s waste doesn’t take 100 years to decompose in a landfill. Cat owners should avoid clumping clay litters. The clay is strip-mined, which is harmful to the environment, and the clay sediment contains carcinogenic silica dust that your cat can ingest.
  3. Adopt a “recycled” pet from a shelter or rescue group. There are 70,000 puppies and kittens born and abandoned every day in the United States. One of the best and most humane things you can do is to adopt a “recycled” pet from a local animal shelter or animal rescue group. They will thank you with unconditional love, endless snuggles, and sloppy kisses.

Tips courtesy of The Nature Conservancy28https://www.nature.org/greenliving/gogreen/everydayenvironmentalist/green-your-pets.xml

 

 

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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://www.cnbc.com/2017/08/04/us-stocks-jobs-report-beats-fed.htmlhttp://performance.morningstar.com/Performance/index-c/performance-return.action?t=%21DJI&region=usa&culture=en-US
2. http://performance.morningstar.com/Performance/index-c/performance-return.action?t=SPX&region=usa&culture=en-UShttp://performance.morningstar.com/Performance/index-c/performance-return.action?t=@CCO
3. https://www.msci.com/end-of-day-data-search
4, 7, 11, 13, 14. http://wsj-us.econoday.com/byshoweventarticle.asp?fid=482480&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top
5. http://wsj-us.econoday.com/byshoweventarticle.asp?fid=482480&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#tophttps://www.cnbc.com/2017/08/04/us-stocks-jobs-report-beats-fed.html
6, 12. http://wsj-us.econoday.com/byshoweventfull.asp?fid=477422&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top
8. http://wsj-us.econoday.com/byshoweventfull.asp?fid=477915&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top
9. http://wsj-us.econoday.com/byshoweventfull.asp?fid=478123&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp – top
10. http://wsj-us.econoday.com/byshoweventfull.asp?fid=478123&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top
15. https://www.cnbc.com/2017/08/04/mystery-of-slow-wage-growth-keeps-market-doubting-fed-can-hike-rates.htmlhttp://www.reuters.com/article/us-usa-economy-idUSKBN19L1RY
16, 17. https://www.cnbc.com/2017/08/04/mystery-of-slow-wage-growth-keeps-market-doubting-fed-can-hike-rates.html
18. http://www.investopedia.com/insights/how-will-fed-reduce-balance-sheet/
19. http://lipperalpha.financial.thomsonreuters.com/2017/08/sp-500-17q1-earnings-dashboard/
20. https://www.cnbc.com/2017/08/03/these-key-economic-metrics-literally-went-off-the-charts-says-bespokes-paul-hickey.html?__source=newsletter%7Ceveningbrief
21. http://wsj-us.econoday.com/byshoweventfull.asp?fid=478086&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top
22. http://wsj-us.econoday.com/byshoweventfull.asp?fid=477110&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top
23. https://www.bloomberg.com/news/articles/2017-08-01/euro-area-economy-steams-ahead-as-ecb-awaits-inflation-to-follow?cmpid=BBD080117_MKT&utm_medium=email&utm_source=newsletter&utm_term=170801&utm_campaign=marketshttps://www.cnbc.com/2017/08/04/global-investors-find-a-new-love-as-consumer-conference-soars-in-emerging-markets.html
24. http://www.cookinglight.com/recipes/fish-fire-roasted-summer-veggies
25. https://www.irs.gov/uac/newsroom/summer-newlyweds-should-also-think-about-taxes
26. https://www.golftipsmag.com/instruction/faults-and-fixes/lose-the-golf-fat-and-thin-shots/
27. https://www.cdc.gov/family/minutes/tips/preventdrownings/index.htmtreatment#1
28. https://www.nature.org/greenliving/gogreen/everydayenvironmentalist/green-your-pets.xml