Stocks Slide as Uncertainty Rises – November 13, 2017
After posting gains every week since September, U.S. stocks declined by market’s close on Friday. The S&P 500 and Dow ended their longest stretch of weekly increases since 2013, and the NASDAQ ended its own 6-week streak.1https://www.cnbc.com/2017/11/10/us-stocks-tax-reform-nvidia-earnings.html By November 10, the S&P 500 declined 0.21%, the Dow was down 0.50%, and the NASDAQ slipped 0.20%.2https://www.cnbc.com/2017/11/10/us-stocks-tax-reform-nvidia-earnings.html Meanwhile, the MSCI EAFE dropped by 0.45%.3https://www.msci.com/end-of-day-data-search
While these declines are not huge, understanding why stocks dropped after several weeks of steady gains is important. The markets are incredibly complex, so we cannot point to one single detail that drove their performance. We can, however, help you gain insight into what influenced investors’ decisions.
The Market’s Drop in Context
In many ways, uncertainty is to blame for last week’s losses, from a variety of angles:
- Healthcare: Equities dropped as companies continue to analyze changing dynamics in the industry, including potential competition from the tech world. Developments on medical devices and healthcare equipment could create quicker distribution models while decreasing costs, threatening traditional business practices.4https://www.bloomberg.com/news/articles/2017-11-09/asia-stocks-brace-for-volatility-as-dollar-falls-markets-wrap https://www.usnews.com/news/business/articles/2017-11-10/most-asian-shares-track-wall-street-losses-on-us-tax-fears
- Energy: Tension between Iran, Saudi Arabia, and Lebanon—and the accompanying geopolitical uncertainty—contributed to crude oil prices slipping, which led Energy stocks to lose ground.5https://www.bloomberg.com/news/articles/2017-11-09/asia-stocks-brace-for-volatility-as-dollar-falls-markets-wrap https://www.bloomberg.com/news/articles/2017-11-10/lebanon-demands-prime-minister-hariri-s-return-from-saudi-arabia
- Tax Reform: On Thursday, November 9, the Senate released its tax-reform proposal, which includes significant differences from the current House bill.6https://www.npr.org/2017/11/09/563095268/gop-senators-unveil-competing-tax-overhaul In particular, the Senate’s decision to delay corporate-tax reductions until 2019 led to a stock sell-off. This change from the House bill also fueled concern about the likelihood of fiscal reform moving forward at all.7https://www.bloomberg.com/news/articles/2017-11-09/asia-stocks-brace-for-volatility-as-dollar-falls-markets-wrap
What Lies Ahead
No one knows exactly when or how taxes may change—and who will experience the greatest impact. For tax reform to occur, the House and Senate will have to work through the number of places where their plans diverge and align their political priorities.8https://www.nytimes.com/2017/11/09/us/politics/tax-plan-house-senate-differences.html At the same time, the Federal Reserve could raise interest rates as many as 4 times over the next year, which could also alter the financial landscape.9https://www.bloomberg.com/news/articles/2017-11-09/asia-stocks-brace-for-volatility-as-dollar-falls-markets-wrap
In the coming weeks, we will gain more information on tax reform and monetary policy. As we digest information, we will continue focusing on how current circumstances affect clients’ long-term goals. As always, if you have questions about your financial life, contact us anytime.
Wednesday: Consumer Price Index, Retail Sales, Business Inventories
Thursday: Industrial Production, Housing Market Index
Friday: Housing Starts
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.
“The greatest thing you’ll ever learn is just to love and be loved in return.”
- 2 cloves garlic, chopped
- 2 serrano peppers, sliced thin
- 1 tablespoon fresh ginger, peeled and chopped
- 2 tablespoons vegetable oil
- 1 ¼ pounds chicken breast, boneless and skinless, cut into ½-inch pieces
- 2 tablespoons miso, white or yellow
- 2 tablespoons water
- 4 green onions, sliced
- 3 cups cauliflower rice, cooked*
- ¼ teaspoon each, ground salt and pepper
- Warm a 12-inch skillet on medium heat, and cook garlic, peppers, ginger, and vegetable oil for 3 minutes or until garlic turns golden, stirring frequently.
- Put chicken breasts in skillet with salt and pepper, and cook for 4 minutes.
- Whisk together miso and water in a separate bowl, then toss into skillet along with the green onions.
- Cook entire mixture for another 3 minutes or until chicken is done, stirring often.
- Serve with cauliflower rice.
- *You can substitute regular rice for cauliflower rice.Recipe adapted from Good Housekeeping10http://www.goodhousekeeping.com/food-recipes/healthy/a42219/spicy-chicken-miso-stir-fry-recipe/
Protect Yourself From IRS Imposters
Becoming a victim of identity theft can be detrimental to your life, and protecting yourself is essential. Unfortunately, sometimes taxpayers can become deceived by individuals pretending to be IRS representatives through emails, phone calls, or house visits.
Under most instances, the IRS will reach out to you about any tax details by first mailing you an official letter. Sometimes, the IRS may have to communicate in other ways, such as a home visit. When visiting you at home, the IRS representative always shows two official forms of ID, which you have the right to request to see:
- Pocket commission
- HSPD-12 card
In addition, the IRS will never:
- Require a specific type of payment, such as debit card, and ask for your account information over the phone
- Insist you pay taxes without the ability to review or appeal the request
- Threaten to arrest you or revoke your driver’s license or immigration status
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 that you discuss your specific tax issues with a qualified tax advisor.
Tip adapted from IRS.gov11https://www.irs.gov/newsroom/how-to-know-its-really-the-irs-calling-or-knocking-on-your-door
Perfect Your Half-Wedge Shot
Approaching half-wedge shots on the course can be tricky. However, by learning to control your distance, you can take wedge shots with confidence.
To practice controlling your distance:
- Use your arms to bring the club back.
- Turn your body fluidly toward the target on the downswing. Do not try to hit the ball with your hands.
- Focus on regulating your backswing and through-swing on either side of the ball with 3 different swing lengths.
- Practice these swings with the same speed and strength, not any harder or softer.
- Practice each swing length using 3 different wedges.
- Pay attention to how the various wedges change your distance.
By sequencing your swings and becoming more familiar with your wedges, you can control your distance and hit the half-wedge with purpose.
Tip adapted from Ron Kaspriske | Golf Digest Magazine12https://www.golfdigest.com/story/master-the-half-wedge
Identify Glaucoma Symptoms
Glaucoma is a group of eye conditions in which the optic nerves become damaged and can eventually lead to blindness. Once someone loses their vision to glaucoma, they cannot recover their sight. While anyone can develop glaucoma, it is most common in older adults. Regular eye visits can help keep your vision in check.
Here are some signs you can also look out for:
- Irregular blind spots in your peripheral or central vision, often in both eyes
- Advanced tunnel vision
Acute Angle-closure Glaucoma
- Pain in your eyes
- Intense headaches
- Blurry vision
- Red eyes
Consult a doctor if you feel you may have any of the above symptoms.
Tips adapted from Mayo Clinic13https://www.mayoclinic.org/diseases-conditions/glaucoma/basics/definition/con-20024042
Keep Your Vegetables From Spoiling
Food waste is a real problem in the United States—each year, we toss out $165 billion worth of uneaten food.14https://www.marketwatch.com/story/this-is-how-much-food-americans-waste-at-thanksgiving-2016-11-22 You can do your part to not waste edible food by storing it more efficiently. Here are some ways to make your veggies last longer:
Vegetables like zucchini and cucumber have high moisture, which quickly leads to rot. To lengthen their shelf life:
- Rinse only right before you want to use them.
- Store them either on a counter or shelf or directly in the refrigerator bin, without a plastic bag.
Vegetables such as beets and turnips will dry out and wilt quickly. To lengthen their shelf life:
- Cut the tops off each vegetable to avoid pulling moisture away from the root.
- Store the topped-off vegetables in an open container covered with a moist towel in the refrigerator (or dunk them in water every few days).
Tip adapted from Care2.com15http://www.care2.com/greenliving/how-to-store-vegetables-without-plastic.html
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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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