Stocks Slip for Second Week – April 17, 2017
Last week, major indexes experienced losses for the second week in a row, with the S&P 500 falling 1.21%, the Dow giving back 1.01%, the NASDAQ dropping 1.26%, and the MSCI EAFE declining 0.14%.1http://performance.morningstar.com/Performance/index-c/performance-return.action?t=SPX®ion=usa&culture=en-UShttp://performance.morningstar.com/Performance/index-c/performance-return.action?t=!DJI®ion=usa&culture=en-UShttp://performance.morningstar.com/Performance/index-c/performance-return.action?t=@CCOhttps://www.msci.com/end-of-day-data-search
Markets closed on April 14 for the Good Friday holiday, but in the four trading days, a number of headlines dominated the news cycles:
- International tensions surrounding Syria and North Korea continued to heighten.2http://finance.yahoo.com/news/stock-market-briefing-com-120042941.html
- The U.S. dropped its biggest non-nuclear bomb in Afghanistan.3http://www.cnn.com/2017/04/14/world/moab-bomb-things-to-know/
- United Airlines lost $250 million in market value on Tuesday after footage emerged of a passenger’s violent removal from an overbooked flight.4http://money.cnn.com/2017/04/11/investing/united-airlines-stock-passenger-flight-video/index.html?iid=EL
These headlines drew great attention last week, and we will continue to follow events as they develop. Meanwhile, we want to focus on newly released data from last week that gives perspectives on where the economy is today—and what we should watch for in the coming months. In a nutshell, the reports hinted at relatively slow growth in the first quarter of 2017.5http://www.reuters.com/article/us-usa-economy-idUSKBN17G0ZW
Inflation and Spending Dropped
- The producer price index, which measures price changes for producers of goods and services, missed expectations and fell 0.1% in March.6https://www.bls.gov/news.release/ppi.nr0.htm
- The consumer price index, which measures price changes in a group of goods and services consumers purchase, fell 0.3%—much more than predicted.7http://wsj-us.econoday.com/byshoweventfull.asp?fid=477393&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top
- Retail sales declined 0.2% in March, the second monthly drop in a row.8http://www.reuters.com/article/us-usa-economy-idUSKBN17G0ZW
Consumer Sentiment and Jobless Claims Were Positive
- The April Consumer Sentiment Index readings beat expectations, revealing people’s assessment of current economic conditions being near the all-time high.9http://finance.yahoo.com/news/stock-market-briefing-com-120042941.html
- Jobless claims came in well below expectations to show fewer people filing first-time unemployment claims—indicating a strong labor market.10http://wsj-us.econoday.com/byshoweventfull.asp?fid=477441&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top
Analyzed together, this new data could indicate that the Federal Reserve will be less likely to raise rates in June.11https://www.bloomberg.com/news/articles/2017-04-14/falling-inflation-retail-sales-bolster-fed-s-go-slow-approach However, we still have two more months of data and market performance until that meeting, and much can change in that time. Consumer spending accounts for approximately 70% of the total economy. Thus, high consumer sentiment and a tightening labor market—coupled with delayed income-tax returns—could help the economy pick up in the coming months.12https://www.bloomberg.com/news/articles/2017-04-14/falling-inflation-retail-sales-bolster-fed-s-go-slow-approach
Right now, we are in the thick of quarterly earnings season. Last Thursday, we saw J.P. Morgan Chase and Citigroup exceed their earnings estimates and still lose value in their shares that day.13http://www.cnbc.com/2017/04/13/despite-positive-earnings-bank-stocks-turn-negative.html Determining whether this investor response is industry specific or indicative of other sentiment changes will be a key detail to examine in the coming weeks. The forthcoming reports will give key insights into the health of corporate America—and the market’s reaction to the companies’ performance.
We will continue to watch political and market developments and how they affect our overall economy. In the meantime, we encourage you to keep a focus on your long-term goals and the strategies that can help support your financial life.
CEO, Managing Director
MGO | Wealth Advisors
Monday: Housing Market Index
Tuesday: Housing Starts, Industrial Production
Wednesday: Beige Book
Friday: Existing Home Sales
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.
“Aim at the sun, and you may not reach it; but your arrow will fly far higher than if aimed at an object on a level with yourself.”
– Joel Hawes
Soy-Braised Beef & Tomato-Mint Salad
A refreshing, Asian-inspired take on brisket!
- 3 lb. beef brisket, cut into 1-inch chunks with fat trimmed off
- 5 cloves garlic, chopped
- ¼ cup brown sugar
- ¼ cup rice vinegar
- ¼ cup soy sauce
- 3 tablespoons fish sauce
- ½ teaspoon pepper
- 1 pint grape tomatoes, halved
- 1 small red onion, sliced thinly
- ½ cup mint leaves
- Jasmine rice, steamed
- Combine beef, garlic, brown sugar, rice vinegar, soy sauce, fish sauce, and black pepper in a 7 to 8-quart slow-cooker.
- Cook ingredients on low for 6 – 8 hours, until beef is tender.
- Toss raw onions, tomatoes, and mint leaves into cooked brisket mixture.
- Steam rice when ready to serve brisket.
- Serve brisket with a side of steamed rice.
Recipe adapted from Good Housekeeping14http://www.goodhousekeeping.com/food-recipes/a37553/soy-braised-beef-tomato-mint-salad-recipe/
Know What Makes a Gift Taxable
When you give gifts of property or money to people, you may need to pay a gift tax to the IRS. Here are some points to consider as you prepare to file your taxes this week.
Are all gifts taxable?
Generally, no. While you should keep in mind that the gift tax could apply to you, most gifts that you give do not trigger the gift tax. Here are nontaxable gifts:
- Gifts that are worth less than the annual exclusion amount for the applicable tax year
- Tuition or medical payments you made on behalf of another person to an education system or medical facility
- Gifts to your spouse
- Gifts to political organizations
- Gifts to charities
What is the annual exclusion amount?
The annual exclusion amount for 2016 is $14,000. You typically won’t have a gift tax for any gift you give another person that is under this amount.
Does the person who receives a gift pay a gift tax?
Typically, no; they aren’t responsible for paying a tax on the gift.
Tip courtesy of IRS.gov15https://www.irs.gov/uac/tax-tips-to-help-you-determine-what-makes-a-gift-taxable
Avoid a Loose Swing
When you’re told to swing “nice and easy,” a common problem can emerge: You forget to go after the ball. The result? You become too relaxed in your swing and lose force. You can hit the ball better and avoid a loose swing with the following practice:
First: Understand What a Loose Swing Can Do
Solid contact requires decisiveness in your swing. Without strong grip and force, you get out of synch and lose precision as you move through the impact zone.
Second: Hit the Ball in the Rough – Half Swing
You can practice your swing by hitting your ball out of the rough. When doing so, you have to be more aggressive in order to clear the heavy grass. To nail that shot, you end up bracing for impact to stabilize your swing. This is the goal you need to reach to also hit a solid shot in the fairway: a feeling that your arms and torso connect in unison. You can practice this swing:
- At address: You should feel pressure in both armpits, and your biceps should press against your chest.
- As a drill: Tuck your shirtsleeves under your arms, keeping your arms pinched against your body. Practice making half swings with this stance, holding your pinch.
Third: Hit the Ball in the Rough – Full Swing
After you practice your half swing, try to recreate that feeling in your full swings. The rough will reveal the quality of your swing: If your arms disconnect from your body and you don’t stay strong, you will make awful shots.
Continue to practice your full swings until you hit the ball consistently strong out of the rough—and then watch your improvements unfold in the fairway, too.
*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 courtesy of Golf Digest16http://www.golfdigest.com/story/the-easiest-drill-for-better-ball-striking
Taking Care of Blisters
From new shoes to sunburns to infections, a variety of activities and health complications can cause blisters to form. While most usually heal on their own, you can follow these care tips to help find relief the next time you get a blister:
- Wear a Bandage: Loosely covering the blister with a bandage can create a buffer between your skin and any impact.
- Use a Doughnut-Shaped Moleskin Pad: For blisters on areas that receive lots of impact, a doughnut-shaped moleskin pad can provide additional relief. You’ll want to put the pad around the blister so that it sticks through the pad’s opening in the middle.
- Drain Properly: While you should avoid draining a blister at home, you can pop the blister to relieve pressure and pain. When you do this, always sterilize a needle with rubbing alcohol before popping the blister, and drain the fluid by pressing it toward the hole.
- Clean Thoroughly: Whether you’ve popped the blister or it tore open, you need to thoroughly dress the wound by first rinsing the area completely with clean water. (Note: Do not use hydrogen peroxide or alcohol, which will cause slower healing!) Then, smooth the flap of skin from the blister down (only tear off if it’s infected or dirty) and cover with petroleum jelly and a nonstick bandage.
Cut Down Your Water Use at Home
Water may seem like an endless resource as it pours from your showers and faucets at home, but with droughts hitting us around the world, water scarcity is becoming an ongoing problem. You can do your part to reduce waste by cutting down on how much water you use. Here are a few easy ways to make changes:
- Use a shower bucket: When you turn water on to prep hot water for a shower, put a bucket under the faucet to capture the flowing water. Save the water to use later for things like watering plants.
- Turn off water while brushing your teeth: Every time you let water pour out of a faucet, you are releasing 2.5 gallons per minute. You can cut this waste by turning off the water as you brush your teeth, and only turning it back on when you need to rinse.
- Install rain barrels: Lawns and gardens use a lot of water. You can reduce how much you use by collecting rain in barrels and recycling the water whenever you need to water your plants.
Tip courtesy of Care2.com18http://www.care2.com/greenliving/20-ways-to-conserve-water-at-home.html
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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.
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