Monthly Archives

December 2016

December 29, 2016 – Weekly American Wealth Review

By | Weekly Newsletter

Weekly Letter

As our client, you may have received a letter this week from Securities America Financial Corporation stating that they are your “new broker/dealer.” These letters were distributed in error by Securities America, and are inaccurate. I have spoken with their management and they are in process of sending out a letter correcting their mistake, but in the mean time I wanted to extend our apologies for any confusion this may have caused. You do not have to do anything in response to this letter.

2016 has been an action-packed year with the S&P 500 going from being down roughly 10% in February to up nearly 10% as of the end of last week. We have also seen crude oil drop to lows of $26 then rise to nearly double that price as of this week. Finally, though many did not expect Brittan to vote in favor of exiting the European Union, it was even a greater surprise to watch markets rally just two days after the vote.

2017 is now just days away, and as we transition into the New Year, both U.S. stock and bond markets appear to be anticipating economic growth. On one hand the major stock market averages are in a positive trend while long term U.S. Treasury bonds are in a negative trend, however the world is generally not this simple. Though the stock market has been in a honeymoon phase on hopes of lower taxes, fewer regulations, and economic growth since the presidential election, that should change once the inauguration has taken place and investors realize that any expected change won’t happen right away.
We wish you and your loved ones health, prosperity and happiness in the new year.

Sincerely,
Laif E. Meidell, CMT

We hope you have a wonderful week and a great start to a new year,
Pat Meidell, Laif Meidell and Heidi Foster

Weekly Economic Update

HOUSEHOLD SPENDING SLOWS IN NOVEMBER

Last month, consumer spending increased 0.2%, while consumer incomes were flat. November was the first month in nine in which household incomes failed to rise, and the consumer spending advance was half that of October. Even so, with consumer confidence indices and other economic indicators becoming stronger, the November figures may represent an anomaly. Another Department of Commerce report revised third-quarter growth up to 3.5%.1

CONSUMER OPTIMISM AT A 13-YEAR PEAK

The University of Michigan’s last consumer sentiment index of 2016 came in at 98.2, 4.4 points above its final November mark. It has not been that high since January 2004. Economists polled by Thomson Reuters expected an advance to 98.0.2

HOME SALES RISE AS TEMPERATURES DROP

Resales were up 0.7% last month, according to the National Association of Realtors. The Census Bureau recorded a 5.2% November gain in new home buying. In October, new home sales fell 1.4%, while existing home sales improved 1.5%.3

CORE PCE PRICE INDEX SHOWS 1.6% YEARLY ADVANCE

The Federal Reserve’s preferred inflation meter was flat in November after ticking up 0.1% in October. The annualized gain was thereby reduced 0.2% to a number well under the central bank’s 2.0% target.1,3

SMALL WEEKLY GAINS FOR STOCKS

Across the last five trading days, the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite all gained a little ground. The blue chips rose another 0.46% to 19,933.81; the S&P, another 0.25% to 2,263.79. As for the Nasdaq, the tech benchmark gained 0.47% to settle at 5,462.69 Friday. More consequential, perhaps, was the descent of the CBOE VIX. The “fear index,” gauging market volatility, ended the week at a remarkably low 11.44, falling 6.23% in five days.4

THIS WEEK

U.S. stock and bond markets will be closed Monday in observance of the Christmas Day holiday. Tuesday, the Conference Board releases its last consumer confidence index of 2016 and the October S&P/Case-Shiller 20-city home price index appears. The NAR issues its November pending home sales report on Wednesday. Investors consider the latest initial unemployment claims figures on Thursday. Nothing major is slated for Friday.

December 19, 2016 – Weekly American Wealth Review

By | Weekly Newsletter

Weekly Letter

Investors came back to the market in a good mood and ready to move stock prices higher on Monday. Though the major market averages closed higher on the day, prices were off their intraday highs reached in the first half of the day. By the closing bell the Standard and Poor’s 500 was still holding on to gains of 0.20 percent and the Nasdaq Composite was higher by 0.37 percent. Though over the past four trading days the S&P 500 has closed with higher lows, a positive sign, it has also generally had lower highs, which can be a problem.

Monday’s market behavior seems to fit within the recent pattern that indicates the major averages are consolidating, or coiling, in preparation for their next major move. Though we never know exactly what direction or how long the next major market move will be, at the moment the odds favor prices resuming their trend once the consolidation is over, which is higher.

The only real news on Monday came from a speech given by Federal Reserve President, Janet Yellen, at the University of Baltimore’s mid-year commencement. In her comments, Ms. Yellen
said that wage growth is picking up “and weekly earnings for younger workers have made strong gains over the past couple of years.” She went on to say that job prospects for young workers are “very good” right now for new graduates, saying that layoffs are low and job openings are high, while pointing to the 4.6 percent unemployment rate.

Nervous investors interpreted President Yellen’s comments as a call for inflation. Bond prices experienced a sharp selloff shortly after Ms. Yellen’s comments, but bonds generally recovered by the closing bell as prices tried to form a bottom.

Sincerely,
Laif E. Meidell, CMT

We hope that you have a great week,
Pat Meidell, Laif Meidell and Heidi Foster

Weekly Economic Update

FED RAISES RATES, PLOTS THREE 2017 HIKES

Federal Reserve policymakers unanimously chose to raise the benchmark interest rate by a quarter point last week. That was expected; less expected was the central bank’s adjustment to its 2017 dot-plot. Fed officials now see three rate hikes next year instead of two. The move to the new target range of 0.50-0.75% sent the dollar and bond yields higher Wednesday – the yield on the 2-year note quickly touched a peak unseen since August 2009. Stocks suffered only moderate losses after the announcement. Federal Open Market Committee members now forecast economic growth of 2.1% in 2017 and 2.0% in 2018.1

RETAIL SALES TICK UP, PRODUCER PRICES RISE

Economists, polled by Briefing.com, had expected a 0.4% October advance for retail purchases; the gain was only 0.1% instead, and 0.2% minus car and truck sales. The Producer Price Index rose 0.4% last month after a flat October; the core PPI also posted a 0.4% increase. Inflation pressure remained steady for the consumer: both the headline and core Consumer Price Index advanced 0.2% in November.2

HOUSING STARTS FALL FROM 9-YEAR PEAK

Groundbreaking declined 18.7% last month as winter arrived, with single-family starts down 4.1%. The Census Bureau also reported a 4.7% November decline in building permits.3

DOW ADVANCES, WHILE NASDAQ, S&P 500 RETREAT

A relatively calm trading week ended with the Dow Jones Industrial Average at 19,843.41, 0.44% higher than it had closed the previous Friday. Both the S&P 500 and Nasdaq Composite saw small weekly losses; the Nasdaq descended 0.13% to 5,437.16, while the S&P declined 0.06% to 2,258.07. Over on the NYMEX, light sweet crude settled at $51.94 a barrel Friday; gold at $1,135.60 an ounce.4

THIS WEEK

Lennar announces Q4 results Monday. CarMax, Darden Restaurants, FedEx, General Mills, Nike, Steelcase, and Valspar all report earnings on Tuesday. Wednesday, investors assess the latest existing home sales numbers and earnings from Accenture, Bed Bath & Beyond, Finish Line, Micron Technology, Red Hat, and Winnebago. Thursday offers new initial claims data, reports on November consumer spending and durable goods orders, the November core PCE price index, the last estimate of Q3 GDP, and earnings from Cintas. Friday brings November new home sales figures and the final University of Michigan consumer sentiment index of 2016.

Meidell: Fed meeting no speed bump

By | Published Articles

Typically, investors go into hibernation mode the day prior to and up until the Fed’s Federal Open Market Committee announcement, but that wasn’t the case on Tuesday as investors traded with little concern, prior to what is expected to be a 0.25 percent rate increase in the overnight lending rate when the Fed concludes its meeting Wednesday. Investors will be looking for cues from the Fed’s comments regarding how many rate increases to expect in 2017, with current expectations now between two or three.

The major market averages finished higher on Tuesday with the Dow Jones Industrial Average closing at 19,911.21. Some in the financial media are becoming giddy over the idea that the Dow is just a stone’s throw away from crossing the 20,000-point threshold. All the major market averages finished the day in the green with the Standard & Poor’s 500 up 0.65 percent and the Nasdaq Composite higher by 0.95 percent over the same period.

Market milestones are a funny thing, on one hand they help reinforce investors beliefs that stock markets are moving higher, a call to some that they are missing the train if they are currently out of the market. While for others, they may increase fears that stock prices are too high, triggering sentiments that it’s now time to sell. The media play a part in making these milestones out to be bigger than they should be. I mean, where was the celebration on Tuesday when the S&P 100 index closed above 1,000 by four points for the first time in history? It’s at times like these that we must remind ourselves that it’s only a number, it just happens to have more zeros in it than others.

Investors seem to be a little less concerned that interest rates are headed much higher in the short term, given a boost to dividend paying stocks. This week’s top performing sectors were led by the Dow Jones U.S. Utilities index up 4.62 percent over the past five trading days. In the No. 2 spot this week is the Dow Jones U.S. Technology index gaining 3.81 percent over the same period.

December 12, 2016 – Weekly American Wealth Review

By | Weekly Newsletter

Weekly Letter

Stock prices retreated and markets cooled some on Monday, after last week’s strong gains took the major market averages to new highs. The Standard and Poor’s 500 slipped 0.11 percent and Nasdaq Composite fell 0.59 percent, as some investors took profits and others appeared content to wait for the outcome of Wednesday’s FOMC meeting announcement.

On Monday, the Dow Jones Industrial Average rose 39.58 points to close at a new all-time high of 19,796.43. The Industrial Average is made up of only 30 companies and is more prone to outperform or underperform the more broadly diversified stock market indexes. In this case, it was energy, consumer staples and health care sectors that gave the Industrial Average its additional lift.

As of Monday evening, the Fed Fund futures were still predicting a 100 percent chance the Fed will raise rates on Wednesday at the conclusion of this week’s FOMC meeting.

Since the last Fed meeting in September the expectations for the economy has shifted. At that time, the Fed reduced their prospects for economic growth and inflations and increased their unemployment expectations into the year end. However, since then the unemployment rate has fallen to 4.6 percent and third quarter economic growth jumped by 2.9 percent, well above expectations. Many use the stock market as a gauge of the economy and investor optimism about the future. The recent market advance has most investors comfortable with a rate increase this week.

With all the good news surrounding the U.S. economy, some are beginning to speculate that the Fed’s rate increase could be as high as 0.5 percent this time around, versus the traditional 0.25 percent hike. Most investors will be paying extra close attention for any indication of the pace of future rate hikes in 2017.

Sincerely,
Laif E. Meidell, CMT

We hope that you have a great week,
Pat Meidell, Laif Meidell and Heidi Foster

Weekly Economic Update

SERVICE SECTOR LOOKS VERY HEALTHY

The Institute for Supply Management’s monthly services index improved 2.4 points in November to a 57.2 reading. Analysts polled by Briefing.com had expected a small gain to 55.6. It was the PMI’s best reading since October 2015, and it marked the 82nd consecutive month of expansion for the non-manufacturing segment of the economy.1

HOUSEHOLD SENTIMENT SOARS

Rising 4.2 points to a mark of 98.0, December’s initial University of Michigan consumer sentiment index came in just a tenth of a point below its most recent (2015) peak. This was one of the index’s three highest readings in the last 12 years. The main reason, in the words of University of Michigan economist Richard Curtin: “More consumers spontaneously mentioned the expected positive impact of new economic policies than ever before recorded in the long history of the surveys.”2

OIL FINISHES THE WEEK WITH A FLOURISH

WTI crude advanced 1.22% Friday, reaching $51.46 a barrel as Wall Street ended its trading day. Gold and silver respectively slipped 1.11% and 1.03% on the same day; gold ending the week at $1,159.40 an ounce, and silver, at $16.92 an ounce.3

WILL THE DOW HIT 20,000 BEFORE THE END OF 2016?

Investors are starting to wonder. As stocks closed at record highs Friday, the blue chips settled closer to that potential milestone at 19,756.85. The Dow gained 3.06% on the week. Five-day advances for the S&P 500 and Nasdaq Composite were even greater. The Nasdaq rose 3.59% to 5,444.50 during the week, while the S&P climbed 3.08% to 2,259.53. When the closing bell rang Friday, the S&P was up 4.39% month-over-month, the CBOE VIX volatility index down 17.08% in a month.3

THIS WEEK

Monday, Verifone Systems announces quarterly results. Nothing notable is slated for Tuesday.The Federal Reserve makes an interest rate decision on Wednesday, and in addition to that, Wall Street will react to the November Producer Price Index, reports on November retail sales and industrial output, and earnings from Pier 1 Imports, Progressive and Worthington Industries. November’s Consumer Price Index, and the latest initial jobless claims report arrive Thursday, as well as earnings from Adobe Systems, Jabil Circuit, Navistar, Oracle, and Rite Aid. Friday, the Census Bureau releases data on November groundbreaking and building permits, and Carnival presents a new earnings report.

December 6, 2016 – Weekly American Wealth Review

By | Weekly Newsletter

Weekly Letter

U.S. stocks index futures traded lower on Sunday after Italy voted not to pass a sweeping referendum on constitutional issues, designed in part to shrink the size of the government and cut government spending. The referendum was spearheaded by Italian prime minister, Matteo Renzi who indicated that he would resign following the “No” vote on the referendum. Though markets were temporarily stunned by the news from Italy, U.S. stock futures quickly regained their footing and recovered their losses.

The major market averages gapped higher at the opening bell on Monday, and held onto most of their gains throughout the trading day. By the market’s close, the Standard and Poor’s 500 was higher by 0.58 percent and the Nasdaq Composite had risen 1.01 percent. What some are noticing is how quickly market are springing back from situations of uncertainty. In the past six months, investors have stared down fears of fallout over the “Brexit” vote, the U.S. presidential election, and now the Italian referendum and each time have recovered more quickly than the last.

There was more good news on the economy Monday as the ISM non-manufacturing index for November leaped 2.4 points to a reading of 57.2. A reading of 50 or greater indicates economic expansion, so the November report indicates an acceleration of growth. The ISM non-manufacturing index is a survey of over 375 firms from various sectors of the economy that includes construction, mining, agriculture, forestry, and fishing and hunting. Some of the highlights from the report included growth in employment, new orders and business activity.

Sincerely,
Laif E. Meidell, CMT

We hope that you have a great week,
Pat Meidell, Laif Meidell and Heidi Foster

Weekly Economic Update

JOBS REPORT SHOWS UNEMPLOYMENT AT 4.6%

America’s jobless rate fell to a nine-year low in November as companies added 178,000 net new jobs. The U-6 rate (including the underemployed decreased) 0.2% to 9.3%. There were some negatives: yearly wage growth moderated to 2.5%, and the labor force participation rate ticked down to 62.7%, in part because of baby boomer retirements.1

STRONG CONSUMER CONFIDENCE, SPENDING, GDP

As November ended, the Conference Board’s monthly consumer confidence index rose 6.3 points to a mark of 107.1. In October, personal spending increased 0.3%, according to the Census Bureau, with personal incomes up 0.6%. The Bureau of Economic Analysis revised third quarter growth upward by 0.3% to 3.2% last week.2

PENDING HOME SALES, HOME PRICES SEE GAINS

The S&P/Case-Shiller 20-city home price index showed a 5.5% annualized gain in its September edition, improved from 5.2% in August. Housing contract activity rose another 0.1% in October, according to the National Association of Realtors.2

MANUFACTURING INDEX IMPROVES

The Institute for Supply Management’s November purchasing manager index for the factory sector rose 1.3 points to 53.2, indicating another month of expansion. Analysts polled by MarketWatch had projected a reading of 52.5.2

OIL PRICES SKYROCKET; S&P 500 DECLINES

News of OPEC’s oncoming production cut drove WTI crude to its best week since January 2009. Futures settled Friday at $51.68 on the NYMEX, up 12.2% in five days (including a Thursday-Friday leap of almost 13%). Only the Dow Jones Industrial Average advanced among key Wall Street indices last week, rising 0.10% to 19,170.42. The S&P 500 dipped 0.97% on the week to 2,191.95; the Nasdaq Composite, 2.65% to 5,255.65; and the Russell 2000, 2.45% to 1,314.25.3,4

THIS WEEK

November’s ISM non-manufacturing PMI appears Monday. Earnings from Analogic, AutoZone, Bob Evans Farms, Dave & Buster’s, Michaels Stores, and Toll Brothers arrive Tuesday, plus a report on October factory orders. Wednesday’s earnings parade includes results from Casey’s General Stores, Costco, H&R Block, and Lululemon Athletica. A new initial jobless claims report comes out on Thursday, along with earnings from Broadcom, Dell, Hovnanian, and Toro. Friday brings the initial December consumer sentiment index from the University of Michigan.