Keeping an Eye on Global Activity
The summer months are almost underway, which means that both vacations and midyear check-ins are ahead. As we approach the midpoint of 2018, many of us will take this opportunity to reflect on what we’ve seen so far and what may be ahead for the rest of the year. But we’re not quite there yet! So as we kick off the month of June, here are some valuable takeaways coming out of recent action in Italy and a quick check-in on the U.S. economy.
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Volatility During Healthy Markets
After more than 18 months of nearly uninterrupted advances, the U.S. equity markets started declining last week, with a large sell-off on February 5, 2018. Although it is always difficult to endure these declines when they’re occurring, we encourage investors to focus on the underlying fundamentals of the economy and the markets, which are pointing to the potential for continued growth in 2018 and beyond.
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Impacts of the New Tax Law
I hope that you have enjoyed spending time with loved ones during this holiday season. This time of year often presents an opportunity for some additional rest and relaxation, but there is always the possibility for activity in the markets—or as was the case last week, the government. Last Friday, December 22, 2017, President Trump signed the 2017 Tax Cuts and Jobs Act into law. Although the depth of detail of this new law may be intimidating, on balance, its passage may provide firmer footing for investors as we begin a new year.
The $1.5 trillion tax cut is a complex, 1,000-page law intended to spur economic activity through a reduction in both individual and corporate tax rates, and simplify the tax code by eliminating or trimming a variety of deductions and exemptions. At a high-level overview:
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Fed Raises Rates
The Federal Reserve’s (Fed) policy-making arm, the Federal Open Market Committee (FOMC), raised its target for the federal funds rate by 0.25% (25 basis points) yesterday as expected at the conclusion of its two-day meeting. By raising this key overnight borrowing rate, the Fed raised interest rates for the first time in 2016, and for just the second time since the Great Recession (the last time the Fed raised rates was December 2015). The Fed raised rates because…..
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Election 2016
Election 2016 - Wednesday, November 09, 2016
Donald Trump has completed his landmark quest and will become the nation’s 45th President after a contentious and often divisive campaign. In addition, the Republican Party has retained control of both houses of Congress. This outcome marks a significant reversal from just a few weeks ago when a Hillary Clinton presidency was highly probable and even a Democratic party sweep of Congress was possible.
While this outcome is certainly a shock to many, it is important to remember that the result isn’t a surprise to the plurality of American voters that spoke their collective will at the ballot boxes yesterday. The strength of a democracy is not in whether we like the outcome, but rather in how we accept the result as the voice and will of our republic.
While many things are promised on the campaign trail…
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Fed Finally Raises Rates
The events of yesterday bring one word to mind: finally. The Federal Reserve (Fed) finally raised the target for the federal funds rate by 0.25%. By raising this key overnight borrowing rate, the Fed raised interest rates for the first time in nine years—an event that has been receiving a great deal of attention recently. Surrounding the past several Fed meetings…..CLICK TO READ MORE
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Effects of Lower Energy
Oil has dropped by more than 40% in just the past three months and contributed to volatile stock markets. LPL Financial Research does not believe the sharp drop in oil prices is a sign of significant deterioration in the U.S. or global economy. The stunning collapse does have wide-ranging impacts on the economy and markets, but LPL Research believes the risks associated with low oil prices can be manageable and that the positives outweigh the negatives.
Lower oil prices benefit the U.S. economy in a number of ways.
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“Outlook 2014” – Investors Almanac
A farming almanac is an annual publication containing a guide for the coming year and a forecast of the times and statistics of events and phenomena important to growing. Farmers’ almanacs have been a source of wisdom, rooted in the core values of independence and simple living, for American growers for over 200 years. To help you plan for what lies ahead, we are pleased to bring you our Outlook 2014: The Investor’s Almanac. We hope our almanac will prove to be a trusted guide to the coming year filled with a wealth of wisdom for investors.
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Government Shutdown
The United States and Iran have been opening up new channels to communicate and negotiate, punctuated by a phone call this week between the U.S. and Iranian Presidents, after many years of a standoff. Ironically, this historic event occurred while a domestic standoff in Congress has shut down the U.S. government for the first time in 17 years.
The failure in Washington is disappointing, if not a surprise. However,
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Market Insights - Q1, 2012
Stocks enjoyed very strong gains during the first quarter. In fact, based on the S&P 500 measure of the broad market, it was the best quarter for stocks since the third quarter 2009 and the best first quarter since 1998. The Index gained 12.6% during the quarter including dividends, to reach the 1408 level at the close on March 30, 2012. It was a quarter of milestones….
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Small Steps
Psychologists at the University of Scranton have found that by the end of January one-third of people had broken their New Year’s resolution and by March that rises to about half. The failure rate goes up from there.
Many of us make New Year’s resolutions such as eating healthier or losing weight. These resolutions are easy to make but difficult to keep. Why?
Click to read more….
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Providing Perspective on the Markets and Economy
Continued concern over the debt burden of the developed world combined with the deeply divided political landscape in Washington, D.C. has many investors questioning the sustainability of the economic recovery following the Great Recession of 2008. Growth has slowed and we believe the chance of revisiting a recession has increased to approximately 35%. However, the most likely scenario remains…
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U.S. Debt Rating Downgraded - August 8, 2011
Monday, August 8, 2011 – U.S. Debt Rating Downgraded
After the market close on Friday, Standard and Poor’s (S&P)—one of the three major U.S. rating agencies—downgraded the U.S. government debt from AAA to AA+. This is actually a drop of less than one level within the S&P rating system. According to S&P, an obligor rated AAA has “extremely strong capacity to meet its financial commitments” while one of AA has “very strong capacity to meet its financial commitments” and differs from AAA obligors “only to a small degree.” Therefore, U.S. debt is still rated very strong. In addition, .....
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Maintaining a Cautious Stance through This Economic Soft Spot - June 22, 2011
For the second year in a row, we have experienced an early summer economic soft spot with Europe at the epicenter. Last year, the S&P 500 market posted gains through late spring when concerns about Europe’s debt and an environmental catastrophe (oil leak in the Gulf) started a summer of volatility and uneven economic data. Sound familiar?
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Ignore the Noise, Focus on the Improvement - Tuesday, February 08, 2011
As January came to a close, it was clear that the stock market remained quite resilient. The S&P 500 Index, a proxy for large cap U.S. equities, returned 2.4% in January, which marks the fifth consecutive positive month for the market. The gains were recorded despite record snowfall across the country, increased geopolitical unrest and municipal bonds catching a bout of the "Whitney Flu."
Stocks were not the only asset on the rise, ...
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Washington and The Markets - Friday, November 19, 2010
Market participants breathed a sigh of relief in early November. The arrival of the long-awaited mid-term elections and the Federal Reserve (Fed) announcement of another stimulus program unfolded as anticipated. Even though the major political headlines are out of the way, what happens in Washington during the remainder.........
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"One and a Half Cents" on the Fourth Quarter - Thursday, October 21, 2010
As the calendar turned to fall, the markets began to rise. While bonds posted a respectable 2.5% gain for the third quarter, measured by the Barclays Aggregate Bond index, the S&P 500 posted an outstanding 11% gain for the third quarter. This performance was driven by...
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The Transition to Sustainable Growth - Monday, May 03, 2010
The recession of 2008 has not yet been relegated to a page in the history books. Throughout 2009 and into 2010, the economy and markets have been in their recovery phase, which has led to greatly improved conditions. However, there is still more progress to be made...
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The Latest Perfectionist: The S&P 500 - February 24, 2009
The S&P 500 experienced an 8% pullback this year in the middle of the strongest earnings reporting season in years and in the midst of some of the most robust economic reports in a very long time. Unimpressed, the stock market has turned up its nose at the data and is back to where it started this year.
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The Magic of Dow 10,000 - Wednesday, October 28, 2009
The Dow Jones Industrial Average, which bottomed intra-day at 6,440 on March 9, 2009 has risen above the mystical 10,000 level.
What is interesting about the Dow 10,000 level is that while celebrated by the media as a major threshold, the reality is it is just another number.
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It's Not Where You Are; It's Where You Are Headed That Really Matters - June 22, 2009
It is amazing where we sit today and how the mood and sentiment of investors has changed. With the market's about-face starting March 9 and its near 35% rally off the bottom, the world does not feel quite so scary, the markets look less menacing, and our futures appear less fuzzy. But it's crazy how we got here.
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The Good, the Bad, and the Missing - March 4, 2009
The market is constantly weighing three inputs to determine its direction and risk profile: what it views as positive, what it views as negative, and what it does not yet understand. I like to call this the Good, the Bad, and the Missing.
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Financial Stability Plan: Not Clear Yet - February 19, 2009
Financial markets remain choppy and distressed as markets apparently view Treasury Secretary Geithner's rollout of the "Financial Stability Plan" as a disappointment. I certainly was underwhelmed by the plan and its lack of details.
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Good News, Bad News: Where are we now? - February 5, 2009
I know I am not happy about much of what is taking place. Bailouts are never pretty. They are never fair and lots of undeserving folks and institutions get benefits they do not deserve.
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Assessing the Damage - January 12, 2009
We start the New Year in the debris of the economic and market collapse if 2008... I do think that we can recover from this near unbelievable mess created by a bunch of Irresponsible Wall Street Firms, regulators and politicians and return to growth and healing the financial markets.
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Working Through the Recession - December 22, 2008
In my opinion, we were done in by the combination of oil prices that went way too high last spring and summer and by some absolutely irresponsible risk taking on Wall Street. That said, there are some lights at the end of this dark tunnel.
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The Financial Collapse: Looking For Answers - November 17, 2008
I have been asked why I did not foresee the pattern of events that led to this sizable collapse in the financial markets. I've asked myself the same question.
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In the Thick of a Recession - November 10, 2008
It is pretty clear that we are now in the thick of a recession. Is there any good news? What does this outlook mean for investing?
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Behind the Down Days - October 28, 2008
As we wait for indications that the bottoming process is working through, we had another bad week. The Dow fell 473 points over the week ended last Friday, more than erasing the 401 point gain the prior week
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Tightening Up For The Recession - October 24, 2008
Are we in a global recession? How deep will it be? Are government and central bank actions sufficient to deal with the banking crisis? Is OPEC likely to stick us with an oil production cut in an attempt to push oil prices back up again?
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Market Update & Credit Default Swap Explanation - Oct. 16, 2008
I expect markets to remain volatile for some time. I hope we have seen the low but, of course, have no way to know.
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October Volatility - October 14, 2008
The Dow and the S&P 500 were down 18.2 % last week. It is cold comfort that international markets fared worse, with the EAFE international stock price index falling 21.7%. The carnage was everywhere. No sector was spared.
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Strength of LPL Financial - October 10, 2008
No Investment Banking, High Net Capital Levels, Strong Liquidity Position, No Investment Inventory, Active Monitoring of Partners.
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No Time To Panic - October 6, 2008
Yesterday we endured a full scale global financial panic. The main stock market indices, the Dow, the S&P 500 and the NASDAQ finished down about 4 percent each.
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Banking and Financial Market Update - Sept. 30, 2008
Banks and Financial Institutions are Consolidating. "Emergency Economic Stabilization Act" fails to pass.
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AIG Policyholder Concerns - September 17, 2008
What will happen to my AIG insurance policy? What about my Variable Annuity with AIG?
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Financial Market Instability - September 16, 2008
The bad news and instability of financial institutions may not be over.
