Category Archives: Individual and Medicare

Monthly Economic Update, August 2011

MONTHLY ECONOMIC UPDATE

 

 

MONTHLY QUOTE

“The ability to deal with people is as purchasable a commodity as sugar or coffee and I will pay more for that ability than for any other under the sun.”
 – John Rockefeller

 

 

MONTHLY TIP

When was the last time you calculated your net worth? Doing this annually will help you gauge the pace of your financial progress. Need help? Visit
tinyurl.com/wimnw
or give me a call.

MONTHLY RIDDLE

Two boxes each hold four hot sauce packets and four soy sauce packets. Without looking, you take one packet from each box. What are the chances that at least 1 of the packets you draw is a hot sauce packet?

Last month’s riddle:
Michael reminds his friends that he grew up as an only child. Then he introduces Levi to these friends, stating that Levi’s father is also the son of Michael’s father. So how are Michael and Levi related?

Last month’s answer:

Levi is Michael’s son.

 

August 2011

THE MONTH IN BRIEF
Debt. The word hung over global markets like a cloud in July, and Wall Street braced for the shock that could have resulted if Congress didn’t raise the debt ceiling by August 2. Fortunately for stocks, a deal was struck in time – but the anxiety in the days prior to the deal stole momentum from the stock market. Away from Washington, domestic economic indicators left much to be desired. On the month, the S&P 500 lost 2.15%.1

DOMESTIC ECONOMIC HEALTH
If Congress didn’t sink the stock market in July, it came close. Partisan stances firmed as the clock ticked toward an August 2 deadline to raise the nation’s debt ceiling cited by Treasury Secretary Timothy Geithner. At the last minute, an accord was reached and made law – but not before U.S. stocks had their worst week in over a year, with the S&P 500 losing 52.74 points from July 25-29. The Budget Control Act of 2011 calls for the federal debt cap to be raised by as much as $2.4 trillion, with budget cuts of at least $2.1 trillion over the next decade.1,2

As July ended, we were getting a portrait of a very weak recovery. Personal spending retreated 0.2% in June after advancing only 0.1% in May, and the jobless rate was 9.2% in June with a net job gain of just 18,000. The Commerce Department also told us that the economy expanded by only 1.3% in the first half of 2011. The University of Michigan’s final July consumer sentiment survey seemingly reflected some of this: it came in at 63.7, a low unseen in 28 months. The Conference Board’s monthly survey managed to advance 1.9 points to 59.5.3,4,5,6

Tighter wallets and pocketbooks tend to encourage lower prices, so a dip in inflation wasn’t exactly a surprise. In June, the Consumer Price Index retreated 0.2% to match the pullback in personal spending. It was the first decline in CPI in a year. However, core CPI rose 0.3% for the second straight month. Annual inflation was running at 3.6%, with annual core inflation at 1.6%. The Producer Price Index dipped 0.4% in June, its first negative month in a year. Retail sales ticked up 0.1% in June; Ford (+6.0%), Chrysler (+20.0%) and GM (+7.6%) recorded big increases in auto sales in July. 7,8,9

While the Institute for Supply Management’s manufacturing and service sector indices simply amount to surveys of purchasing managers, they are among the nation’s most-watched economic indicators. Both indices disappointed investors in July: the manufacturing PMI dropped 4.4% to just 50.4 (barely indicating growth) while the service sector PMI also went south 0.6% to 52.7. For that matter, the June readings on factory orders (-0.8%) and durable goods orders (-1.9%) also showed declines.10,11

 

GLOBAL ECONOMIC HEALTH
In Europe, investors fretted that the twin EU/IMF bailouts for Greece had come too late. They also worried about Italy – would its government soon need a similar rescue effort? A red flag went up when the heavily indebted nation’s 10-year note yields topped 6%. That was the alarm that led to bailouts for Portugal and Ireland. These anxieties aside, it is worth noting (as European Council president Herman Van Rompuy did in Great Britain’s Guardian) that economic growth is currently averaging about 2.5% in the nations of western Europe, about double that of America.12,13

China’s manufacturing sector barely grew in July, with the nation’s official PMI edging down to 50.7 from the 50.9 reading in June. That PMI hasn’t been so low since March 2009. The pullback also happened in other nations in the region. India’s manufacturing activity gauge went south to 53.6 from 55.3 in June; Taiwan’s PMI contracted for the second month in a row, falling to 46.1. South Korea’s manufacturing sector bucked the trend; its PMI improved a bit to 51.3.14

 

WORLD MARKETS
Last month, two of the world’s hottest stock markets could be found in Southeast Asia. Indonesia’s JSX Composite hit a new all-time high and gained 6.2%. Thailand’s benchmark SET index did even better, soaring 8.2%. Hong Kong’s Hang Seng gained 0.2% in July, while China’s Shanghai Composite slipped 2.0%. Key European indices struggled, particularly the CAC 40; the major French index plummeted 7.8% last month. Other July losses in Europe: DJ STOXX 600, -2.8%; FTSE 100, -2.1%; DAX, -0.4%. The MSCI World Index fell 1.89% in July; the MSCI Emerging Markets Index lost 0.74% for the month.15,16,17,18

COMMODITIES MARKETS
The broad commodities market staged a nice rebound: after two tough months, the 19-commodity Reuters-Jefferies CRB Index gained 1.2% for July. Gold had a fantastic month – the COMEX price soared $126.00 in July. Gold’s 8.3% July gain was echoed by advances for silver (15.0%), palladium (8.8%) and platinum (3.4%). Oil ended July at $95.70 per barrel, eking out a 0.3% monthly gain. The U.S. Dollar Index lost -0.54% in July, closing at 73.90 on July 29.19,20,21,22

REAL ESTATE
New and existing home sales declined in June: new home sales slipped by 1.0% while residential resales declined by 0.8%. The May edition of the S&P/Case-Shiller Home Price Index showed a 4.5% year-over-year decline. Other indicators offered some bright spots. The National Association of Realtors said pending home sales were up 2.4% in June. Construction spending improved 0.2% in June, a third straight monthly gain. Perhaps most encouragingly, single-family housing starts improved by 9.4% in June.23,24,25

Mortgage interest rates remained at rock-bottom levels, and didn’t move much from the end of June. In Freddie Mac’s July 28 Primary Mortgage Market Survey, the monthly movement looked like this: 30-year FRMs, +0.04% to 4.55%; 15-year FRMs, -0.03% to 3.66%; 5/1-year ARMs, +0.03% to 3.25%; 1-year ARMs, -0.02% to 2.95%.26

LOOKING BACK…LOOKING FORWARD
The Dow and S&P 500 suffered their poorest month (in percentage terms) since August 2010. Both the NASDAQ and Dow logged their third straight down month.1

% CHANGE Y-T-D 1-MO CHG 1-YR CHG 10-YR AVG
DJIA +4.89 -2.18 +16.01 +1.67
NASDAQ +3.90 -0.62 +22.41 +3.66
S&P 500 +2.75 -2.15 +17.32 +0.73
REAL YIELD 7/29 RATE 1 YR AGO 5 YRS AGO 10 YRS AGO
10 YR TIPS 0.38% 1.21% 2.41% 3.50%

 
Sources: usatoday.com, online.wsj.com, bigcharts.com, treasury.gov – 7/29/111,27,28,29,30

Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly.

These returns do not include dividends.

How will August play out? You have to look hard to find some optimism; some bearish analysts are wondering if a double-dip recession is forthcoming, or already here. They point to the mediocrity of the 1Q and 2Q GDP and the stalled housing market as key signals. However, you have to consider that Japan’s hub economy suffered three disasters, and that turmoil in the Middle East and North Africa helped drive energy costs higher in the first half of the year. If the consumer can regain enthusiasm as a byproduct of lower energy prices, decent job generation, improved corporate profits, corresponding bullishness in the stock market and any added geopolitical stability, the second half of 2011 may provide a lift for equities.

UPCOMING ECONOMIC RELEASES: Here is the data stream for the rest of August. Ahead of us, we have the July unemployment figures (8/6), an FOMC meeting (8/9), a report on June wholesale inventories (8/10), July retail sales figures, June business inventories and the initial University of Michigan August consumer sentiment survey (8/12), July building permits and housing starts (8/16), the July PPI (8/17), the July CPI, July’s existing home sales and the Conference Board’s LEI index for August (8/19), July new home sales (8/23), July durable goods orders (8/24), the final August consumer sentiment poll from the University of Michigan and the second take on 2Q GDP (8/26), July consumer spending and June pending home sales (8/29), the June Case-Shiller home price index and the Conference Board’s August look at consumer confidence (8/30), and lastly a report on July factory orders (8/31).

 

Please feel free to forward this article to family, friends or colleagues.
If you would like us to add them to our distribution list, please reply with their address.
We will contact them first and request their permission to add them to our list.

 

 
«RepresentativeDisclosure»

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is not possible to invest directly in an index. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. The JSX Composite is an index of all stocks that trade on the Indonesia Stock Exchange (formerly known as Jakarta Stock Exchange). The SET Index is a market capitalization-weighted price index calculated from the prices of all common stocks on the main board of the Stock Exchange of Thailand (SET), except for stocks that have been suspended for more than one year. The Hang Seng Index is a freefloat-adjusted market capitalization-weighted stock market index that is the main indicator of the overall market performance in Hong Kong. The SSE Composite Index is an index of all stocks (A shares and B shares) that are traded at the Shanghai Stock Exchange. The CAC-40 Index is a narrow-based, modified capitalization-weighted index of 40 companies listed on the Paris Bourse. With a fixed number of 600 components, the STOXX Europe 600 Index represents large, mid and small capitalization companies across 18 countries of the European region. The FTSE 100 Index is a share index of the 100 most highly capitalized companies listed on the London Stock Exchange. The DAX 30 is a Blue Chip stock market index consisting of the 30 major German companies trading on the Frankfurt Stock Exchange. The MSCI World Index is a free-float weighted equity index that includes developed world markets, and does not include emerging markets. The MSCI Emerging Markets Index is a float-adjusted market capitalization index consisting of indices in more than 25 emerging economies. The US Dollar Index measures the performance of the U.S. dollar against a basket of six currencies. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

Citations.

1 – blogs.wsj.com/marketbeat/2011/07/29/data-points-u-s-markets-34/ [7/29/11]

2 – money.cnn.com/2011/08/01/news/economy/debt_ceiling_deal_cbo/ [8/1/11]    

3 – reuters.com/article/2011/08/02/us-usa-economy-idUSTRE7662I420110802 [8/2/11]

4 – npr.org/2011/07/29/138814283/economy-slowed-sharply-during-first-half-of-2011 [7/29/11]

5 – bloomberg.com/news/2011-07-29/michigan-consumer-sentiment-index-fell-to-63-7-in-july-from-71-5-in-june.html [7/29/11]

6 – conference-board.org/data/consumerconfidence.cfm [7/26/11]

7 – online.wsj.com/article/SB10001424052702304521304576447641965268196.html [7/15/11]

8 – census.gov/retail/marts/www/marts_current.pdf [7/14/11]

9 – chron.com/disp/story.mpl/business/7680956.html [8/2/11]

10 – ism.ws/ISMReport/NonMfgROB.cfm [8/3/11]

11 – fxstreet.com/fundamental/economic-indicators/us-factory-orders-fall-in-june-/2011/08/03/ [8/3/11]

12 – reuters.com/article/2011/08/03/us-bonds-italy-spain-idUSTRE7722ZZ20110803 [8/3/11]

13 – guardian.co.uk/commentisfree/2011/jul/30/debt-crisis-greece-eurozone [7/30/11]

14 – online.wsj.com/article/SB10001424053111903341404576481450581731790.html [8/2/11]

15 – reuters.com/article/2011/07/29/markets-southeastasia-stocks-idUSL3E7IT0LF20110729 [7/29/11]               

16 – reuters.com/article/2011/07/29/markets-hongkong-china-stocks-update-idUSL3E7IT0LO20110729 [7/29/11]

17 – nbr.co.nz/article/weekend-markets-wall-st-posts-biggest-weekly-decline-year-ng-98141 [8/1/11]

18 – mscibarra.com/products/indices/international_equity_indices/gimi/stdindex/performance.html [7/29/11]

19 – articles.economictimes.indiatimes.com/2011-07-30/news/29833265_1_copper-crude-oil-futures-debt-crisis [7/30/11]

20 – blogs.wsj.com/marketbeat/2011/07/29/data-points-energy-metals-503/ [7/29/11]

21 – bloomberg.com/news/2011-07-29/gold-surges-to-record-1-637-50-as-congress-plays-chicken-on-u-s-debt.html [7/29/11]

22 – online.wsj.com/mdc/public/npage/2_3051.html?mod=mdc_curr_dtabnk&symb=DXY [8/3/11]

23 – cdn.theatlantic.com/static/mt/assets/business/assets_c/2011/08/month%20in%20review%202011-06-59407.php [8/2/11]

24 – blogs.wsj.com/developments/2011/07/28/behind-the-numbers-pending-home-sales-rise/ [7/28/11]

25 – fxstreet.com/fundamental/economic-indicators/us-construction-spending-better-than-expected/2011/08/01/ [8/1/11]

26 – freddiemac.com/pmms/ [8/3/11]

27 – usatoday.com/money/index [7/29/11]

28 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=7%2F29%2F10&x=0&y=0 [7/29/11]

28 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=7%2F29%2F10&x=10&y=18 [7/29/11]

28 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=7%2F29%2F10&x=0&y=0 [7/29/11]

28 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=7%2F30%2F01&x=0&y=0 [7/29/11]

28 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=7%2F30%2F01&x=0&y=0 [7/29/11]

28 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=7%2F2%30F01&x=0&y=0 [7/29/11]

29 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [7/29/11]

29 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [7/29/11]

30 – treasurydirect.gov/instit/annceresult/press/preanre/2001/ofm71101.pdf [7/11/01]

31 – montoyaregistry.com/Financial-Market.aspx?financial-market=required-ira-distributions&category=1 [8/3/11]

Who is SCORE?

I am proud to be a business mentor for SCORE Charleston.  SCORE provides free counseling and guidance to startup and existing businesses.  The mentor group has an incredibly wide variety of backgrounds.

The results of the 2010 impact survey completed by Gallup on behalf of the SCORE Foundation are now available and are a testament to the organization.  In 2010, SCORE volunteers helped their clients:

  • Start 58,637 businesses at a cost of $119 per business
  • Create 71,449 jobs at a cost of $98 per job
  • Save 11,045 jobs
  • Return $548 to the federal treasury in taxes for every federal dollar appropriated to SCORE

To learn more about SCORE, just give me a call!

Best Places to retire to, or to set up your business?

THE BEST AND THE WORST

 Rounding up the rankings of places to be (and not to be) financially.

 Presented by Reeve Conover

 

Do you live in one of the worst tax states for retirees? Are you fortunate enough to live in one of the best states to do business? Here is a roundup of the miscellaneous, fascinating rankings offered by leading magazines and websites.

What are the best (and worst) states for business? Well, CNBC has ranked all 50 states based on 43 criteria including quality of work force, cost of doing business, quality of life, state economies and access to capital. Coming in at #1: Virginia. Number two is Texas, number three is North Carolina. The state with the lowest cost of doing business – Iowa – ranked 9th. The bottom three? Hawaii (48th), Alaska (49th) and … Rhode Island? Yes, it was dead last. CNBC cited its 10.9% jobless rate and a corporate tax rate nearly as high.1,2                

What are the best (and worst) tax states for retirees? Kiplinger sees four “tax hells” in the Northeast. Vermont is ranked #1 (high property taxes along with state levies of up to 8.95%) and Maine, Connecticut and New Jersey also make the bottom ten. Minnesota is #2, Nebraska #3, Oregon #4 and California #5. As to the best, Wyoming ranks #1 among the “tax heavens”, followed by Mississippi, Pennsylvania, Kentucky and Alabama. Wyoming has no estate tax, no state income tax, and only a 4% sales tax; the state collects abundant revenues from oil and mineral firms.3,4

What cities may be especially attractive for a retiring baby boomer? Fortune offers 4 “great places”, citing ideals among four types of retirement destinations. It ranks Athens, GA as the best college town, Seattle as the best big city, St. George, UT as the best town for outdoors lovers and San Rafael, Argentina as an ideal foreign city for retirement.5

Where could I live well and prosper in my career or business? Kiplinger has ranked its Best Value Cities – metro areas featuring “vibrant economies, a low cost of living, and plenty of lifestyle amenities.” The #1 place to be is … Omaha. Then we have Charlotte at #2, Nashville at #3, and respectively 4th-10th we have Colorado Springs, Knoxville, Lexington, Little Rock, Wichita, Cedar Rapids and Cincinnati. It also identifies the metro areas with the largest household income growth between 2005-09: Midland, TX (+31.3%), Grand Junction, CO (+24.8%) and Jacksonville, NC (+21.8%) came in 1-2-3, while the three biggest household income declines were in St. George, UT (-11.2%), Muskegon-Norton Shores, MI (-11.4%) and Albany, GA (-11.9%).6,7

Reeve Conover may be reached at 877-423-9990 or at Reeve@ReeveWillKnow.com

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty.

Citations.

1 – cnbc.com/id/41666602 [7/29/11]

2 – advisorone.com/2011/06/29/top-10-best-states-for-business?t=marketing-technology [6/29/11]

3- finance.yahoo.com/focus-retirement/article/112987/tax-unfriendly-states-retirees [6/24/11]

4 – finance.yahoo.com/retirement/article/113021/5-tax-friendly-states-retirees-kiplingers [7/1/11]

5 – advisorone.com/2011/06/03/4-great-places-for-baby-boomers-to-retire?page=2 [6/3/11]

6 – kiplinger.com/guides/best-cities/ [7/31/11]

7 – kiplinger.com/tools/bestcities_sort/index.php?sortby=salary&sortorder=ASC [7/31/11]

2nd Quarter Economic Update

Reeve Conover Presents:

 

QUARTERLY ECONOMIC UPDATE

 

 

QUOTE OF THE QUARTER

“Failure is not fatal, but failure to change might be.”
 – John Wooden

 

 

QUARTERLY TIP

Do you regularly log into your bank account or credit card to verify charges? If you don’t bank online – do you carefully check your monthly statements? If not, you should. Fraudulent charges are all too common these days, and some “clever” thieves make small, seemingly insignificant charges ($9.99, $19.99) – most likely in hopes that you won’t notice, or that you’ll decide the amount is too minimal to bother with. If you don’t recognize a charge, call your bank or card provider immediately. Aside from the importance of getting your money back, it’s vital that they know of the fraud. It means your account info may be compromised, and most banks will help you by looking into the fraud and by issuing you a new card or account number to protect you from future erroneous charges.

 

A review of 2Q 2011

THE QUARTER IN BRIEF
For the first time in four quarters, U.S. stocks did not advance. The S&P 500 lost 0.39% in 2Q 2011, a quarter marked by worries over the debt carried by multiple European nations, the wrap-up of the Fed’s second installment of quantitative easing, high gas prices and indications that the recovery was stalling. Yet as June ended, encouraging domestic indicators and better headlines from overseas helped to renew the collective appetite for risk.1

DOMESTIC ECONOMIC HEALTH
Much was made of the “soft patch” the economy had entered into this spring. Some key indicators seemed to confirm it. Consumer spending – which had increased by 0.6% in March – was just +0.3% for April and flat for May. When adjusted for inflation, personal spending actually decreased by 0.1% in both those months. Retail sales were up 0.3% in April, down 0.2% in May. On the other hand, durable goods orders – down 2.7% in April – improved by 1.9% in May.3,4

Unemployment actually increased in the quarter. In March, the jobless rate was at 8.8%; in May, it had climbed back up to 9.1%. By May, annualized inflation had cranked up to 3.6%, and gasoline prices had risen 36.9% in a year. On the bright side, monthly consumer price increases had moderated: after 0.5% gains in the federal government’s Consumer Price Index in February and March, prices respectively advanced by just 0.4% and 0.2% in April and May. Wholesale inflation was more pronounced, what with energy costs and supply disruptions in the wake of the March earthquake and tsunami in Japan: producer prices increased by 0.8% in April and 0.2% for May, bringing 12-month wholesale inflation to 7.3% in May compared to 5.8% for March.5,6,7

As for the key American snapshot of the manufacturing and service sectors, the Institute for Supply Management’s non-manufacturing index went from 54.6 in May to 53.3 in June; its manufacturing gauge defied expectations, moving north to 55.3 in June from May’s 53.5 reading.8

 

In April, citing concern over the ballooning U.S. deficit, Standard & Poor’s cut the credit outlook for America from “stable” to “negative”. Moody’s Investors Service made no such move. The federal debt ceiling was reached on May 16, and Treasury Secretary Timothy Geithner noted a hard deadline of August 2 to raise the debt cap. Congress mostly dithered on the issue during May and June, playing politics first and striving for compromise second. The Federal Reserve’s second round of quantitative easing ended June 30 and the impact wasn’t as harsh as feared: though the end of QE2 meant the end of $600 billion thrown at the bond market, bond yields and stock prices actually increased slightly on July 1.9,10,11

 

GLOBAL ECONOMIC HEALTH
As the quarter ended, Greece seemed poised to stave off a near-term default with $17 billion more in loans from the International Monetary Fund and the European Union. Greece’s parliament passed an austerity bill on June 29 including $40 billion in tax hikes and budget cuts.12

That wasn’t the only notable economic development in Europe in the quarter. The European Central Bank raised its key interest rate to 1.25% (and seemed poised to raise it again in early July), making a move before the Bank of England and the Fed. Annualized inflation in the Eurozone was at 2.8% in April; it ticked down to 2.7% by June. Retail sales in the EU slumped by 1.1% in May, and by 2.8% in Germany. On the upside, Germany’s manufacturing orders rose by 2.9% in April and 1.8% in May, and German business confidence improved in June.13,14,15

 

China’s official manufacturing index declined in each month of the second quarter, falling to 50.9 by June. Its annualized inflation rate hit 5.5% in June, the highest in 34 months. Elsewhere, there were other signs of a slowdown: India’s PMI slipped in both May and June, reaching a low unseen since September. The key PMIs in South Korea and Taiwan also fell, with Taiwan’s showing sector contraction. Business sentiment in Japan fell to its lowest level in five quarters in 2Q 2011, an effect of the triple tragedy the nation suffered in March.16,17

WORLD MARKETS
The world’s major stock market indices posted widely varying quarterly results. In Europe, Germany’s DAX advanced a healthy 4.8%, and Ireland’s ISEQ gained 2.7%; England’s FTSE 100 managed to gain 0.6%, while the Dow Jones STOXX 600 slipped 1.1%. While the Nikkei 225 actually advanced 0.6% for 2Q 2011, the bulk of important indices in Asia did not (Kospi, -0.3%; Sensex, -3.1%; Hang Seng, -4.8%; All Ordinaries, -4.8%; Shanghai Composite, -5.7%). Brazil’s Bovespa went -9.0% for the quarter. The MSCI World and Emerging Markets indices respectively lost 0.28% and 2.11% last quarter.18,19,20,21

COMMODITIES MARKETS
While May and June were trying, the quarterly performances were not all bleak. Reviewing metals on the COMEX, we see that gold gained 4.4% (its eleventh positive quarter in a row) to go +5.7% for the year. Other metals posted quarterly losses (silver, -8.1%; platinum, -3.2%; palladium, -0.9%). The U.S. Dollar Index retreated 2.2% for the quarter.22,23

Moving to energy and crops, oil lost 10.6% in 2Q 2011 for its worst quarter since 4Q 2008 as the International Energy Agency elected to free up global reserves. While several key crops have had a great run over the past 12 months, the quarter was not kind to them: corn lost 10.0%, soybeans slipped 8.2% and wheat lost 20.0%. Rice pulled off a 6.1% quarterly advance.24,25

REAL ESTATE
Instead of a bottom, we got a double dip: in June, the April S&P/Case-Shiller Home Price Index came out and revealed a 4.0% year-over-year decrease in collective house prices across 20 metro areas. As for other barometers, June existing home sales (as measured by the National Association of Realtors) were down 15.3% from a year ago while June new home sales were up 13.5% from a year before.26,27,28

Mortgage rates fell in the quarter. Here were Freddie Mac’s Primary Mortgage Market Survey interest rate averages from March 31: 30-year FRMs, 4.86%; 1-year ARMs, 3.26%; 15-year FRMs, 4.09%; 5-year ARMs, 3.70%. The numbers from the June 30 survey: 30-year FRMs, 4.51%; 1-year ARMs, 2.97%; 15-year FRMs, 3.69%; 5-year ARMs, 2.97%.30

LOOKING BACK…LOOKING FORWARD
The mixed 2Q performances of the major indices aren’t so bad when you consider the volatility (and swoon) of June.1

% CHANGE Y-T-D 2Q CHG 1-YR CHG 10-YR AVG
DJIA +7.23 +0.77 +27.01 +1.82
NASDAQ +4.55 -0.27 +31.49 +2.84
S&P 500 +5.01 -0.39 +28.13 +0.79
REAL YIELD 6/30 RATE 1 YR AGO 5 YRS AGO 10 YRS AGO
10 YR TIPS 0.75% 1.15% 2.54% 3.52%

 
Sources: online.wsj.com, bigcharts.com, treasury.gov, treasurydirect.gov – 6/30/111,30,31,32

Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly.

These returns do not include dividends.

The new quarter begins with a few questions. Will a QE3 be needed? Will inflation become more of a factor? Will cheaper commodities help U.S. companies? Will Greece require further bailouts or loans before 2011 ends? Are Spain, Italy and Portugal next on the EU/IMF rescue list? How long can world financial markets put up with inaction on the U.S. debt ceiling? And finally, will Wall Street earnings be as impressive as some analysts think? It promises to be an eventful quarter.  

 

Please feel free to forward this article to family, friends or colleagues.
If you would like us to add them to our distribution list, please reply with their address.
We will contact them first and request their permission to add them to our list.

 

 

«RepresentativeDisclosure»

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is not possible to invest directly in an index. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. The DAX 30 is a Blue Chip stock market index consisting of the 30 major German companies trading on the Frankfurt Stock Exchange. The Irish Stock Exchange (ISE) is Ireland’s only stock exchange and has been in existence since 1793. The FTSE 100 Index is a share index of the 100 most highly capitalized companies listed on the London Stock Exchange. With a fixed number of 600 components, the STOXX Europe 600 Index represents large, mid and small capitalization companies across 18 countries of the European region. Nikkei 225 (Ticker: ^N225) is a stock market index for the Tokyo Stock Exchange (TSE). The Nikkei average is the most watched index of Asian stocks. The Korea Composite Stock Price Index or KOSPI is the index of all common stocks traded on the Stock Market Division. BSE Sensex or Bombay Stock Exchange Sensitivity Index is a value-weighted index composed of 30 stocks that started January 1, 1986. The Hang Seng Index is a free-float capitalization-weighted index of selection of companies from the Stock Exchange of Hong Kong. The S&P/ASX All Ordinaries Index represents the 500 largest companies in the Australian equities market. The SSE Composite Index is an index of all stocks (A shares and B shares) that are traded at the Shanghai Stock Exchange. The Bovespa, the benchmark stock index of Brazil, is the second largest in the Americas, and the leading exchange in Latin America. The MSCI World Index is a free-float weighted equity index that includes developed world markets, and does not include emerging markets. The MSCI Emerging Markets Index is a float-adjusted market capitalization index consisting of indices in more than 25 emerging economies. The US Dollar Index measures the performance of the U.S. dollar against a basket of six currencies. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

 

Citations.

1 – blogs.wsj.com/marketbeat/2011/06/30/data-points-u-s-markets-27/ [6/30/11]

2 – bea.gov/newsreleases/national/pi/pinewsrelease.htm [6/27/11]

3 – census.gov/retail/marts/www/marts_current.pdf [6/14/11]

4 – bloomberg.com/news/2011-06-24/u-s-advance-report-on-durable-goods-for-may-text-.html [6/24/11]

5 – data.bls.gov/timeseries/LNS14000000 [6/29/11]      

6 – bls.gov/news.release/cpi.nr0.htm [6/15/11]

7 – bls.gov/news.release/ppi.nr0.htm [6/14/11]

8 – ism.ws/ISMReport/MfgROB.cfm [7/6/11]

9 – money.usnews.com/money/business-economy/articles/2011/04/18/what-sps-us-outlook-downgrade-means [4/18/11]

10 – money.cnn.com/2011/05/16/news/economy/debt_ceiling_deadline/index.htm [5/16/11]

11 – fool.com/how-to-invest/personal-finance/savings/2011/07/05/what-does-qe2s-ending-mean-to-you.aspx [7/5/11]

12 – huffingtonpost.com/2011/06/29/greece-austerity-bill-greek_n_886760.html [6/29/11]

13 – online.wsj.com/article/SB10001424052702303544604576429731982195632.html [7/6/11]

14 – smh.com.au/business/world-business/euro-zone-retail-sales-slump-in-may-20110706-1h19l.html [7/6/11]

15 – bloomberg.com/news/2011-07-06/german-factory-orders-rise-on-domestic-demand.html [7/6/11]

16 – news.xinhuanet.com/english2010/china/2011-07/01/c_13960799.htm [7/1/11]

17 – finfacts.ie/irishfinancenews/article_1022654.shtml [7/1/11]

18- online.wsj.com/article/SB10001424052702303627104576413833704779332.html [7/1/11]

19 – online.barrons.com/article/SB10001424052702303627104576413800819281550.html [6/30/11]

20 – online.wsj.com/article/SB10001424052702303763404576416263003588324.html [7/1/11]

21 – mscibarra.com/products/indices/international_equity_indices/gimi/stdindex/performance.html [6/30/11]

22 – bullionpricestoday.com/bullion-prices-mixed-in-second-quarter-2011/ [6/30/11]

23 – online.wsj.com/mdc/public/npage/2_3051.html?mod=mdc_curr_dtabnk&symb=DXY [7/6/11]

24 – blogs.wsj.com/marketbeat/2011/06/30/data-points-energy-metals-494/ [6/30/11]

25 – businessweek.com/news/2011-07-01/corn-extends-worst-monthly-loss-since-2008-on-acreage-increase.html [7/1/11]

26 – blogs.forbes.com/morganbrennan/2011/06/29/what-can-homeowners-learn-from-case-shillers-home-price-index/ [6/29/11]

27 – realtor.org/wps/wcm/connect/04f71400474c15ff808c8e0e6e9f088e/REL1105EHS.pdf [6/21/11]

28 – census.gov/const/newressales.pdf [6/23/11]

29 – freddiemac.com/pmms/ [7/5/11]

30 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=6%2F30%2F10&x=0&y=0 [7/6/11]

30 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=6%2F30%2F10&x=0&y=0 [7/6/11]

30 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=6%2F30%2F10&x=0&y=0 [7/6/11]

30 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=6%2F29%2F01&x=0&y=0 [7/6/11]

30 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=6%2F29%2F01&x=0&y=0 [7/6/11]

30 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=6%2F29%2F01&x=0&y=0 [7/6/11]

31 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [7/6/11]

32 – treasurydirect.gov/instit/annceresult/press/preanre/2001/ofm11001.pdf [1/10/01]

33 – montoyaregistry.com/Financial-Market.aspx?financial-market=roth-ira-rules-and-regulations&category=1 [7/7/11]

Eldercare Takes Its Toll on Employees and Employers

by Michael Haberman on July 13, 2011 · 4 comments

Eldercare has become a much bigger issue in recent years than it has been in the past. There are several reasons, prime among them is the increasing life expectancy. The pressures that accompany caring for aging parents take a toll on employees and on their employers.  Craig Schneider of the Atlanta Journal-Constitution writes in Caring for Parents Increasingly Costly that “One in four American adults provides care for an aging parent, a threefold increase since 1994…”

The toll or cost for employees occurs on several different levels.

  1. There is an emotional cost associated with watching your parents diminish in vitality. It hurts to watch them lose their independence at the same time you lose your independence as you pick up the responsibility of making sure they get to appointments for care and to continue some social contact.
  2. There is a financial cost. Although some parents have saved money or have insurance not all do. The adult children often take on some of the financial burden of providing care for parents. If you are taking care of a parent that is distant from you the cost of making trips, especially if a trip has to be made on short notice.
  3. There is potential career loss. Mr. Schneider reported on several employees who lost their jobs as a result of the extraordinary amount of time it took to take care of an ill parent. They were small companies that did not have to comply with Family and Medical Leave requirements. However, they did try to work with the employee but there reaches a time that situations are not going to improve and decisions have to be made. Companies have to decide or employees have to decide whether continuing in that job is possible. Even with FMLA leave it is unpaid time and it does not cover just situations of failing health. Any leave has to be associated with a serious medical condition.

There are also costs incurred on the employer’s side as well. These include:

  1. Loss of focus and attention on the part of the employee. This results in their productivity loss as well as the loss of productivity other employees who pick up the extra work burden to make up for the effected employee. According to Schneider’s research this cost employers $33.6 billion five years ago and the cost is even greater today.
  2. Physical costs associated with paying out vacations, leaves, etc.
  3. Loss of a valued employee and the potential long term effect on the business, such as customer relationships.
  4. An emotional toll associated with having to terminate an employee in that situation. Despite characterizations in the press, movies, and cartoons most employers I know, especially smaller employers, enjoy making this decision.

It is an unfortunate circumstance of the way our society is structured that female employees end up suffering more careerwise than male employees. Daughters more often take on the role of caregivers and subsequently abandon careers to care for a parent. Their marriages also suffer from the stress of loss of job, loss of privacy, loss of independence and the associated financial burden.

Is there a solution for this? I am not an advocate for governmental intervention. I am not an advocate for making employers pay for eldercare through increased paid time off. Afterall the company of the employee did not any hand in the lack of saving or planning that the employee’s parents didn’t do. Some companies, such as Home Depot  and UPS are working with insurance programs to provide eldercare, but those are just two companies. So I am not really sure what a solution is for today.

I do know that the solution for tomorrow is education today! Insurance companies, social agencies and employers need to work to educate workers on the importance of saving for the eventual need for eldercare. Life expectancy is not going to suddenly start getting shorter. So we need to be prepared. Despite the old t-shirt saying in the picture I know my wife and I are working hard on not becoming a burden to our children. Perhaps we should get that message across to everyone.

June 2018
M T W T F S S
« May    
 123
45678910
11121314151617
18192021222324
252627282930  

Sign Up To Our Newsletter

Reeve Conover is a Registered Representative. Securities offered through Cambridge Investment Research, Inc., a Broker/dealer member FINRA/SPIC. Cambridge and Conover Consulting are not affiliated. Licensed in SC, NC, NY, CT, NJ, and CA.
FINRA.org - SIPC - Brokercheck