Category Archives: Investing and fiduciary requirements

Weekly Economic Update for October 15, 2012

Reeve Conover Presents

 

WEEKLY ECONOMIC UPDATE

 

 

WEEKLY QUOTE

“No rational argument will have a rational effect on a man who does not want to adopt a rational attitude.”

     

– Karl Popper

   

  

WEEKLY TIP

This is the time of year to get your “tax file” ready. Start a file in which you can compile your W-2s, assorted 1099s and important receipts reflecting business and health care expenses and charitable gifts.

  

  

WEEKLY RIDDLE

What word describes a man who does not have all his fingers on one hand?

  

   

Last week’s riddle:

Strange but true: the letters in the phrase “bad credit” can be rearranged to spell something most of us probably have in our wallets or handbags. Find the anagram.

  

Last week’s answer:

Debit card.

 

October 15, 2012

    

OUTLOOK OF CONSUMERS BRIGHTENS AGAIN

Economists weren’t expecting the University of Michigan’s preliminary October consumer sentiment survey to show a major advance – but it did. The index came in at 83.1, notably better than September’s final 78.3 mark. While the much-watched consumer gauge is still well below a “normal” reading of 100, this was the highest reading since September 2007.1

GAS PRICES DRIVE PPI HIGHER

Wholesale inflation rose 1.1% for September, according to the federal government’s Producer Price Index. The major influence: a 4.7% spike in energy prices.  The core PPI (minus food and energy prices) was flat last month. In the past 12 months, the PPI has advanced 2.1%. Annualized wholesale inflation hasn’t been that pronounced since March.2

NEW BEIGE BOOK REPORTS MILD ECONOMIC GROWTH

The Federal Reserve’s latest survey of current economic conditions in its 12 districts noted that consumer spending “was generally reported to be flat to up slightly since the last report” while overall economic activity had “generally expanded modestly.” On the heels of the final 1.3% estimate of Q2 GDP, all this was hardly surprising.3,4

TOUGH WEEK SEES PLENTY OF SELLING

The Q3 earnings season got off to an unimpressive start, and the major indices reacted with their worst weekly performances since late May: the Dow lost 2.07%, the NASDAQ 2.94% and the S&P 500 2.21%. Gold slipped 1.18% as well; oil, on the other hand, managed a 2.20% advance. Where did everything settle Friday? Oil ended the week at $91.86 per barrel and gold at $1,759.70 an ounce; the Dow closed at 13,328.85, the S&P at 1,428.59 and the NASDAQ at 3,044.11.1,5

THIS WEEK: Monday brings Q3 results from Citigroup and September retail sales figures from the Census Bureau. IBM, Intel, Coca-Cola, Goldman Sachs, Johnson & Johnson, United Health, Mattel, PNC Financial and State Street report earnings Tuesday; the September CPI also appears. Wednesday, Q3 results come in from Northern Trust, US Bancorp, American Express, Bank of America, PepsiCo, Bank of NY Mellon, Blackrock and eBay; data on September housing starts also arrives. Thursday, earnings are in from Morgan Stanley, Phillip Morris, Nokia, Google, Microsoft, Travelers, Union Pacific, Verizon, Fifth Third, Huntington AMD, Capital One, Chipotle and E-Trade, plus new initial claims figures and the Conference Board’s September leading indicators index. Friday, we get the numbers on existing home sales in September along with earnings from GE, Honeywell and McDonald’s.

% CHANGE Y-T-D 1-YR CHG 5-YR AVG 10-YR AVG
DJIA +9.10 +15.71 -1.08 +6.98
NASDAQ +16.85 +16.87 +1.70 +15.15
S&P 500 +13.60 +18.33 -1.71 +7.10
REAL YIELD 10/12 RATE 1 YR AGO 5 YRS AGO 10 YRS AGO
10 YR TIPS -0.78% 0.26% 2.36% 3.10%

 
Sources: money.msn.com, bigcharts.com, treasury.gov, treasurydirect.gov – 10/12/121,6,7,8

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

These returns do not include dividends.

 

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«RepresentativeDisclosure»

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. Marketing Library.Net Inc. is not affiliated with any broker or brokerage firm that may be providing this information to you. 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. 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 – money.msn.com/market-news/post.aspx?post=bc2367f2-d20e-4178-ba68-c8bf60b299d9 [10/12/12]

2 – www.nasdaq.com/article/us-producer-prices-rise-11-core-ppi-flat-20121012-00342#.UHh9YaCMLHp [10/12/12]

3 – www.hispanicbusiness.com/2012/10/10/fed_beige_book_report_calls_spending.htm [10/10/12]

4 – www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm [9/27/12]

5 – montoyaregistry.com/Financial-Market.aspx?financial-market=common-financial-mistakes-and-how-to-avoid-them&category=29 [10/12/12]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F12%2F11&x=0&y=0 [10/12/12]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F12%2F11&x=0&y=0 [10/12/12]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F12%2F11&x=0&y=0 [10/12/12]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F12%2F07&x=0&y=0 [10/12/12]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F12%2F07&x=0&y=0 [10/12/12]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F12%2F07&x=0&y=0 [10/12/12]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F11%2F02&x=0&y=0 [10/12/12]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F11%2F02&x=0&y=0 [10/12/12]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F11%2F02&x=0&y=0 [10/12/12]

7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [10/12/12]

7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [10/12/12]

8 – treasurydirect.gov/instit/annceresult/press/preanre/2002/ofm71002.pdf [7/10/02]

 

Sales Strategies for Small Business- Class

Sales Strategies for the Small Business
October 17, 2012

Do you have a sales strategy? Or, are you “winging it” ?
 
If you have a sales strategy, how have you confirmed it is most effective?
 
Should you employ multiple sales strategies?
 
A panel of experts in different businesses with lots of experience developing sales strategies will discuss these issues and answer questions specific to the needs of your business.
 
Without an effective sales strategy a business will never be a success !
 
Date & Time: Wednesday-Oct-17 from 6pm to 9pmLocation: Charleston Metro Chamber/4500 Leeds Ave, N Charleston, SC  29405

Register:  www.score285.org /Cost: $25 
 

SCORE – Coastal Chapter4500 Leeds Ave

N Charleston, SC  29405

843-727-4778
www.score285.org 

STOCKS & PRESIDENTIAL ELECTIONS

Presented by Reeve Conover

What does history show – and should we value it?

 As an investor, you know that past performance is no guarantee of future success. Expanding that truth, history has no bearing on the future of Wall Street.

That said, stock market historians have repeatedly analyzed market behavior in presidential election years, and what stocks do when different parties hold the reins of power in Washington. They have noticed some interesting patterns through the years which may or may not prove true for 2012.

The Dow hasn’t done that well when the presidency has changed hands. A new research report from MFS Investment Management details the history of the blue chips in presidential election years from 1900-2008. It notes that the DJIA has on average lost 4.4% in election years in which the incumbent party in the White House loses. On the other hand, in years when the status quo was maintained, the Dow gained an average of 15.1%. Of course, much of these yearly gains and losses could also be chalked up to macroeconomic factors having nothing to do with a presidential race.1

Overall, election years have been good for the blue chips. On average, the Dow has advanced 7.6% in the 28 election years since 1900. When Republicans have won a presidential election, the average annual gain of the index has been 10.3%. When Democrats have won the White House, the average annual gain has been 3.9%.1

Do stocks respond if a particular party has control of Congress? Many House and Senate seats will be decided in November as well, and so MFS also looked for any history of effect on the S&P 500 when a single party had or lacked a majority in Congress from 1961-2010.

 In that period, MFS notes that when the White House and Congress were controlled by the same party, the S&P annually returned 12.1% on average. In years with a Democratic President and a Republican-controlled Congress, it returned an average of +21.3%. In years when a Republican President contended with a Democrat-controlled Congress, the annual return of the index averaged +4.5%. In years in which Congress was split – regardless of who was President – the S&P went 7.1%+ on average.1

Could the Dow actually help determine who wins the White House? James Stack, president of InvesTech Research, chooses to look at this through the other end of the telescope. In his view, the performance of the Dow between Labor Day and Election Day exerts a powerful influence on who wins in November.

 Stack notes that in 25 of the 28 presidential elections held since 1900, the incumbent party in the White House either a) lost the presidency when the Dow retreated within that time frame or b) retained the White House when the Dow advanced between Labor Day and Election Day. Of course, other factors may have been considerably more influential in these elections, such as a given president’s approval rating and the unemployment rate.2  

Bulls have run in many fourth quarters of election years. As the Stock Trader’s Almanac cites, the S&P 500 advanced in the last seven months of 15 out of the 18 election years from 1952-2008.3

How much weight does history ultimately hold? Perhaps not much. It is intriguing, and some analysts would instruct you to pay more attention to it rather than less. Historical “norms” are easily upended, however. Take 2008, the election year that brought us a bear market disaster. The year 2000 also brought an S&P 500 loss. While a presidential election undoubtedly affects Wall Street every four years, it is just one of many factors in determining a year’s market performance.1

 Reeve Conover can be reached at 877-423-9990 or 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. Please note – investing involves risk, and past performance is no guarantee of future results. 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. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

   

   

Citations.

1 – https://www.mfs.com/wps/FileServerServlet?articleId=templatedata/internet/file/data/sales_tools/mfse_elect_sfl&servletCommand=default [9/12]

2 – www.usatoday.com/money/markets/story/2012/09/18/will-dows-gyrations-determine-race-for-white-house/57797628/1 [9/18/12]

3 – www.usatoday.com/money/perfi/columnist/krantz/story/2011-12-11/stocks-during-presidential-election-years/51770758/1 [12/9/11]

 

Wisconsin: How can we choose a benchmark plan NOW?

By  |October 1, 2012 | LifeHealthPro

Wisconsin Gov. Scott Walker is ramping up his battle over implementation of the Patient Protection and Affordable Care Act of 2010 (PPACA).

The Republican decided about a year ago to halt all work in the state on implementation of the PPACA health insurance exchange program.

Theodore Nickel, Walker’s insurance commissioner, now has written to U.S. Health and Human Services (HHS) Secretary Kathleen Sebelius to say that the state needs at least 60 days after HHS issues the final PPACA essential health benefits (EHB) regulations to choose an EHB benchmark plan.

Wisconsin does not have the necessary information from HHS to make the EHB plan determination by the original Sept. 30, 2012, deadline, Nickel wrote in a letter to Sebelius.

“Recognizing that your office has continually missed regulatory deadlines, we ask that you provide states the same flexibility your office has provided itself,” Nickel said.

If HHS postpones the EHB selection deadline until after the EHB regulations are out, Wisconsin will have time to review the regulations and get stakeholder feedback on the benchmark candidate plans available in Wisconsin, Nickel said.

Walker and Republican colleagues are continuing to try to block implementation of PPACA through many channels. 

If the law takes effect on schedule and works as drafters expect, it will require all individual and small group major medical plans to offer the standardized EHB package by 2014.

HHS has asked each state to create its own EHB packages by looking at the federal employee plans, state employee plans and small group plans available in the state. Officials are also supposed to look at a large commercial health maintenance organization (HMO) plan when a large, statewide HMO plan is available.

HHS has said that it will choose a benchmark plan for states that fail to recommend their own benchmark preferences.

Health insurance costs grew slowly for two years. Now, they’re speeding up.

Posted by Sarah Kliff on September 25, 2012 at 12:01 am

U.S. spending on health insurance grew at an accelerated rate in 2011, breaking a two-year trend of smaller cost increases. The culprit, a new study suggests, is not Americans seeking more treatment but rather rapid growth in the price of medical care.

Spending for private health insurance surged by 4.6 percent in 2011, according to a report from the Health Care Cost Institute. That growth rate is faster than the rest of the economy and higher than the previous year, which had 3.8 percent growth.

Average spending on a private insurance patient rose to $4,547 in 2011, compared with $4,349 in 2010. That statistic suggests that a recent downturn in health-care spending may have been a temporary product of the recession rather than a more permanent change, as some health-care economists have hoped.

“We don’t know yet whether this is a one-off year aberration or a resumption of patterns of higher growth,” said Health Care Cost Institute Director David Newman. “We just don’t know. When you have one data point, you’re cautious.”

The Health Care Cost Institute used data from 40 million Americans with private insurance provided by health plans such as Aetna and Kaiser Permanente. The research does not include data on public insurance programs, such as Medicare and Medicaid, which the federal government will make available in early 2013.

Employers typically have tried to control costs by reducing the volume of care delivered, whether that means higher co-pays for doctor visits or using prevention to catch costly diseases earlier.

Those efforts, this report suggests, have succeeded: Inpatient admissions to hospitals actually declined by 0.5 percent between 2010 and 2011.

“One thing Americans should realize is they’re actually not heavier users of health care compared to Germans or Canadians,” said Uwe Reinhardt, a health economist at Princeton University. “Utilization in the United States really isn’t that different.”

Fast growth in the price of health care, however, meant that overall spending still increased. The price of the average emergency-room visit rose by 5.4 percent over the same period, hitting $1,381 in 2011.

The cost of professional procedures, such as doctor visits, rose 3.3 percent, while prescription drugs spiked by 17.7 percent.

“We’ve done a good job cutting back on length of stay,” Newman said. “But if quantity is cut back and prices are going up, you’ll still see overall spending increase.”

Health economists say this reflects a health-care market in which employers and insurance companies have exerted little downward pressure on the cost of medical care.

“No insurer wants to be known as being obsessively aggressive against price increases,” said Gerard Anderson, director of the Johns Hopkins University’s Center for Hospital Finance and Management. “If you’re an insurance company, you stand to lose a large client [the hospital] all to gain a small rate reduction.”

Anderson argues that stronger government intervention is necessary to slow price growth in the health-care market. He points to the example of Maryland, the only state where the government sets the rates that hospitals can charge insurance companies.

The program began in 1976, when Maryland’s per-admission hospital spending was 26 percent higher than in the rest of the country. Between 1977 and 2009, the state’s hospitals “experienced the lowest cumulative increase in cost per adjusted admission of any state in the nation,” researchers in the Journal of American Medical Association concluded.

“Hospital prices have been held down substantially,” Gerard said of the Maryland experience. “And private insurers pay the same rates as public insurers.”

Such efforts, however, have fallen out of favor in other states. Congress gave states the authority to set payments in the early 1970s. About 30 states went on to do so. All states except Maryland gravitated away from those models, as states have looked for more competition and less regulation in health-care markets.

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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.
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