Quarterly Economic Update

A review of Q1 2019, Presented by Beacon Financial Group

In this Q1 recap: the Federal Reserve alters its outlook, the truce in the trade dispute holds, the real estate market strengthens, and stocks make an impressive comeback from Q4, even as growth concerns mount.

THE QUARTER IN BRIEF

The strongest first quarter for stocks in 21 years featured all kinds of news. Central banks revised their outlook on monetary policy, seeing less robust economies in 2019. Faint glimmers of progress emerged in the U.S.-China trade dispute. Concerns over near-term corporate earnings and bond yields grew. The possibility of a “hard” Brexit loomed in Europe. The real estate market showed signs of heating up again. As the closing bell rang on the last trading day of March, the Standard and Poor’s 500 notched a 13% gain for the first three months of the year. 1

DOMESTIC ECONOMIC HEALTH

Late last year, the Federal Reserve was forecasting two interest rate hikes for 2019 and maintaining a fairly hawkish outlook. On March 20, the central bank veered away from all that. It cut its 2019 growth forecast for the economy by 0.2% to 2.1%, indicated it would not raise interest rates this year, and projected just one quarter-point hike through 2021. At a press conference immediately after the release of the March policy statement, Fed Chairman Jerome Powell shared his view that the “growth of economic activity has slowed,” but he added that Fed policymakers did not foresee a recession developing. 2

The financial markets reacted swiftly. Demand for longer-term Treasury notes rose. By March 22, the yield on the 10-year Treasury had fallen dramatically, to the point where the yield on the 2-year Treasury exceeded it. (Bond yields fall when bond prices rise.) Economists refer to this as an inverted yield curve. Some economists see an inverted yield curve as a recession signal, while others disagree. The sudden flight to longer-term Treasuries did seem to reflect a lessening of risk appetite among institutional investors. Just six days after the Fed made its pivot, the CMEGroup’s FedWatch Tool, which tracks market expectations about interest rate changes, gave the Fed a 71.7% chance of making an interest rate cut by the end of the year. 3,4

Some of the incoming data during the quarter seemed to correspond with the Fed’s revised assessment of the economy, but some did not. (Some was actually delayed as an effect of the federal government shutdown that carried into late January.)

Inflation pressure eased. In October, the Consumer Price Index showed a 2.5% annualized advance. By February, inflation was running at just 1.5%. 5

Job creation surged, then fell off. There were 311,000 net new jobs in January, but just 20,000 in February. From January to February, though, the unemployment rate declined from 4.0% to 3.8%, and the broader U-6 rate, encompassing the underemployed, dropped from 8.1% to 7.3%. (The federal government shutdown may have affected some of the above numbers.) 6  

The quarter also ended with the Bureau of Economic Analysis downgrading fourth-quarter gross domestic product (GDP). The prior estimate was 2.6%; the revised estimate was 2.2%. 7

One important consumer confidence gauge rose and fell during the quarter: the Conference Board’s index declined sharply to 124.1 in March, after hitting a 3-month peak of 131.4 in February. The University of Michigan’s consumer sentiment index performed better: it started the quarter with a drop of 7.1 points in January, but by late March, it was at 98.4, a tenth of a point above where it was in December. 8,9

The Institute for Supply Management’s monthly purchasing manager index, following manufacturing activity, was nowhere near 60 (a level it reached last summer), but remained well above 50 (the mark delineating sector expansion from industry contraction). ISM’s manufacturing PMI was at 56.6 in January, 54.2 in February, and 55.3 in March. 10

GLOBAL ECONOMIC HEALTH

Financial markets worldwide breathed a collective sigh of relief as the trade dispute between the U.S. and China eased. Negotiations between the two nations continued during the quarter, but no deal emerged. While some trade analysts see an agreement being reached in the second quarter, there are doubts that such an accord will resolve the issue at the center of the tariff fight – the concern that Chinese firms are using their technologies to steal U.S. intellectual property. In March, President Trump said that he would prefer leaving 25% tariffs on $50 billion of Chinese products in place, even if a new trade deal was forged. 11

The quarter ended without a Brexit or even an accepted Brexit path – with the United Kingdom facing a potentially unpleasant outcome. The revised Brexit deal, which Prime Minister Theresa May brought to Parliament, was rejected for a third time in late March, raising the possibility of the U.K. leaving the European Union on April 12 without any kind of defined trade agreement. The European Central Bank surprised financial markets in early March with a decision to revive some of the economic stimulus measures it had recently ended, and it also indicated that would leave interest rates unchanged until at least 2020. The latest forecast from the Organization for Economic Cooperation and Development (OECD) projects only 1% growth for the eurozone this year and less than that for the economies of Germany, Japan, and the United Kingdom. 12,13

WORLD MARKETS

The S&P 500 was just one of many equity benchmarks advancing double digits in the first quarter. In fact, nearly every foreign stock index posted a quarterly gain of some kind. China’s Shanghai Composite surged 26.77%; Italy’s FTSE MIB, 16.17%; Hong Kong’s Hang Seng, 14.41%; France’s CAC 40, 13.10%; all outperformed the S&P for Q1. Other notable gains: Canada’s TSX Composite, 12.42%; Euro Stoxx 50, 11.66%; Germany’s DAX, 9.16%; Brazil’s Bovespa, 8.56%; the United Kingdom’s FTSE 100, 8.19%; India’s BSE Sensex, 8.11%; Japan’s Nikkei 225, 7.56%; South Korea’s KOSPI, 6.19%. MCSI’s World index rose 11.88% in the quarter; MSCI’s Emerging Markets index, 9.56%. 14,15

COMMODITIES MARKETS

Oil outgained all other major commodities during the quarter. The value of West Texas Intermediate crude rose 29.98% on the New York Mercantile Exchange (NYMEX), taking the per-barrel price to $60.18 at the March 29 close. Other major Q1 advances: unleaded gasoline, 25.52%; palladium, 14.98%; copper, 9.29%; platinum, 6.59%; lumber, 6.07%; cotton, 5.61%. The significant retreats: natural gas, 4.21%; cocoa, 6.44%; corn, 6.98%; coffee, 9.22%; wheat, 11.76%. Gold gained but 0.29% for the quarter, while silver lost 2.65%. On the NYMEX Commodity Exchange, gold was worth $1,290.80 per ounce at the close on March 29; silver, $15.10 per ounce. The U.S. Dollar Index closed out Q1 1.27% higher at 97.20. 16,17

REAL ESTATE

Is a buyer’s market returning? As the quarter ended, some real estate industry journalists and analysts wondered if that was the case. Existing home sales surged 11.8% in February, according to the National Association of Realtors. That was the largest monthly gain seen since December 2015. While residential resales were still down 1.8%, year-over-year, this latest NAR report was certainly encouraging. NAR chief economist Lawrence Yun cited “lower mortgage rates, more inventory, rising income, and higher consumer confidence” as contributing factors in the increase. Additionally, the Census Bureau said that the pace of new home buying improved 4.9% during February; economists surveyed by Reuters had forecast a 1.3% advance. 18,19

As Yun noted, cheaper home loans factored in to all this. The decline in longer-term Treasury yields influenced mortgage rates. By the last week of March, a 30-year, fixed-rate mortgage was carrying an average interest rate of just 4.06%, according to the calculations of mortgage buyer Freddie Mac. Compare that with 4.95% as recently as November. (The 15-year, fixed-rate mortgage carried an average interest rate of just 3.57% as March ended.) 20

In February, the median sale price of an existing home was $249,500, representing a year-over-year increase of 3.6%. The median new home purchase price was $315,300, and that was down 3.6% from a year earlier. 18,19

TIP OF THE QUARTER

Retirees aiming to increase their income over time should not overlook the potential of dividend-paying stocks.

LOOKING BACK, LOOKING FORWARD

The major U.S. equity benchmarks recorded great gains in the quarter. The closing settlements on the last trading day of Q1: Dow Jones Industrial Average, 25,928.68; S&P 500, 2,834.40; Nasdaq Composite, 7,729.32. The S&P Smallcap 600 ended the quarter at 939.30, advancing 11.17%. 21

Just as the bulls seemed beaten down, they came running right back. After diving nearly 14% in the last three months of 2018, the S&P 500 rebounded more than 13% in the opening quarter of 2019. While consumer spending is still strong, many analysts still see slightly less economic growth this year (between 2%-2.5%). Stock market analytics firm FactSet is now projecting 4% profit growth for S&P 500 firms in 2019; when 2018 ended, the projection was near 10%. Economies in Europe and China appear to be less robust, and that could put a drag on the revenue of S&P 500 companies, 40% of which comes from outside the U.S. An abrupt April Brexit could also be a negative for global equity markets. The financial markets showed great resilience in Q1, forcing some financial firms to reconsider their full-year outlook. 1

QUOTE OF THE QUARTER

“The secret of joy in work is contained in one word – excellence. To know how to do something well is to enjoy it.”

PEARL BUCK

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This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. 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 market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs, or expenses. Investors cannot invest directly in indices. All economic and performance data is historical and not indicative of future results.

Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. 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 - tinyurl.com/y23en223/ [3/29/19]

2 - cbsnews.com/news/fed-rate-hikes-none-in-2019-federal-reserve-projects-no-rate-hikes-slower-growth-this-year/ [3/20/19]

3 - bloomberg.com/news/articles/2019-03-22/u-s-treasury-yield-curve-inverts-for-first-time-since-2007 [3/22/19]

4 - investors.com/market-trend/stock-market-today/dow-jones-futures-fed-rate-cut-odds-inverted-yield-curve/ [3/26/19]

5 - ycharts.com/indicators/us_inflation_rate [4/1/19]

6 - investing.com/economic-calendar/ [3/31/19]

7 - marketwatch.com/tools/calendars/economic [3/29/19]

8 - investing.com/economic-calendar/cb-consumer-confidence-48 [3/31/19]

9 - tradingeconomics.com/united-states/consumer-confidence [3/31/19]

10 - instituteforsupplymanagement.org/ISMReport/MfgROB.cfm [4/1/19]

11 - pbs.org/newshour/economy/new-round-of-u-s-china-trade-talks-set-to-begin-in-beijing [3/28/19]

12 - cnbc.com/2019/03/29/brexit-general-election-speculation-grows-after-may-loses-vote.html [3/29/19]

13 - nytimes.com/2019/03/07/business/ecb-european-economy-stimulus.html [3/7/19]

14 - investing.com/indices/major-indices [3/31/19]

15 - msci.com/end-of-day-data-search [3/29/19]

16 - barchart.com/futures/performance-leaders?viewName=chart&timeFrame=3m [3/31/19]

17 - money.cnn.com/data/commodities/ [3/29/19]

18 - nar.realtor/newsroom/existing-home-sales-surge-11-8-percent-in-february [3/22/19]

19 - cnbc.com/2019/03/29/new-home-sales-february.html [3/29/19]

20 - tinyurl.com/y27puujx [3/29/19]

21 - barchart.com/stocks/indices?viewName=performance [3/29/19]

22 - barchart.com/stocks/indices?viewName=performance [1/1/19]

23 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldAll [3/29/19]

 



You Could Retire, But Should You?

Presented by Beacon Financial Group

It might be better to wait a bit longer.

Some people retire at first opportunity, only to wish they had waited longer. Your financial strategy likely considers normal financial ups and downs. That said, a big “what if” on your mind might be “what if I retire in a down time that doesn’t swing back upward in a year or two?” It could happen to everyone, and it certainly doesn’t work on your schedule. For that reason, the fact that you can retire doesn’t necessarily mean that you should.

 

Retiring earlier may increase longevity risk. The concern can be put into three dire words: “outliving your money.” Sudden medical expenses, savings shortfalls, financial downturns, and larger-than-planned withdrawals from retirement accounts can all contribute to it. The downside of retiring at 55 or 60 is that you have that many more years of retirement to fund.

 

There are also insurance issues to consider. Medicare will not cover you until you turn 65; in the event of an illness, how would your finances hold up without its availability? While your employer may give you a year-and-a-half of COBRA coverage upon your exit, that could cost your household more than $1,000 a month. 1,2

How is your cash position? If your early retirement happens to coincide with a severe market downturn or a business or health crisis, you will need an emergency fund – or at the very least, enough liquidity to quickly address such issues.

 

Does your spouse want to retire later? If so, your desire to retire early might cause some conflicts and impact any shared retirement dreams you hold. If you have older children or other relatives living with you, how would your decision affect them?  

  

Working a little longer might ease the transition to retirement. Some retirees end up missing the intellectual demands of the workplace and the socialization with friends and coworkers. They find no ready equivalent once they end their careers. Also, it may be difficult to find a part-time job in another field, so staying a while longer could help you make the change at a pace that will be more comfortable, both financially and emotionally. 3

 

Ideally, you will retire with adequate savings and a plan to stay physically and mentally active and socially engaged, so waiting a bit longer to retire might be advantageous to your bottom line.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. 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.

 

«RepresentativeDisclosure» 

 

Citations.

1 - cnbc.com/2019/02/28/what-you-need-to-know-about-medicare.html [2/28/19]
2 - fool.com/personal-finance/2019/02/24/should-you-use-cobra-coverage-when-you-leave-your.aspx [2/24/19]
3 - news.stlpublicradio.org/post/more-older-americans-working-past-65-delaying-retirement [8/8/18]

 

Weekly Economic Update

Presented by Beacon Financial Group

In this week’s recap: stocks close out a great quarter, mortgage rates decline, and Wall Street awaits a wave of IPO action.

THE WEEK ON WALL STREET

Stocks ended last week higher as volatility slowed, completing their best quarter since 2009. A Friday tweet from Secretary of the Treasury Steven Mnuchin encouraged investors, referring to “constructive” discussions in the ongoing U.S.-China trade negotiations. 1

The S&P 500 gained 1.27% for the week. The Dow Industrials and Nasdaq Composite both exceeded that advance: the Dow rose 1.60%; the Nasdaq, 1.42%. 2-4

Foreign shares went the other way. The MSCI EAFE index following international stocks retreated 0.91%. 5

2019 Could Be a Big Year for IPOs

One of the ride-share pioneers, Lyft, closed on its initial public offering (IPO) on Friday, and a glance at the IPO calendar shows that as many as 226 companies could soon go public, with Uber and Airbnb possibly among them. 6

This IPO wave may be a signal of a market top, or it may point to a comeback for risk appetite, which could be healthy for the overall market.

Should some big-name IPOs stumble, it may deter others from moving ahead, which may influence the market psychology. Conversely, an enthusiastic reception may help support further market advances.

[Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities.]   

Good News for the Housing Market

The Fed’s dovish tone has also influenced home loan rates. Freddie Mac’s latest Primary Mortgage Market Survey shows an average interest rate of just 4.06% on a 30-year, fixed rate mortgage, compared with 4.28% a week earlier and 4.95% in December. 7

This news is especially significant given the recent pickup in existing home sales. They jumped 11.8% in February, the biggest monthly gain in more than three years. 8

[A 30-year, fixed rate mortgage is a conventional home loan meeting the lending requirements of Fannie Mae and Freddie Mac, but it is not a mortgage guaranteed or insured by any government agency. Private mortgage insurance, or PMI, is required for any conventional loan with less than a 20% down payment.]

 

TAX TIP

The federal income tax filing deadline is Monday, April 15. However, residents of Maine and Massachusetts have until Wednesday, April 17 to file their 2018 tax return. April 15 is Patriots' Day, and April 16 is Emancipation Day. 9

TIP OF THE WEEK

Good debt (a home loan, a student loan) should be distinguished from bad debt (such as credit card debt with a high-interest rate). Strive to pay off bad debt as quickly as you can, and remember that much of it may be linked to purchases that reflect wants rather than needs.

THE WEEK AHEAD: KEY ECONOMIC DATA

Monday: February retail sales.

Wednesday: ADP’s snapshot of March private sector hiring.

Friday: The Department of Labor’s March jobs report.

Source: Econoday / MarketWatch Calendar, March 29, 2019

The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision. The release of data may be delayed without notice for a variety of reasons.

 

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Tuesday: GameStop (GME), Walgreens Boots Alliance (WBA)

Thursday: Constellation Brands (STZ)

Source: Morningstar.com, March 29, 2019

Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

QUOTE OF THE WEEK

“No pessimist ever discovered the secrets of the stars, or sailed to uncharted land, or opened a new doorway for the human spirit.”

HELEN KELLER

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. 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 market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results.  Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. 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 - marketwatch.com/story/stocks-end-higher-sp-records-strongest-quarter-in-a-decade-2019-03-29 [3/29/19]

2 - quotes.wsj.com/index/SPX [3/29/19] 

3 - quotes.wsj.com/index/DJIA [3/29/19]         

4 - quotes.wsj.com/index/COMP [3/29/19]        

5 - quotes.wsj.com/index/XX/990300/historical-prices [3/29/19]

6 - cnbc.com/2019/02/04/a-giant-ipo-wave-is-coming-as-unicorns-whet-investor-appetite.html [2/4/19]

7 - startribune.com/us-mortgage-rates-post-biggest-drop-in-decade-to-4-06-pct/507781302/ [3/29/19]

8 - nar.realtor/newsroom/existing-home-sales-surge-11-8-percent-in-february [3/22/19]

 

9 - efile.com/tax-day-deadlines/ [3/21/19]

CHART CITATIONS.

 

quotes.wsj.com/index/SPX [3/29/19]   

quotes.wsj.com/index/DJIA [3/29/19]         

quotes.wsj.com/index/COMP [3/29/19]        

quotes.wsj.com/index/XX/990300/historical-prices [3/29/19]

markets.wsj.com [3/29/19]

 

treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield [3/29/19]

 

treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldAll [3/29/19]

Yes, Young Growing Families Can Save & Invest

Presented by Beacon Financial Group

It may seem like a tall order, but it can be accomplished.

Put yourself steps ahead of your peers. If you have a young, growing family, no doubt your to-do list is pretty long on any given day. Beyond today, you are probably working on another kind of to-do list for the long term. Where does “saving and investing” rank on that list?

 

For some families, it never quite ranks high enough – and it never becomes the priority it should become. Assorted financial pressures, sudden shifts in household needs, bad luck – they can all move “saving and investing” down the list. Even so, young families have strategized to build wealth in the face of such stresses. You can follow their example.

    

First step: put it into numbers. How much money will you need to save by 65 to promote enough retirement income and to live comfortably? Are you on pace to build a retirement nest egg that large? How much risk do you feel comfortable tolerating as you invest?

 

A financial professional can help you arrive at answers to these questions and others. They can help you define long-range retirement savings goals and project the amount of savings and income you may need to sustain your lifestyle as retirees. At that point, “the future” will seem more tangible, and your wealth-building effort, even more purposeful.   

Second step: start today & never stop. If you have already started, congratulations! In getting an early start, you have taken advantage of a young investor’s greatest financial asset: time.

 

If you haven’t started saving and investing, you can do so now. It doesn’t take a huge lump sum to begin. Even if you defer $100 worth of salary into a retirement account per month, you are putting a foot forward. See if you can allocate much more. If you begin when you are young and keep at it, you may witness the awesome power of compounding as you build your retirement savings and net worth through the years. 

 

Of course, this may not be enough, and you may find that you need to devote more than $100 per month to your effort. If you strategize and escalate your savings over time, you may very well generate enough money for a very comfortable retirement.

 

Merely socking away money may not be enough, either. There are a wide variety of choices you can make – perhaps alongside a trusted financial professional – that may help position you and your household for a comfortable future, provided you keep good financial habits along the way. 

How do you find the balance? This is worth addressing – how do you balance saving and investing with attending to your family’s immediate financial needs?

  

Bottom line, you should consider finding money to save and invest for your family’s near-term and long-term goals. Are you spending a lot of money on goods and services you want rather than need? Cut back on that kind of spending. Is credit card debt siphoning away dollars you should assign to saving and investing? Fix that financial leak and avoid paying with plastic whenever you can.

  

Vow to keep “paying yourself first” – maintain the consistency of your saving and investing effort. What is more important: saving for your child’s college education or buying those season tickets? Who comes first in your life: your family or your luxuries? You know the answer. 

   

It has been done; it should be done. There are people who came to this country with little more than the clothes on their backs who have found prosperity. It all starts with belief – the belief that you can do it. Complement that belief with a strategy and regular saving and investing, and you may find yourself much better off much sooner than you think.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. 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.

Weekly Economic Update

Presented by Beacon Financial Group

In this week’s recap: the “yield curve” inverts for the first time this decade, the Federal Reserve adjusts its stance on interest rates, and the price of oil climbs.

THE WEEK ON WALL STREET

Friday, the yield of the 3-month Treasury bill exceeded the yield of the 10-year Treasury note for the first time in 12 years. For some analysts, this “inverted yield curve” may imply a short-term lessening of confidence. (Treasury yields move inversely to Treasury prices.) 1

As a result, the S&P 500 ended the week 0.94% lower. The Nasdaq Composite fell 0.80%, and the Dow Industrials lost 1.19%. 2,3,4

In contrast, the MSCI EAFE index following international stocks rose, gaining 0.52% for the week. 5

FED SEES NO HIKES IN 2019

On Wednesday, the Federal Reserve held interest rates steady, but lowered its estimate of 2019 economic growth to 2.1%.

Last December, the central bank forecast two rate hikes in 2019. It now expects to leave rates unchanged this year, with one quarter-point hike projected for 2020.

This pivot may acknowledge a slight change in economic conditions. The Fed’s latest policy statement noted that the “growth of economic activity has slowed from its solid rate in the fourth quarter.” 6   

OIL HOVERS NEAR $60

At Friday’s closing bell, a barrel of West Texas Intermediate (NYMEX) crude oil was valued at $58.85 on the New York Mercantile Exchange (NYMEX). Its value briefly climbed to $60 earlier in the week.

Month-over-month, the price of WTI crude has risen nearly 5%. Historically, higher oil prices can have a significant impact on retail gasoline prices. 7

WHAT’s NEXT

A U.S. delegation is scheduled to accompany Secretary of the Treasury Steven Mnuchin to China this week for further trade negotiations. Finally, Brexit will not occur this Friday, as the European Union has extended the United Kingdom’s deadline in response to Prime Minister Theresa May’s request. 8,9

T I P  O F  T H E  W E E K

When a baby comes along, it can be hard to stick to a household budget. Rather than struggle to meet old goals, adjust the budget in light of new realities. Refrain from abandoning budgeting in the wake of the change.

THE WEEK AHEAD: KEY ECONOMIC DATA

Tuesday: The Conference Board’s latest reading on consumer confidence.

Thursday: February pending home sales, and the federal government’s second estimate of fourth-quarter Gross Domestic Product (GDP).

Friday: Reports on consumer spending and new home sales, and March’s final University of Michigan consumer sentiment index, another measure of consumer confidence levels.

Source: Econoday / MarketWatch Calendar, March 22, 2019

The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision. The release of data may be delayed without notice for a variety of reasons.

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Monday: Winnebago (WGO)

Tuesday: KB Home (KBH)

Wednesday: Lennar (LEN), Lululemon Athletica (LULU), Paychex (PAYX)

Thursday: Accenture (ACN)

Friday: Blackberry (BB), CarMax (KMX)

Source: Morningstar.com, March 22, 2019

Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame, and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

Q U O T E  O F  T H E  W E E K

“Life engenders life. Energy creates energy. It is by spending oneself that one becomes rich.”

SARAH BERNHARDT

Know someone who could use information like this?
Please feel free to send us their contact information via phone or email. (Don’t worry – we’ll request their permission before adding them to our mailing list.)

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. 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 market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results.  Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. 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 - bloomberg.com/news/articles/2019-03-22/u-s-treasury-yield-curve-inverts-for-first-time-since-2007 [3/22/19]

2 - quotes.wsj.com/index/SPX [3/22/19] 

3 - quotes.wsj.com/index/DJIA [3/22/19]         

4 - quotes.wsj.com/index/NASDAQ [3/22/19]        

5 - quotes.wsj.com/index/XX/990300/historical-prices [3/22/19]

6 - cbsnews.com/news/fed-rate-hikes-none-in-2019-federal-reserve-projects-no-rate-hikes-slower-growth-this-year/ [3/20/19]

7 - money.cnn.com/data/commodities/ [3/22/19]

8 - cnbc.com/2019/03/20/trump-says-china-tariffs-could-stay-in-place-amid-trade-deal-talks.html [3/20/19]

9 - nytimes.com/2019/03/21/world/europe/brexit-extension-eu-uk.html [3/21/19]

 

CHART CITATIONS.

 

quotes.wsj.com/index/SPX [3/22/19]     

quotes.wsj.com/index/DJIA [3/22/19]         

quotes.wsj.com/index/NASDAQ [3/22/19]        

quotes.wsj.com/index/XX/990300/historical-prices [3/22/19]

markets.wsj.com [3/22/19]

 

treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield [3/22/19]

 

treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldAll [3/22/19]

 

Weekly Economic Update

Presented by Beacon Financial Group

In this week’s recap: the Dow, S&P, and Nasdaq all advance more than 2% in five trading sessions, while investors review tame inflation data and wait for further news in U.S.-China trade negotiations.

THE WEEK ON WALL STREET

The big story last week was the sudden grounding of Boeing 737 Max 8 and 9 passenger jets in dozens of countries. The financial effects of this ban could potentially impact the airline industry and segments of the economy for months. 1

While the news created a headwind for the Dow Industrials, stocks managed to post solid gains for the week. The Nasdaq Composite rose 3.12%; the S&P 500, 2.46%; the Dow, 2.25%. 2,3,4

Bullish sentiment was also evident overseas. Looking at the MSCI EAFE index, international stocks advanced 1.93%. 5

Any companies mentioned are for illustrative purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame and risk tolerance.

TRADE MEETING DELAYED

Wall Street expected President Trump and Chinese President Xi to discuss trade issues this month. Thursday, Bloomberg reported that their talk had been postponed, with no firm date ahead. 6   

MUTED INFLATION

The latest Consumer Price Index showed just a 1.5% rise in overall consumer costs in the year ending in February.

This number does not suggest an overheating economy. During a 60 Minutes interview last week, Federal Reserve Chairman Jerome Powell said the central bank did “not feel any hurry” to make a rate move.

TAX TIP

If you turned 70½ last year, April 1 is your final deadline to receive your initial Required Minimum Distribution (RMD) from a traditional IRA, SEP-IRA, SIMPLE IRA, or employer-sponsored retirement plan. If you take your initial RMD from these retirement accounts this year, you must receive your second RMD from them by December 31, 2019. 8

Withdrawals from traditional IRAs, SEP-IRAs, and SIMPLE IRAs are taxed as ordinary income and, if taken before age 59 1/2, may be subject to a 10% federal income tax penalty. Generally, once you reach age 70 ½, you must begin taking required minimum distributions from these plans. 7

T I P   O F   T H E   W E E K

If it seems you will retire before you are eligible for Medicare, be sure to make the most of your employee health benefits. Schedule doctor, optometrist, and dentist check-ups as well as any major procedures needed. Paying for this health care out of pocket could be hugely expensive, and the premiums for private insurance could be costly.

THE WEEK AHEAD: KEY ECONOMIC DATA

Wednesday: The Federal Reserve wraps up its two-day policy meeting.

Friday: February existing home sales.

Source: Econoday / MarketWatch Calendar, March 15, 2019

The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision. The release of data may be delayed without notice for a variety of reasons.

 

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Tuesday: FedEx (FDX), Michaels Companies (MIK)

Wednesday: General Mills (GIS), Micron Technology (MU)

Thursday: ConAgra Brands (CAG), Darden Restaurants (DRI), Nike (NKE)

Source: Morningstar.com, March 15, 2019

Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame, and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

Q U O T E  O F  T H E  W E E K

“Committing a great truth to memory is admirable; committing it to life is wisdom.”

WILLIAM ARTHUR WARD

Know someone who could use information like this?
Please feel free to send us their contact information via phone or email. (Don’t worry – we’ll request their permission before adding them to our mailing list.)

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. 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 market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results.  Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. 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 - cnbc.com/2019/03/13/boeing-shares-fall-after-report-says-us-expected-to-ground-737-max-fleet.html [3/13/19]

2 - quotes.wsj.com/index/SPX [3/15/19] 

3 - quotes.wsj.com/index/DJIA [3/15/19]         

4 - quotes.wsj.com/index/NASDAQ [3/15/19]        

5 - quotes.wsj.com/index/XX/990300/historical-prices [3/15/19]

6 - bloomberg.com/news/articles/2019-03-14/china-u-s-said-to-push-back-trump-xi-meeting-to-at-least-april [3/14/19]  

7 - reuters.com/article/us-usa-economy-inflation-idUSKBN1QT1MF [3/12/19]

8 - irs.gov/newsroom/tax-time-guide-seniors-who-turned-70-and-a-half-last-year-must-start-receiving-retirement-plan-payments-by-april-1 [3/5/19]

 

CHART CITATIONS:

quotes.wsj.com/index/SPX [3/15/19] 

quotes.wsj.com/index/DJIA [3/15/19]         

quotes.wsj.com/index/NASDAQ [3/15/19]        

quotes.wsj.com/index/XX/990300/historical-prices [3/15/19] 

markets.wsj.com [3/15/19]

 

treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield [3/8/19]

 

treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldAll [3/8/19]

Your Financial Strategy

Like a chess grandmaster, it’s worth thinking a few moves ahead.

Presented by Beacon Financial Group

Thinking about retirement might seem unpleasant. As you budget your monthly bills, you might feel as if you simply don’t have enough to handle both your day-to-day affairs and still save for the future. It’s certainly true that it’s a challenge. That said, with some careful thought and a little imagination, you can probably think of ways to make what once felt impossible, more possible.

The strategic approach is known to grandmasters, generals, and sports coaches the world over. Simply put, it’s a matter of looking over your resources and options, then taking steps to use them to your greatest advantage. Strategy doesn’t guarantee any particular outcome, but it can help you make arrangements for all manner of financial situations, both positive and negative. You probably have some questions. That’s good; asking questions and seeking answers is a healthy beginning to a strategy.

Isn’t financial strategy for rich people? Not necessarily. Building that strategy could potentially give you a boost toward a better future for you and those you love. Whether it’s just you, as a single person, or you and your family, giving some thought to your finances could be all that is standing between real life and pursuing a dream. It could also potentially be what prevents a dire financial situation from becoming even worse. All by just thinking a few moves ahead. 1

Am I ready for this? Absolutely. Financial strategy is just a way of thinking ahead. If you’re reading this, you’re already thinking ahead. This means that you may be ready to start thinking about putting money aside for retirement, contemplating insurance choices, setting up beneficiaries, creating or updating a will, and even designating a financial power of attorney and health care proxy as well as drawing up a living will. 2

These topics might seem “far away,” in some distant future, or even fill you with a little anxiety or dread. That anxiety, though, is rooted in the uncertainties in life; you never know what’s coming next. At least with a strategy in action, you have some things in place for your family. If it still seems like too much, it’s good to know that you can reach out to professionals for help.

Do I have to do it all by myself? You have many choices when it comes to building a financial strategy. You could educate yourself and go it alone. It’s certainly cheaper, but you’re probably thinking more about all the things you need to learn and less about all the things you might miss by going the do-it-yourself route. There are also computer-based options, which can be affordable, but you definitely lose the advantages of human help. 2

Finally, there is the financial professional. You might think of a financial professional as a man wearing a green visor, crunching numbers for some cartoon billionaire. The truth is that there are all sorts of financial professionals who specialize in working with people at every income level and from all walks of life. Some financial professionals charge flat rates or by the hour, and others such as fee-only financial professionals typically receive a percentage of client assets under management. 2,3

You have many choices when it comes to who you do business with – your financial professional should be able to talk you through investments, financial issues in the news, working toward your own goals, and ultimately, help you think a few moves ahead.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. 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 - nerdwallet.com/blog/investing/5-financial-planning-myths/ [12/7/18]

2 - investors.com/etfs-and-funds/personal-finance/steps-in-financial-planning-2019/ [12/31/18]

3 - thestreet.com/personal-finance/when-is-it-worth-it-to-work-with-a-financial-advisor-14631145 [6/23/18]

The A, B, C, & D of Medicare

Breaking down the basics & what each part covers.

Presented by Beacon Financial Group

Whether your 65th birthday is on the horizon or decades away, you should understand the parts of Medicare – what they cover and where they come from.

Parts A & B: Original Medicare. There are two components. Part A is hospital insurance. It provides coverage for inpatient stays at medical facilities. It can also help cover the costs of hospice care, home health care, and nursing home care – but not for long and only under certain parameters.1,2

Seniors are frequently warned that Medicare will only pay for a maximum of 100 days of nursing home care (provided certain conditions are met). Part A is the part that does so. Under current rules, you pay $0 for days 1-20 of skilled nursing facility (SNF) care under Part A. During days 21-100, a $170.50 daily coinsurance payment may be required of you.2

Part B is medical insurance and can help pick up some of the tab for physical therapy, physician services, expenses for durable medical equipment (hospital beds, wheelchairs), and other medical services, such as lab tests and a variety of health screenings.1

Part B isn’t free. You pay monthly premiums to get it and a yearly deductible (plus 20% of costs). The premiums vary according to the Medicare recipient’s income level. The standard monthly premium amount is $135.50 this year. The current yearly deductible is $185. (Some people automatically receive Part B coverage, but others must sign up for it.)3

Part C: Medicare Advantage plans. Insurance companies offer these Medicare-approved plans.

To keep up your Part C coverage, you must keep up your payment of Part B premiums as well as your Part C premiums. To say not all Part C plans are alike is an understatement. Provider networks, premiums, copays, coinsurance, and out-of-pocket spending limits can all vary widely, so shopping around is wise. During Medicare’s annual Open Enrollment Period (October 15 - December 7), seniors can choose to switch out of Original Medicare to a Medicare Advantage plan or vice versa; although, any such move is much wiser with a Medigap policy already in place.4,5

How does a Medigap plan differ from a Part C plan? Medigap plans (also called Medicare Supplement plans) emerged to address the gaps in Part A and Part B coverage. If you have Part A and Part B already in place, a Medigap policy can pick up some copayments, coinsurance, and deductibles for you. You pay Part B premiums in addition to Medigap plan premiums to keep a Medigap policy in effect. These plans no longer offer prescription drug coverage.6

Part D: prescription drug plans. While Part C plans commonly offer prescription drug coverage, insurers also sell Part D plans as a standalone product to those with Original Medicare. As per Medigap and Part C coverage, you need to keep paying Part B premiums in addition to premiums for the drug plan to keep Part D coverage going.7

Every Part D plan has a formulary, a list of medications covered under the plan. Most Part D plans rank approved drugs into tiers by cost. The good news is that Medicare’s website will determine the best Part D plan for you. Go to medicare.gov/find-a-plan to start your search; enter your medications and the website will do the legwork for you.8

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. 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 - mymedicarematters.org/coverage/parts-a-b/whats-covered/ [1/29/19]

2 - medicare.gov/coverage/skilled-nursing-facility-snf-care [1/29/19]

3 - medicare.gov/your-medicare-costs/part-b-costs [1/29/19]

4 - medicareinteractive.org/get-answers/medicare-basics/medicare-coverage-overview/original-medicare [1/29/19]

5 - medicare.gov/sign-up-change-plans/joining-a-health-or-drug-plan [1/29/19]

6 - medicare.gov/supplements-other-insurance/whats-medicare-supplement-insurance-medigap [1/29/19]

7 - ehealthinsurance.com/medicare/part-d-all/medicare-part-d-prescription-drug-coverage-costs [1/29/19]

What People Overlook When Shopping for Life Insurance

A few realities that must be acknowledged.

Shopping for life insurance means paying attention to detail. In scrutinizing these details, however, some fundamental, big-picture truths may be ignored.

If you want to renew or upgrade coverage later in life, the terms could be less than ideal. You may be healthier than most of your peers, you may have the constitution of someone half your age, but insurers base policy premiums and terms of coverage on actuarial norms, not exceptions. Purchase a term life policy at age 50, and your premiums may be considerably more expensive than if you had bought the same coverage at age 30. This is the way of the insurance business.1

Have you had a serious illness? Have you been diagnosed with a medical condition, such as diabetes, sleep apnea, or high blood pressure? You are looking at higher life insurance premiums, and insurers may limit the amount of life insurance coverage you can buy.2

A guaranteed acceptance life insurance policy may be the answer, but even with one of these policies, you may have to live a certain number of years after buying the coverage for your heirs to receive a death benefit. Many times, if the insured dies within 2-3 years of the policy purchase, the named beneficiaries only receive an amount equivalent to the premiums that have been paid, plus interest.2

Your beneficiaries need to know that you own life insurance. Roughly $1 billion in life insurance payouts sit unclaimed in America. Why? The beneficiaries are unaware of them. Also, sometimes beneficiary designations are hazy; a “husband” is named as a primary beneficiary on a policy, but the insured has married more than once, so an ex-spouse contests the beneficiary form. Such legal challenges may generate court costs offsetting the financial value of the death benefit.3

While it seems obvious to inform heirs about a life insurance policy, some people never do – and this simple oversight continues to obstruct life insurance payouts.

You need to name a beneficiary in the first place. Some consumers fail to, however, and that can create problems. If you do not designate a beneficiary for your life insurance policy, its death benefit could be included in your estate, exposed to probate and creditors.4

You must also recognize that you could live much longer than you expect. Years ago, most life insurance policies were sold with the assumption that the insured party would die by age 100. If the policyholder lived beyond that maturity date, the insurer would simply pay out the cash value of the policy (or something similar) to the insured person at that time.5

Today, maturity dates on life insurance policies are often set at age 121, but not all are. There is still a possibility that you could outlive a maturity date and money could be paid out to you instead of your named beneficiaries. This possibility must be acknowledged.5

As you shop for life insurance coverage, keep all this in mind. Some policyholders (and their heirs) tend to lose sight of these realities.

This material was prepared by MarketingPro, 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 - investopedia.com/articles/investing/102914/7-factors-affect-your-life-insurance-quote.asp [6/28/18]

2 - nasdaq.com/article/4-errors-to-avoid-with-your-life-insurance-cm868133 [10/30/17]

3 - baltimoresun.com/health/blog/bs-md-insurance-deceased-database-20170111-story.html [1/11/17]

4 - thebalance.com/must-life-insurance-be-used-to-pay-a-decedent-s-bills-3505232 [5/12/18]

5 - lifeinsurance.org/blog/does-life-insurance-expire-at-a-certain-age [6/28/18]

Save & Invest Even if Money Is Tight

Presented by Beacon Financial Group

For millennials, today is the right time.

If you are under 30, you have likely heard that now is the ideal time to save and invest. You know that the power of compound interest is on your side; you recognize the potential advantages of an early start.

There is only one problem: you do not earn enough money to invest. You are barely getting by as it is.

Regardless, the saving and investing effort can still be made. Even a minimal effort could have a meaningful impact later.

Can you invest $20 a week? There are 52 weeks in a year. What would saving and investing $1,040 a year do for you at age 25? Suppose the invested assets earn 7% a year, an assumption that is not unreasonable. (The average yearly return of the S&P 500 through history is roughly 10%; during 2013-17, its average return was +13.4%.) At a 7% return and annual compounding, you end up with $14,876 after a decade in this scenario, according to Bankrate’s compound interest calculator. By year 10, your investment account is earning nearly as much annually ($939) as you are putting into it ($1,040). 1,2

You certainly cannot retire on $14,876, but the early start really matters. Extending the scenario out, say you keep investing $20 a week under the same conditions for 40 years, until age 65. As you started at age 25, you are projected to have $214,946 after 40 years, off just $41,600 in total contributions. 2

This scenario needs adjustment considering a strong probability: the probability that your account contributions will grow over time. So, assume that you have $14,876 after ten years, and then you start contributing $175 a week to the account earning 7% annually starting at age 35. By age 65, you are projected to have $1,003,159. 2

Even if you stop your $20-per-week saving and investing effort entirely after 10 years at age 35, the $14,876 generated in that first decade keeps growing to $113,240 at age 65 thanks to 7% annual compounded interest. 2

How do you find the money to do this? It is not so much a matter of finding it as assigning it. A budgeting app can help: you can look at your monthly cash flow and designate a small part of it for saving and investing.

Should you start an emergency savings fund first, then invest? One school of thought says that is the way to go – but rather than think either/or, think both. Put a ten or twenty (or a fifty) toward each cause, if your budget allows. As ValuePenguin notes, many deposit accounts are yielding 0.01% interest. 3

It does not take much to start saving and investing for retirement. Get the ball rolling with anything, any amount, today, for the power of compounding is there for you to harness. If you delay the effort for a decade or two, building adequate retirement savings could prove difficult.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. 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 - nerdwallet.com/blog/investing/average-stock-market-return/ [2/28/18]

2 - bankrate.com/calculators/savings/compound-savings-calculator-tool.aspx [7/26/18]

3 - valuepenguin.com/average-savings-account-interest-rates [7/26/18]

Your Emergency Fund: How Much is Enough?

Presented by Beacon Financial Group

An emergency fund may help alleviate the stress associated with a financial crisis.

Have you ever had one of those months? The water heater stops heating, the dishwasher stops

washing, and your family ends up on a first-name basis with the nurse at urgent care. Then, as

you’re driving to work, giving yourself your best, “You can make it!” pep talk, you see smoke

seeping out from under your hood.

Bad things happen to the best of us, and instead of conveniently spacing themselves out, they

almost always come in waves. The important thing is to have a financial life preserver, in the

form of an emergency cash fund, at the ready.

Although many people agree that an emergency fund is an important resource, they’re not sure

how much to save or where to keep the money. Others wonder how they can find any extra

cash to sock away. One recent survey found that 29% of Americans lack any emergency savings

whatsoever. 1

How Much Money? When starting an emergency fund, you’ll want to set a target amount. But

how much is enough? Unfortunately, there is no “one-size-fits-all” answer. The ideal amount

for your emergency fund may depend on your financial situation and lifestyle. For example, if

you own your home or provide for a number of dependents, you may be more likely to face

financial emergencies. And if the crisis you face is a job loss or injury that affects your income,

you may need to depend on your emergency fund for an extended period of time.

Coming Up with Cash. If saving several months of income seems an unreasonable goal, don’t

despair. Start with a more modest target, such as saving $1,000. Build your savings at regular

intervals, a bit at a time. It may help to treat the transaction like a bill you pay each month.

Consider setting up an automatic monthly transfer to make self-discipline a matter of course.

You may want to consider paying off any credit card debt before you begin saving.

Once you see your savings begin to build, you may be tempted to use the account for

something other than an emergency. Try to budget and prepare separately for bigger expenses

you know are coming. Keep your emergency money separate from your checking account so

that it’s harder to dip into.

Where Do I Put It? An emergency fund should be easily accessible, which is why many people

choose traditional bank savings accounts. Savings accounts typically offer modest rates of

return. Certificates of Deposit may provide slightly higher returns than savings accounts, but

your money will be locked away until the CD matures, which could be several months to several

years.

The Federal Deposit Insurance Corporation (FDIC) insures bank accounts and certificates of

deposit (CD’s) up to $250,000 per depositor, per institution in principal and interest. CD’s are

time deposits offered by banks, thrift institutions, and credit unions. CD’s offer a slightly higher

return than a traditional bank savings account, but they also may require a higher amount of

deposit. If you sell before the CD reaches maturity, you may be subject to penalties. 2

Some individuals turn to money market accounts for their emergency savings. Money market

funds are considered low-risk securities, but they’re not backed by the federal government like

CD’s, so it is possible to lose money. Depending on your particular goals and the amount you

have saved, some combination of lower-risk investments may be your best choice. 2

Money held in money market funds is not insured or guaranteed by the FDIC or any other

government agency. Money market funds seek to preserve the value of your investment at

$1.00 a share. However, it is possible to lose money by investing in a money market fund.

Money market mutual funds are sold by prospectus. 2

Please consider the charges, risks, expenses, and investment objectives carefully before

investing. A prospectus containing this and other information about the investment company

can be obtained from your financial professional. Read it carefully before you invest or send

money.

The only thing you can know about unexpected expenses is that they’re coming – for everyone.

But having an emergency fund may help alleviate the stress and worry associated with a

financial crisis. If your emergency savings are not where they should be, consider taking steps

today to create a cushion for the future.


Know someone who could use information like this? Please feel free to send us their contact information via phone or email. (Don’t worry – we’ll request their permission before adding them to our mailing list.)


This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. 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 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 - cnbc.com/2018/07/02/about-55-million-americans-have-no-emergency-savings.html [7/6/18]

2 - investor.vanguard.com/investing/cash-investments [12/13/18]

Monthly Economic Update for January 2019

Presented by Beacon Financial Group

In this month’s recap: equities rally here and around the world, economic fundamentals look solid, the pace of home sales slows, and oil surges.

THE MONTH IN BRIEF

During a month marked by political impasses in the United States and United Kingdom, equities performed well around most of the world. On Wall Street, the S&P 500 advanced 7.87% in January, with a new earnings season as well as trade and monetary policy developments providing tailwinds. Most of the economic data that rolled in was good; the partial federal government shutdown may have negatively impacted some of the numbers. Home sales fell off abruptly. Many commodities advanced. All in all, investors focused on the potential of the markets more than disputes. 1

DOMESTIC ECONOMIC HEALTH

The Congressional Budget Office believes that the 35-day federal government shutdown cost the economy about $11 billion. The silver lining is that roughly $8 billion of that loss is potentially recoverable, presuming federal spending and consumer spending bounce back in the coming months. 2

Due to the length and breadth of the shutdown, a few key economic reports did not appear last month. Nevertheless, there were plenty of attention-getting news items.

As expected, the Federal Reserve left interest rates alone in January. What really intrigued investors was the dovish tone of the Fed’s latest policy statement. It noted that the Federal Open Market Committee would be “patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate” for the economy. The central bank appeared newly cautious: language implying that rate hikes might be merited was now absent. 3

In mid-January, China made a move in the U.S.-China trade dispute. It offered a plan to address the U.S. trade deficit, with an objective of cutting it to $0 by 2024. China would undertake a strategy to buy greater amounts of American goods: $45 billion more during 2019, and gradually, more in each of the following five years, with the multiyear increase reaching $1 trillion. Bloomberg News reported that U.S. negotiators wanted China to try and wipe out the trade imbalance within two years, not six. American demand for Chinese-made products is so strong, however, that making any real dent in the trade deficit might be a tall order, given current free market conditions. 4

Main Street seemed a bit unsettled by the shutdown and recent stock market volatility. The most respected U.S. monthly consumer confidence gauge, maintained by the Conference Board, fell sharply in January to 120.2, a good reading that still represented its lowest level since July 2017. Its future expectations sub-index hit a 27-month low. At mid-month, the University of Michigan’s consumer sentiment index slipped from its final December mark of 98.3 to 90.7. 5,6

The Institute for Supply Management’s twin purchasing manager indices also fell; those numbers exclusively concerned December. In the last month of 2018, ISM’s manufacturing sector index slipped 5.2 points to 54.1; its services sector PMI declined 3.1 points to 57.6. Both readings indicated solid sector expansion, just to a lesser degree than a month before. 7

One word summed up the latest jobs report from the Department of Labor: fantastic. In December, employers added 312,000 net new workers to their payrolls. The main unemployment rate rose 0.2% to 3.9%, but that was an effect of more Americans looking for work. The U-6 rate, counting both the unemployed and underemployed, held at 7.6%. Wages were up 3.2% year-over-year, the best annual advance in a decade. 8

The Consumer Price Index retreated 0.1% during December after a flat November; the core CPI rose 0.2% in the final month of 2018, replicating its November move. December also brought a slight slip for both the headline (0.2%) and core (0.1%) Producer Price Index. 6

As January drew to a close, some significant data was still pending: the first estimate of Q4 Gross Domestic Product (GDP), plus the latest reports on personal spending as well as income and durable goods orders. This backlogged data could appear in the first half of this month.

GLOBAL ECONOMIC HEALTH

Would the Brexit be delayed? After the crushing 230-vote defeat of Prime Minister Theresa May’s withdrawal deal in Parliament, the United Kingdom faced six possible options: an extension of the March 29 Brexit deadline set by the European Union, a renegotiation of May’s withdrawal deal, a general election that could bring about a change in U.K. leadership, a “hard” Brexit with no trade agreements with the E.U., another national vote on the matter, or no Brexit at all with the U.K. staying in the E.U. As January ended, May faced a February 13 deadline to return to Parliament with either an altered deal or a statement of which other course of action she wanted the U.K. to pursue. While European Council President Donald Tusk tweeted that the Brexit agreement was “not open for renegotiation,” U.K. Foreign Secretary Jeremy Hunt said that a delayed Brexit could be in order. One key sticking point has been the flow of trade between Ireland and Northern Ireland, which could be disturbed if Northern Ireland leaves the E.U. 9,10

China’s factory sector shrunk for a second straight month in January; the reading on the nation’s official manufacturing PMI improved 0.2 points to 49.5. The Chinese economy grew 6.6% in 2018 – a striking advance by global standards, but its smallest expansion since 1990. The effect of that slowdown was being felt in America (where major tech and heavy equipment firms reported declining sales in China) and in Japan, South Korea, and Australia, three of its other major trading partners. (Tariffs on a variety of Chinese imports to the U.S. are slated to rise from 10% to 25% before the end of the first quarter.) 11,12

WORLD MARKETS

Investors felt bullish around the world last month, and the performance numbers of major equity benchmarks reflected their optimism. Europe saw broad gains: Russia’s MICEX improved 6.41% in January; Spain’s IBEX 35, 6.05%; the FTSE Eurofirst 300, 5.99%; Germany’s DAX, 5.82%; France’s CAC 40, 5.54%. Even in London, the FTSE 100 gained 3.58%. 13

Indices in the Asia-Pacific region, Canada, and South America recorded even larger monthly jumps. Canada’s TSX Composite outperformed the Dow and S&P 500, surging 8.50%. The MSCI Emerging Markets index climbed 8.71% for the month, and MSCI’s World index added 7.68%. Look what two South American benchmarks did: Brazil’s Bovespa soared 11.14%, and Argentina’s Merval, 18.97%. Mexico’s Bolsa posted a monthly advance of 5.64%. Hong Kong’s Hang Seng and South Korea’s Kospi set the pace in the east, with respective gains of 8.11% and 8.03%. Australia’s All Ordinaries rose 3.99%; China’s Shanghai Composite, 3.96%; Japan’s Nikkei 225, 3.79%. The only notable retreats were minor: India’s Nifty 50 lost 0.29%; Malaysia’s KLSE Composite, 0.42%. 13,14

COMMODITIES MARKETS

Oil got off to a great start for 2019. By the closing bell on January 31, a barrel of WTI crude was worth $54.04 on the NYMEX, after a 17.94% YTD gain. While natural gas futures lost 4.53% last month, unleaded gasoline improved 4.94%, and heating oil soared 11.71%. 15

Among the softs, while cocoa took a 10.50% drop, other major crops rose. Sugar gained 4.16%; soybeans, 3.83%; cotton, 2.99%; wheat, 2.68%; corn, 0.47%; coffee, 0.34%. Copper led the key metals, rising 5.75%. Platinum advanced 4.35%, and silver and gold respectively added 4.05% and 3.03%. Gold ended the month at $1,319.50 on the COMEX; silver, at $16.06. The U.S. Dollar Index lost 0.80% in January. 15,16

REAL ESTATE

First, the good news. January brought a significant dip in mortgage rates. In Freddie Mac’s last Primary Mortgage Market Survey of 2018 (December 27), a conventional home loan carried 4.55% interest on average. By January 31, that average interest rate had declined to 4.46%. The trend carried over to 15-year, fixed rate loans (4.01% to 3.89%) and 5/1-year, adjustable loans (4.00% to 3.96%). 17,18

Additionally, delayed new home sales data from the Census Bureau showed a 17.0% jump in November to an 8-month high. (The Bureau’s report on January housing starts is still pending as a result of the shutdown.) 19

Now, the bad news: existing home sales slowed. The National Association of Realtors announced that resales were down 6.4% month-over-month in December, after improving 2.1% in November. In 2018, existing home sales lagged 3.1% behind their 2017 pace; last year was the poorest year for home buying since 2015. 6,20

In other real estate news, the 20-city composite S&P CoreLogic Case-Shiller home price index showed 4.7% annual appreciation in its latest edition (November), which was the slimmest gain in almost four years. The yearly advance had been 5.0% a month earlier. The NAR’s pending home sales index, which measures monthly housing contract activity, fell 2.2% to 99.0 in December; that was its worst reading since April 2014. 5,20

T I P O F T H E M O N T H

Recent college graduates are certainly challenged to save for the future, what with student loans, rent, and entry-level jobs. It can be tough to set anything aside. Still, saving and investing something is better than nothing, and the effort must be made. Given the power of compounding over time, starting early is smart.

LOOKING BACK, LOOKING FORWARD

Equities got off to a flying start this year. While the big three all gained 7% or better last month, the small caps outran those bullish starts: the Russell 2000 soared 11.19% in January. At the closing bell on January 31, their settlements were: Dow Industrials, 24,999.67; Nasdaq Composite, 7,281.74; S&P 500, 2,704.10; Russell 2000, 1,499.42. Leading the pack among U.S. benchmarks in terms of monthly performance, the PHLX Oil Service Sector index climbed 19.28%. The CBOE VIX declined 34.82% in January, down to 16.57 at the end of the month. 1

Patient investors sighed with relief at January’s major Wall Street advance. The S&P 500 had not rallied so strongly in January since 1987. It just goes to show that when the bears come out, the bulls are quite capable of coming right back. Going into February, investors have three preoccupations: earnings, the rate of progress in the trade negotiations between the U.S. and China, and the lingering risk of a shutdown in Washington. In the best-case scenario, this month would see a return to business as usual on Wall Street: a leveling out of extreme volatility, a fading memory of December and its anxieties. With luck, maybe we will see that this month instead of a retreat inspired by poor quarterly results or sudden headlines. 23

Q U O T E O F T H E M O N T H

“Cherish all your happy moments: they make a fine cushion for old age.”

CHRISTOPHER MORLEY

UPCOMING RELEASES

What will investors interpret during the rest of 2019’s shortest month? Besides earnings, they will look at the January Consumer Price Index (2/13), the January Producer Price Index (2/14), the preliminary February University of Michigan consumer sentiment index, recent retail sales data, and January industrial output (2/15), minutes from the January Federal Reserve policy meeting as well as new and delayed reports on homebuilding activity (2/20), January existing home sales and leading indicators (2/21), a new Conference Board consumer confidence index, January new home sales, and the December S&P CoreLogic Case-Shiller home price index (2/26), January pending home sales and hard goods orders (2/27), and then, an estimate of Q4 growth (2/28). January personal spending data, the January Personal Consumption Expenditures price index, and the final February University of Michigan consumer sentiment index are slated to appear on March 1.

Know someone who could use information like this? Please feel free to send us their contact information via phone or email. (Don’t worry – we’ll request their permission before adding them to our mailing list.)

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. 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 market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. 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 - markets.wsj.com/us [1/31/19]

2 - tinyurl.com/ybuyqd79 [1/28/19]

3 - nbcnews.com/business/economy/federal-reserve-leaves-interest-rate-unchanged-first-meeting-2019-n964726 [1/30/19]

4 - bloomberg.com/news/articles/2019-01-18/china-is-said-to-offer-path-to-eliminate-u-s-trade-imbalance [1/18/19]

5 - reuters.com/article/us-usa-economy/us-consumer-morale-at-one-and-a-half-year-low-house-price-gains-slow-idUSKCN1PN271 [1/29/19]

6 - investing.com/economic-calendar/ [1/31/19]

7 - instituteforsupplymanagement.org/ISMReport/NonMfgROB.cfm?SSO=1 [1/7/19]

8 - time.com/5493913/december-jobs-numbers/ [1/4/19]

9 - cnbc.com/2019/01/15/theresa-may-loses-brexit-vote-what-happens-next.html [1/15/19]

10 - apnews.com/dcaa3bafbc474b0ca2f1a2ef43b450fd [1/31/19]

11 - cnbc.com/2019/01/31/china-economy-manufacturing-january-pmi-.html [1/31/19]

12 - hawaiipublicradio.org/post/asia-minute-slowing-chinese-economy-hits-neighboring-countries [1/29/19]

13 - markets.on.nytimes.com/research/markets/worldmarkets/worldmarkets.asp [1/31/19]

14 - msci.com/end-of-day-data-search [1/31/19]

15 - money.cnn.com/data/commodities/ [1/31/19]

16 - marketwatch.com/investing/index/dxy/historical [1/31/19]

17 - freddiemac.com/pmms/archive.html [1/31/19]

18 - freddiemac.com/pmms/archive.html?year=2018 [1/31/19]

19 - marketwatch.com/story/new-home-sales-soar-17-in-november-hit-an-8-month-high-2019-01-31 [1/31/19]

20 - tinyurl.com/yd25wvyd [1/30/19]

21 - markets.wsj.com/us [12/31/18]

22 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldAll [2/1/19]

23 - marketwatch.com/story/what-does-the-stock-markets-monster-january-rally-mean-for-february-2019-01-31 [1/31/19]

Weekly Economic Update 2/4/2019

Presented by Beacon Financial Group

In this week’s recap: a hiring surge, a noteworthy remark from Jerome Powell, a dip for a respected household confidence index, and gains on Wall Street.

February BEGINS WITH SOME EXCELLENT ECONOMIC DATA

Payrolls swelled with 304,000 net new jobs last month, according to the Department of Labor’s February employment report. (A Bloomberg survey of economists had projected a gain of 165,000.) The number of Americans temporarily laid off or working part time for economic reasons increased greatly in January as a consequence of the partial federal government shutdown; that left the unemployment rate (4.0%) and underemployment rate (8.1%) higher. Average hourly wages were up 3.2% year-over-year. Additionally, the factory sector expanded at a faster pace last month: the Institute for Supply Management’s purchasing manager index improved 2.5 points to a mark of 56.6. 1,2

       

FED HINTS AT THE POSSIBILITY OF PAUSING RATE HIKES

The Federal Reserve made no interest rate move last week, but at its January 30 press conference, Fed chairman Jerome Powell had an interesting comment for the media: “We believe we can best support the economy by being patient before making any future adjustment to policy.” To investors large and small, that remark sounded like a declaration that the central bank was ready to exercise extra caution in considering future rate increases. Powell noted the recent emergence of “some crosscurrents and conflicting signals about the [economic] outlook” as a factor. 3

     

HOW ARE CONSUMERS FEELING?

The latest readings on the country’s two most-watched consumer confidence indices look good, but one just took a major fall. The Conference Board’s monthly index went from a December mark of 126.6 to 120.2 in January. In its final January edition, the University of Michigan’s consumer sentiment gauge displayed a 91.2 reading, up 0.5 points from its preliminary version. 2

     

MAJOR INDICES MAKE ANOTHER WEEKLY ADVANCE

Last week, the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all gained more than 1.3%, thanks in part to some of the developments mentioned above. The S&P rose 7.87% during January. Oil ended the week at $55.31 on the NYMEX; gold, at $1,322.60 on the COMEX. 4,5

T I P   O F   T H E   W E E K

Does your employer offer long-term disability coverage in its benefits package? Do you know how much income that coverage would pay out if you become disabled? Check to see if the income would be adequate; if it appears inadequate, consider arranging supplemental coverage.

THIS WEEK

Alphabet, Beazer Homes, Clorox, Gilead Sciences, Panasonic, Seagate Technology, Sysco, and The Hartford release earnings news Monday. | On Tuesday, ISM’s January non-manufacturing PMI complements earnings from Allstate, AmeriGas, Anadarko Petroleum, Archer Daniels Midland, BP, Chubb, Electronic Arts, Estee Lauder, Genworth Financial, Mitsubishi, Pitney Bowes, Ralph Lauren, Snap, Viacom, Voya Financial, and Walt Disney Co. | Wednesday, earnings arrive from Chipotle, Cummins, Eli Lilly, General Motors, GlaxoSmithKline, Humana, MetLife, Prudential Financial, Spotify, Take-Two Interactive, and Valvoline; in the evening, Federal Reserve chair Jerome Powell takes questions at a Washington, D.C. town hall meeting. | On Thursday, the earnings roll call includes news from ArcelorMittal, Dunkin’ Brands, Fiat Chrysler, Kellogg, L’Oréal, Marathon Petroleum, Mattel, Motorola Solutions, News Corp., Philip Morris, Twitter, Tyson Foods, and Yum! Brands. | Friday, Exelon, Hasbro, and Phillips 66 present Q4 results.

Q U O T E    O F    T H E    W E E K

“Have patience with all things, but chiefly have patience with yourself.”

St. Francis de Sales

Know someone who could use information like this?

Please feel free to send us their contact information via phone or email. (Don’t worry – we’ll request their permission before adding them to our mailing list.)

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. 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 market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results.  Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. 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 - fortune.com/2019/02/01/jobs-numbers-january/ [2/1/19]

2 - marketwatch.com/economy-politics/calendars/economic [2/1/19]

3 - washingtonpost.com/business/2019/01/30/federal-reserve-says-it-will-be-patient-rate-hikes-change-likely-please-trump/ [1/30/19]

4 - markets.wsj.com [2/1/19]

5 - us.spindices.com/indices/equity/sp-500 [1/31/19]

6 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield [2/1/19]

7 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldAll [2/1/19]

Are Your Beneficiary Designations Up to Date?

Presented by Beacon Financial Group

Who should inherit your IRA or 401(k)? See that they do

Here’s a simple financial question: who is the beneficiary of your IRA? How about your 401(k) or annuity? You may be saying, “I’m not sure.” It is smart to periodically review your beneficiary designations.

Your choices may need to change with the times. When did you open your first IRA? When did you buy your life insurance policy? Was it back in the Nineties? Are you still living in the same home and working at the same job as you did back then? Have your priorities changed?

While your beneficiary choices may seem obvious and rock‐solid when you initially make them, time has a way of altering things. In a stretch of five or ten years, some major changes can occur in your life and may warrant changes in your beneficiary decisions.

In fact, you might want to review them annually. Here’s why: companies frequently change custodians when it comes to retirement plans and insurance policies. When a new custodian comes on board, a beneficiary designation can get lost in the paper shuffle. (It has happened.) If you don’t have a designated beneficiary on your retirement accounts, those assets may go to the “default” beneficiaries when you pass away, which might throw a wrench into your estate planning. An example: under ERISA, your spouse receives your 401(k) assets if you pass away. Your spouse must waive that privilege in writing for those assets to go to your children instead. 1

How your choices affect your loved ones. The beneficiary of your IRA, annuity, 401(k), or life insurance policy may be your spouse, your child, maybe another loved one, or maybe even an institution. Naming a beneficiary helps to keep these assets out of probate when you pass away.

Many people do not realize that beneficiary designations take priority over bequests made in a will or living trust. For example, if you long ago named a son or daughter who is now estranged from you as the beneficiary of your life insurance policy, he or she will receive the death benefit when you die, regardless of what your will states. 2

You may have even chosen the “smartest financial mind” in your family as your beneficiary, thinking that he or she has the knowledge to carry out your financial wishes in the event of your death. But what if this person passes away before you do? What if you change your mind about the way you want your assets distributed and are unable to communicate your intentions in time? And what if he or she inherits tax problems as a result of receiving your assets?

How your choices affect your estate. If you are naming your spouse as your beneficiary, the tax consequences are less thorny. Assets you inherit from your spouse aren’t subject to estate tax, as long as you are a U.S. citizen. 3

When the beneficiary isn’t your spouse, things get a little more complicated – for your estate and for your beneficiary’s estate. If you name, for example, your son or your sister as the beneficiary of your retirement plan assets, the amount of those assets will be included in the value of your taxable estate. (This might mean a higher estate tax bill for your heirs.) And the problem will persist: when your non‐spouse beneficiary inherits those retirement plan assets, those assets become part of their taxable estate, and their heirs might face higher estate taxes. Your non‐spouse heir might also have to take required income distributions from that retirement plan someday and pay the required taxes on that income. 4

If you properly designate a charity or other 501(c)(3) non‐profit organization as a beneficiary of your retirement account assets, the assets can pass to the charity without your estate being taxed, and the gift will be deductible for estate tax purposes. 5

Know someone who could use information like this? Please feel free to send us their contact information via phone or email. (Don’t worry – we’ll request their permission before adding them to our mailing list.)


This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. 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 ‐ forbes.com/sites/ashleaebeling/2018/01/08/five‐retirement‐housekeeping‐moves‐for‐the‐new‐year/ [1/8/18]

2 ‐ thebalance.com/why‐beneficiary‐designations‐override‐your‐will‐2388824 [8/28/17]

3 ‐ nolo.com/legal‐encyclopedia/estate‐planning‐when‐you‐re‐married‐noncitizen.html [2/4/18]

4 ‐ corporate.findlaw.com/law‐library/who‐should‐be‐the‐beneficiary‐of‐your‐qualified‐retirement‐plan.html [2/4/18]

5 ‐ ameriprise.com/research‐market‐insights/financial‐articles/insurance‐estate‐planning/charitable‐giving/ [2/4/18]

Weekly Economic Update 1/28/2019

Presented by Beacon Financial Group, January 28, 2019

In this week’s recap: home sales slip, the Fed may be discussing an end date for its balance sheet reduction, leading indicators flash weaker signals, and equities continue to climb.

HOME SALES QUICKLY FALTER

Seldom do existing home sales fall 6.4% in a month, but that was what happened in December. National Association of Realtors economist Laurence Yun called the drop a reflection of “consumer search processes and contract signing activity in previous months when mortgage rates were higher than today,” and noted that the housing market could be poised for a spring rebound. Year‐over‐year, the NAR noted, resales were down 10.3%. The median existing home sale price was $253,600 last month, up 2.9% from December 2017. 1

IS A SUNSET COMING FOR THE FED’S BALANCE SHEET RUNOFF?

On Friday, the Wall Street Journal stated that Federal Reserve policymakers are reportedly considering an end date for the unwinding of the central bank’s huge bond portfolio. Investors will, no doubt, scrutinize the Federal Open Market Committee’s January 30 monetary policy statement for any intimations about this. In gradually shrinking its balance sheet over the last 15 months, the Fed has affected the level of liquidity within the financial markets. 2

LEADING INDICATORS RETREAT

The Conference Board’s monthly index of leading indicators descended a tenth of a point in December. A month earlier, the gauge rose 0.2%. In a note accompanying the release of the data, the CB said this might be a hint that the economy may “decelerate towards 2% growth by the end of 2019.” 3

A SHORT AND POSITIVE WEEK ON WALL STREET

All three major U.S. equity benchmarks posted slight gains this past 4‐day trading week, adding to the extended rally that began after Christmas. At Friday’s close, the S&P 500 was up 7.20% month‐over‐month, and the Dow Jones Industrial Average was on a 5‐week winning streak. Friday’s sudden agreement between President Trump and Democratic congressional leaders to end the partial federal government shutdown was but one positive factor influencing stocks. Some key earnings announcements surprised to the upside: China’s government said that it would inject $37 billion worth of liquidity into its money markets, and investors heard that the Fed might be thinking of wrapping up the unwinding of its balance sheet sooner rather than later. 4,5

T I P O F T H E W E E K

At most businesses, sales and revenue ebb and flow across the year. Some astute short‐term budgeting may help your business better manage the lean times. Start with a list of your essential, month‐to‐month costs, and see if you can plan to reduce any extra costs during the slow months.

THIS WEEK

The Internal Revenue Service begins accepting 2018 individual tax returns on Monday; on Wall Street, investors respond to Q4 results from Caterpillar, Celanese, and Whirlpool. | Tuesday, the Conference Board releases its January consumer confidence index, and 3M, AMD, Allergan, Amgen, Apple, Biogen, Corning, eBay, Harley‐Davidson, Lockheed Martin, Nucor, Pfizer, Pulte Group, Regis Corp., Rockwell Automation, Verizon, and Xerox announce earnings. | The Federal Reserve issues its latest policy statement on Wednesday, with a press conference afterward; ADP presents its January payrolls report, the NAR offers its latest pending home sales index, and the earnings roll call includes Alibaba, Ally Financial, Ameriprise Financial, Anthem, AT&T, Avery Dennison, Boeing, Facebook, General Dynamics, McDonalds, Microsoft, Mondelez International, PayPal, Qualcomm, Royal Caribbean, Siemens, Sirius XM, Tesla, U.S. Steel, and Visa. | On Thursday, December consumer spending numbers are out along with earnings from Aflac, Altria Group, Amazon, Celgene, Charter Communications, ConocoPhillips, DowDuPont, GE, Mastercard, Nokia, Northrop Grumman, Parker Hannifin, Raytheon, Royal Dutch Shell, Sherwin‐Williams, Sprint, Symantec, UPS, and Valero Energy. | Friday, Wall Street interprets January jobs data, the final January University of Michigan consumer sentiment index, ISM’s newest manufacturing PMI, and earnings from Aon, Chevron, Cigna, ExxonMobil, Honda, Honeywell International, Merck, Sony, and Weyerhaeuser.

Q U O T E O F T H E W E E K

“Success is really about being ready for the good opportunities that come before you.”

ERIC SCHMIDT

Know someone who could use information like this? Please feel free to send us their contact information via phone or email. (Don’t worry – we’ll request their permission before adding them to our mailing list.)

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note ‐ investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. 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 market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. 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 ‐ bankingjournal.aba.com/2019/01/existing‐home‐sales‐dipped‐6‐4‐percent‐in‐december/ [1/22/19]

2 ‐ cnbc.com/2019/01/25/fed‐reportedly‐moving‐closer‐to‐ending‐balance‐sheet‐reduction.html [1/25/19]

3 ‐ reuters.com/article/us‐usa‐economy‐unemployment/us‐weekly‐jobless‐claims‐lowest‐since‐1969‐idUSKCN1PI1SM [1/24/19]

4 ‐ marketwatch.com/story/us‐stock‐futures‐point‐to‐another‐upbeat‐day‐for‐wall‐street‐led‐by‐techs‐2019‐01‐25 [1/25/19]

5 ‐ markets.wsj.com [1/25/19]

6 ‐ investopedia.com/markets [1/25/19]

7 ‐ treasury.gov/resource‐center/data‐chart‐center/interest‐rates/Pages/TextView.aspx?data=yield [1/25/19]

8 ‐ treasury.gov/resource‐center/data‐chart‐center/interest‐rates/Pages/TextView.aspx?data=yieldAll [1/25/19]

Ways to Ease the Cost of College

Presented by Beacon Financial Group

A look at grants, scholarships, 529 plans, and other methods

How much could a college education cost in the 2030s? You may want to take a deep breath and sit down before reading the next paragraph.

A MassMutual analysis projects that four years of tuition, room, and board at a private college will cost nearly $369,000 in 2031. An article at CNBC offers a slightly cheaper estimate, putting the total expense at $303,000 for a freshman setting foot on campus in 2036. (Today, the cost of four years at a private university is less than half that.) How about the price tag for four years of tuition, room, and board at a public university in that year? The same CNBC article says that it may reach $184,000. 1,2

Even today, finding enough money to pay for college can be an enormous challenge. There are obvious ways to counter the cost: a student can work full time and apply much of the income toward school, or assume student loans. Fortunately, there are other ways – ways that you may want to explore if you do not want your child to take a hard-scrabble path through school or get soaked with debt.

Ideally, you use money you never have to repay. Grants and scholarships are more plentiful than many students (and parents) realize, and some go begging for applicants. Grants are based on need; scholarships, on merit. Grants can be issued incrementally or in lump sums to a student; most are awarded on a first-come, first-serve basis, which is why it is so crucial to fill out the Free Application for Federal Student Aid (FAFSA) early. A school accepting your student will evaluate your student’s FAFSA, then send an award letter detailing his or her eligibility for federal and state grants. As for scholarships, there are literally millions of them. Sallie Mae provides a convenient online search tool to explore more than 5 million such awards, and you can use it to drill down to opportunities that are strong possibilities for your student. 3

Through a 529 plan, you can invest to meet future college costs. 529 plans come in two varieties, and both varieties have common tax advantages. 529 plan earnings are exempt from federal income tax, and 529 plan assets may be withdrawn, tax free, so long as the money pays for qualified education expenses. While there are no federal tax breaks linked to 529 plan contributions, more than 30 states offer state income tax deductions or credits for them. 4

Some 529 plans are prepaid tuition plans, giving you the potential to prepay up to 100% of your student’s future tuition at a public university within your state (most of these plans do not pay for housing costs). You may be able to convert a prepaid tuition plan so that the assets can be used to pay tuition at an out-of-state university or private college. (There is also the Private College 529 Plan, which 250+ private colleges and universities collectively support.) 4

The great majority of 529 plans are college savings plans, analogous to Roth IRAs. In a college savings plan, you can direct your contributions into equity investments, which offer you the possibility of tax-advantaged growth and compounding. (If the investments perform badly, your college fund may shrink.) 4

You may choose to fund a 529 plan account incrementally or with a lump sum. States put different limits on the amount of money that a 529 account can hold, but six-figure balances are often permissible. You can invest in any state’s 529 plan and pay for higher education expenses with 529 plan assets at any qualified U.S. college or university. 4,5

Whole life insurance could help. If you have a permanent life insurance policy with some cash value, you could take a loan from (or even cash out) the policy and apply the amount toward college costs. The value of a life insurance policy does not factor into a student’s financial aid calculation (which many parents do not realize). If you take a loan from a life insurance policy, you will reduce the death benefit; repay the loan in full, and you will restore its full value. 6

Some families use Roth IRA assets to pay for college. A Roth IRA gives you a degree of flexibility that a 529 plan does not. Suppose your child does not go to college. (While this may seem highly improbable, some young adults do start successful careers without a college education.) In that event, you still have a Roth IRA: a tax-favored retirement savings account with the potential for tax-free withdrawals. 7

A Roth IRA is not a perfect college savings vehicle, however. First, the annual contribution limit is low compared to a 529 plan. Second, while you may withdraw an amount equal to your contributions without penalty at any time of life, a Roth IRA’s earnings represent taxable income when withdrawn. Third, while Roth IRA assets are not countable assets on the FAFSA, tax-free Roth IRA contributions, once withdrawn, still amount to untaxed income for your student (i.e., the Roth IRA beneficiary), and they lower a student’s eligibility for need-based aid. 7

Going to college should not mean going into debt. Would you like to plan, save, and invest to reduce or avoid that consequence? Then talk with a financial professional who is well versed in college planning. The variety of options available may pleasantly surprise you.

Know someone who could use information like this? Please feel free to send us their contact information via phone or email. (Don’t worry – we’ll request their permission before adding them to our mailing list.)

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. 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 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 - forbes.com/sites/megangorman/2018/08/23/balancing-the-high-cost-of-child-care-and-college-savings [8/23/18]

2 - tinyurl.com/y9on33n6 [6/23/18]

3 - salliemae.com/college-planning/financial-aid/understand-college-grants/ [11/15/18]

4 - savingforcollege.com/intro-to-529s/what-is-a-529-plan [8/29/18]

5 - thebalance.com/529-limits-contributions-balances-taxes-4138359 [9/19/18]

6 - nextavenue.org/life-insurance-pay-childs-college/ [9/18/18]

7 - savingforcollege.com/article/can-a-roth-ira-be-used-to-pay-for-college [8/1/18]

Weekly Economic Update 1/22/2019

Presented by Beacon Financial Group January 22, 2019

In this week’s recap: consumer sentiment declines, new ideas surface in U.S.‐China trade talks, oil advances again, and the major indices post weekly gains.

CONSUMER SENTIMENT HITS A 2‐YEAR LOW

Analysts surveyed by MarketWatch thought the University of Michigan’s preliminary January consumer sentiment index would display a reading of 97.5. Instead, it came in at just 90.7, dropping 7.6 points from its final December mark to its lowest level since October 2016. Richard Curtin, the economist who has long overseen the university’s survey, attributed the slip not only to households reacting to the partial federal government shutdown, but also to “the impact of tariffs, instabilities in financial markets, the global slowdown and the lack of clarity about monetary policies.” 1

HINTS OF A THAW IN U.S.‐CHINA TRADE NEGOTIATIONS

Investors were encouraged Friday by news that China had offered a plan to reduce its trade surplus with the U.S. from more than $320 billion to $0 by 2024. The concept, first presented to U.S. trade officials earlier this month, would involve China buying $45 billion more in U.S. goods this year and incrementally more in the five years to follow. Whether the strategy would work is questionable, as America’s strong ongoing demand for Chinese products is arguably the biggest factor in the trade imbalance. Nevertheless, stocks rallied after the news. A day earlier, a Wall Street Journal story noted that U.S. officials were considering easing current tariffs on Chinese imports in exchange for such concessions. 2,3

OIL RISES 4.3% IN A WEEK

As a result of that gain, WTI crude was worth $53.80 per barrel on the New York Mercantile Exchange at Friday’s close. The latest developments in U.S.‐China trade negotiations and the sharpest weekly pullback in the U.S. rig count since 2016 helped to push the price higher. 3

AN EARLY EARNINGS SCORECARD

Through Friday, 11% of S&P 500 firms had reported Q4 results. Seventy‐six percent of those companies reported actual earnings‐per‐share exceeding projections, and 56% beat revenue estimates. As the trading week ended, stock market analytics firm FactSet projected year‐over-year earnings growth of 10.6% for all S&P constituents for Q4. While this would represent a fifth consecutive quarter of double‐digit improvement, such an advance would be the smallest since Q4 2017. Last week, all three major U.S. equity indices rose; you will find their weekly and YTD performances below, along with last Friday’s settlements. 4

T I P O F T H E W E E K

Most loan payments are scheduled monthly, but if you cut a monthly payment in half and pay it every two weeks, there will be two months per year when you make three payments instead of two. This can help you make 13 months of payments in 12, so you can pay down a loan more quickly.

THIS WEEK

U.S. financial markets are closed Monday as the nation observes Martin Luther King, Jr. Day. | Capital One, Fifth Third, GATX, Halliburton, IBM, Johnson & Johnson, TD Ameritrade, Travelers Companies, UBS Group, Union Bank, and Zions Bancorp report earnings Tuesday, and investors also consider December existing home sales figures. | Wednesday’s earnings parade includes Abbott Labs, Comcast, Ford Motor Co., Kimberly‐Clark, Northern Trust, Procter & Gamble, and Texas Instruments. | Firms reporting Thursday include Alaska Air, American Airlines, Bristol‐ Myers, Discover, Freeport McMoRan, Intel, JetBlue, Norfolk Southern, Starbucks, Union Pacific, and Western Digital; beyond the earnings news, a new initial claims report and the Conference Board’s latest index of leading indicators emerge. | AbbVie, Colgate‐Palmolive, D.R. Horton, and NextEra Energy announce earnings Friday; data on December new home sales and durable goods orders may be released if the partial federal government shutdown ends.

Q U O T E O F T H E W E E K

“Always seek out the seed of triumph in every adversity.”

OG MANDINO

Know someone who could use information like this? Please feel free to send us their contact information via phone or email. (Don’t worry – we’ll request their permission before adding them to our mailing list.)

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note ‐ investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. 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 market indices discussed are un-managed and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that

may be providing this information to you. 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 ‐ marketwatch.com/story/consumer‐sentiment‐in‐january‐plunges‐to‐lowest‐level‐since‐trump‐elected‐2019‐01‐18 [1/18/19]

2 ‐ bloomberg.com/news/articles/2019‐01‐18/china‐is‐said‐to‐offer‐path‐to‐eliminate‐u‐s‐trade‐imbalance [1/18/19]

3 ‐ marketwatch.com/story/oil‐prices‐push‐higher‐on‐hopes‐for‐us‐china‐trade‐progress‐2019‐01‐18 [1/18/19]

4 ‐ insight.factset.com/earnings‐season‐update‐january‐18‐2019 [1/18/19]

5 ‐ markets.wsj.com [1/18/19]

6 ‐ treasury.gov/resource‐center/data‐chart‐center/interest‐rates/Pages/TextView.aspx?data=yield [1/18/19]

7 ‐ treasury.gov/resource‐center/data‐chart‐center/interest‐rates/Pages/TextView.aspx?data=yieldAll [1/18/19]

Traditional vs. Roth IRAs

Perhaps both traditional and Roth IRAs can play a part in your retirement plans

IRAs can be an important tool in your retirement savings belt, and whichever you choose to open could have a significant impact on how those accounts might grow.

IRAs, or Individual Retirement Accounts, are tax advantage accounts used to help save money for retirement. There are two different types of IRAs: traditional and Roth. Traditional IRAs, created in 1974, are owned by roughly 35.1 million U.S. households. And Roth IRAs, created as part of the Taxpayer Relief Act in 1997, are owned by nearly 24.9 million households. 1

Both kinds of IRAs share many similarities, and yet, each is quite different. Let's take a closer look.

Up to certain limits, traditional IRAs allow individuals to make tax-deductible contributions into the retirement account. Distributions from traditional IRAs are taxed as ordinary income, and if taken before age 59½, may be subject to a 10% federal income tax penalty. For individuals covered by a retirement plan at work, the deduction for a traditional IRA in 2019 has been phased out for incomes between $103,000 and $123,000 for married couples filing jointly and between $64,000 and $74,000 for single filers. 2,3

Also, within certain limits, individuals can make contributions to a Roth IRA with after-tax dollars. To qualify for a tax-free and penalty-free withdrawal of earnings, Roth IRA distributions must meet a five-year holding requirement and occur after age 59½. Like a traditional IRA, contributions to a Roth IRA are limited based on income. For 2019, contributions to a Roth IRA are phased out between $193,000 and $203,000 for married couples filing jointly and between $122,000 and $137,000 for single filers. 2,3

In addition to contribution and distribution rules, there are limits on how much can be contributed to either IRA. In fact, these limits apply to any combination of IRAs; that is, workers cannot put more than $6,000 per year into their Roth and traditional IRAs combined. So, if a worker contributed $3,500 in a given year into a traditional IRA, contributions to a Roth IRA would be limited to $2,500 in that same year. 4

Individuals who reach age 50 or older by the end of the tax year can qualify for annual “catchup” contributions of up to $1,000. So, for these IRA owners, the 2019 IRA contribution limit is $7,000. 4

If you meet the income requirements, both traditional and Roth IRAs can play a part in your retirement plans. And once you’ve figured out which will work better for you, only one task remains: opening an account.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. 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.ici.org/pdf/per23-10.pdf [12/17]

2 - https://www.marketwatch.com/story/gearing-up-for-retirement-make-sure-you-understand-your-tax-obligations-2018-06-14 [6/14/18]

3 - https://money.usnews.com/money/retirement/articles/new-401-k-and-ira-limits [11/12/18]

4 - https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution-limits [11/2/18]

Weekly Economic Update 1/14/2019

Presented by Beacon Financial Group, January 14, 2019

In this week’s recap: the CPI decreases, a service sector activity index takes a fall, oil’s rebound continues, and equities advance.

FOR THE FIRST TIME SINCE MARCH, INFLATION RETREATS

December brought a 0.1% decline in the Consumer Price Index, the first in nine months. As in November, cheaper gasoline was a factor: gas prices took a 7.5% monthly fall. The CPI advanced 1.9% across 2018. The core CPI, which excludes food and energy costs, rose 0.2% in December for a third consecutive month and gained 2.2% for the year. In short, yearly inflation is back in the vicinity of the Federal Reserve’s 2.0% target. 1

SERVICE SECTOR GROWTH RATE SLOWS

The Institute for Supply Management said that its purchasing manager index service, tracking industry activity, descended to 57.6 in December, paralleling the dip of its factory sector PMI. While the decrease of 3.1 points was a disappointment, the new orders sub-index did rise slightly to 62.7, and the service sector expanded for the 107th straight month. 2

OIL RECORDS ITS LONGEST DAILY WINNING STREAK IN 9 YEARS

Crude oil futures are no longer scraping near 52-week lows. WTI crude settled at $51.59 on the New York Mercantile Exchange at Friday’s close, up 7.6% for the week. A down day on Friday broke a 9-session streak of advances for the commodity, the longest seen since January 2010. 3

BENCHMARKS RISE ON THE EVE OF EARNINGS SEASON

Investors were encouraged by hints of progress in U.S.-China trade negotiations last week and seemed unruffled by the ongoing shutdown of parts of the federal government. Across five trading days, all three major Wall Street equity indices rose 2.4% or more, and both the S&P 500 and Dow Jones Industrial Average exited correction territory with the fourth-quarter reporting season just ahead. (See the table within this Weekly Economic Update for their Friday closes as well as weekly and YTD performances.) 4

T I P O F T H E W E E K

Many people sign up for credit cards without looking at their interest rates and terms. Be sure to read the fine print when applying for a card.

THIS WEEK

A new earnings season starts Monday as Citigroup presents Q4 results. | JPMorgan Chase, UnitedHealth Group, and Wells Fargo report earnings on Tuesday, and the December Producer Price Index also emerges. | Wednesday, Alcoa, Bank of America, BNY Mellon, Blackrock, Comerica, CSX, Goldman Sachs, PNC Financial Services Group, and U.S. Bancorp announce earnings, the Federal Reserve publishes a new Beige Book, and data on December retail sales arrives. | Thursday, earnings roll in from American Express, BB&T, KeyCorp, and Netflix; in addition, investors will consider a Census Bureau report on December housing starts and the latest initial jobless claims figures. | Regions Financial, Schlumberger, and SunTrust Bank offer earnings Friday, which is also when the University of Michigan provides its preliminary January consumer sentiment index.

Q U O T E O F T H E W E E K

“Sometimes when you innovate, you make mistakes. It is best to admit them quickly, and get on with improving your other innovations.”

Know someone who could use information like this? Please feel free to send us their contact information via phone or email. (Don’t worry – we’ll request their permission before adding them to our mailing list.)

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. 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 market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. 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 - cnbc.com/2019/01/10/consumer-price-index-december-2018.html [1/11/19]

2 - dailyfx.com/forex/market_alert/2019/01/07/ISM-Services-Index-Dec-2018.html [1/7/19]

3 - marketwatch.com/story/us-oil-prices-end-lower-to-snap-9-session-streak-of-gains-2019-01-11 [1/11/19]

4 - marketwatch.com/story/stock-market-ends-session-flat-but-books-weekly-gains-as-government-shutdown-approaches-a-record-2019-01-11 [1/11/19]

5 - markets.wsj.com/ [1/11/19]

6 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield [1/11/19]

7 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldAll [1/11/19]

Quarterly Economic Update

A review of Q4 2018, Presented by Beacon Financial Group

In this Q4 recap: waves of volatility hit Wall Street, trade pacts and disputes make headlines, oil takes a plunge, and the economy continues to perform well.

THE QUARTER IN BRIEF

Wall Street saw many ups and downs in the last three months of 2018. The fourth quarter concluded with bulls and bears vying for control of the market and with the S&P 500 suffering a 13.97%, three-month loss. The Federal Reserve sent conflicting signals about its implementation of monetary policy normalization, to the frustration of investors. No real progress was made in resolving the U.S.-China trade war, and the Brexit appeared to reach a standstill. The price of oil dropped sharply. The housing market gained a bit of momentum as home prices and mortgage rates both declined. The quarter was quite newsworthy, but its major headlines raised some troubling questions about the direction of the markets. 1

DOMESTIC ECONOMIC HEALTH

On the whole, the economy looked quite good in the fall. Consumer spending increased 0.8% for October and 0.4% for November, with retail sales up 1.1% in the tenth month of the year and 0.2% in the eleventh. Retailers benefited from a great holiday sales season: on an annualized basis, consumer purchases made between November 1 and December 24 were up 5.1% compared to the same period in 2017. 2,3

Consumer confidence indices declined from strikingly high levels, but were still notably strong.The Conference Board index hit 137.9 in October, 136.4 in November, and 128.1 in December. Having its best year since 2000, the University of Michigan’s monthly consumer sentiment gauge came in at 98.6 for October, 97.5 for November, and 98.3 for December; it averaged 98.4 for 2018. 4,5

Both the service and factory sectors were booming, according to the Institute for Supply Management’s monthly purchasing manager indices. ISM’s non-manufacturing index was above 60 in both October and November (60.3, then 60.7); its manufacturing index rose from 57.7 in October to 59.3 in November. 6

How was the jobs picture? Non-farm payrolls expanded with 237,000 net new jobs during October; the November gain was 155,000. During both months, average yearly wage growth was at 3.1%. The main jobless rate held at 3.7%; the underemployment (U-6) rate moved north from 7.4% to 7.6%. 2,7

Inflation was advancing just 2.2% a year by November; the 12-month increase had approached 3% as recently as July. Falling fuel costs helped tame inflation pressure. As a result, the average non-supervisory worker saw his or her inflation-adjusted income rise 1.0% in the 12 months ending in November, the most since 2016. On the wholesale front, producer prices jumped 0.6% in October, but rose only 0.1% during November. (Speaking of producers, industrial production was up 3.9% year-over-year in November; overall durable goods orders rose 0.8% for November after a 4.3% fall during the prior month. 2,8

In late December, the Bureau of Economic Analysis stated the economy had expanded 3.4% in the third quarter, revising its previous estimate of 3.5%. With growth like that, it not be surprising that the Federal Reserve made its fourth rate move of the year in December, taking the target range on the federal funds rate to 2.25-2.5%. Top Fed officials sounded alternately dovish and hawkish during the fourth quarter. In October, Fed chair Jerome Powell commented that interest rates were “a long way” from neutral, irritating Wall Street. A month later, both he and Fed vice chair Richard Clarida remarked that the benchmark interest rate was close to a “neutral” level. December’s rate increase came with a relatively hawkish dot-plot, projecting two more hikes in 2019. 2,9

The U.S. and China did little to address the tariffs they had imposed on each other earlier in the year. At the start of December, both nations did agree to a 90-day truce on introducing new import taxes. Even so, the U.S. was slated to hike tariffs on as much as $200 billion of Chinese imports as the year began. 10

GLOBAL ECONOMIC HEALTH

Overseas, manufacturing economies in the east and west seemed to be decelerating. In fact, December marked the eighth consecutive month of a downward trend in weighted average Markit flash PMI readings of U.S., Japan, and European Union member countries. The mean factory PMI reading among those nations was the poorest in two years last month. China’s economy slowed in each month of the quarter, according to a Bloomberg Economics tracker, which cited reduced consumer demand for goods and services as much as the impact of tariffs. In November, the nation’s official factory PMI sat at 50.0, the break-even point between sector growth and contraction. In Q3, China’s annualized gross domestic product was expanding at a 6.5% pace; in Q1, the annualized GDP reading had been at 6.8%. 11

The European Union (and the world) waited for the Brexit to proceed. U.K. leaders, however, spent the quarter debating if it should unfold according to the deal that Prime Minister Theresa May had presented to the European Union. By December, May’s deal faced almost certain rejection in Parliament. There were three other options: another national referendum on the Brexit, a no-deal Brexit that would leave big businesses with headaches, or a “managed,” nodeal Brexit with some bilateral trade arrangements put in place. The deadline for the Brexit was still set for March 29. On December 13, the European Central Bank confirmed that its longstanding, asset-purchase program would wrap up at the end of 2018. Interest rate hikes could be in the ECB’s plans this year; euro-area consumer prices have been rising only about 1% annually for the past six years. Real, annualized GDP for the euro area through the first three quarters of 2018 was just 1.2%, a pace far off the 2.7% GDP seen in 2017. 12,13

WORLD MARKETS

As bearish sentiment mounted in Q4, marquee equity indices steadily descended. Most of the 13-week declines were sizable: in the west, France’s CAC 40 slid 13.89%; Germany’s DAX, 13.80%; the United Kingdom’s FTSE 100, 10.41%. In the east, India’s Sensex lost just 0.44%; Hong Kong’s Hang Seng, 6.99%; Japan’s Nikkei 225, 17.02%; Australia’s All Ordinaries, 9.74%; China’s Shanghai Composite, 11.61%. To our north, the TSX Composite retreated 10.89% in Q4. MSCI’s Emerging Markets index fell 7.85% during the quarter; its World index tumbled 13.74%. 14,15

COMMODITIES MARKETS

While equities had a dismal quarter, some commodity futures posted significant Q4 gains. Take cocoa, which advanced 16.04%, and palladium, which rose 12.32%. Sugar improved 7.41% in Q4; gold, 6.61%; silver, 4.86%; soybeans, 2.68%; corn, 1.90%. The U.S. Dollar Index added 1.62%. At the closing bell on December 31, gold and silver were respectively worth $1,284.50 and $15.54 per ounce on the COMEX.16,17 What notable commodities lost value in the quarter? Here is a list. Platinum fell 3.22%; coffee, 3.78%; wheat, 4.55%; natural gas, 4.70%; cotton, 6.59%; copper, 6.63%; RBOB gasoline, 37.41%; WTI crude, 37.54%. WTI crude ended Q4 at just $45.83 a barrel on the NYMEX. 16,17

REAL ESTATE

While the real estate market cooled off in 2018, the pace of home buying began to improve in the fourth quarter. By the estimations of the National Association of Realtors, existing home sales rose 1.4% in October and 1.9% in November. Perhaps sellers were lowering prices to meet prospective buyers on their turf. By November, NAR noted a median sale price of $257,700, which was merely 4.2% higher than in November 2017. 2,18

A dip in mortgage rates could also have been a factor. In the last Freddie Mac survey of 2018 (December 27), the average interest rate for a conventional home loan was 4.55% nationally; it had been 4.72% three months earlier. (Rates on 15-year, fixed loans and 5/1-year, adjustable loans were respectively at 4.01% and 4.00% in the December 27 survey, compared with 4.16% and 3.97% in late September.) 19

Even so, NAR’s pending home sales index measuring monthly housing contract activity showed declines of 2.6% in October and 0.7% in November. New home purchases fell 8.9% in October. (We do not yet know about November new home sales, as the release of that Census Bureau report was delayed due to the federal government shutdown.) 2

Home builders broke less ground in October, then started more projects (and took out more permits) in November. Census Bureau data showed housing starts down 1.6% for October, up 3.2% a month later; building permits were down 0.4% in the tenth month of the year, but up 5.0% in the eleventh. 2

T I P O F T H E Q U A R T E R

If you are within a few years of retiring, schedule a review of your retirement strategy. You do not want to risk basing your withdrawal rate or your investment selection on out-of-date assumptions.

LOOKING BACK, LOOKING FORWARD

The fourth quarter is often hot for stocks, but this past one was ice cold. Equity investors grew concerned about the Federal Reserve’s plans for 2019, the evident economic deceleration in China and Europe, and a narrowing spread between long-term and short-term Treasury yields that risked becoming an inversion. The S&P 500 closed out 2018 at 2,506.85; the Dow Jones Industrial Average, at 23,327.46; the Nasdaq Composite, at 6,635.28; their quarterly performances are noted in the table below. The CBOE VIX volatility index surged 109.74% in the quarter to 25.42. 1,9

If you are wondering how the small caps fared, the short answer is: even worse than the big three. The S&P SmallCap 600 lost 20.43% in Q4; the Russell 2000, 19.39%. 1,20

The fourth quarter of 2018 was the poorest quarter on Wall Street in 11 years. Was the welcomed, large-cap rebound at the end of December a hint of better times ahead? Earnings season is about to start, and it might be just what the Street needs; before it begins, investors may tread cautiously. Wall Street cannot “resume normal programming” fast enough for some market participants, but the path toward stability may not be an easy one; the volatility seen in December may take weeks to moderate. In sum, 2019 presents investors with many more uncertainties than 2018 did, and patience will be required to contend with them. Patience, in fact, may be an investor’s greatest friend this quarter and year. 23

Q U O T E O F T H E Q U A R T E R

“Time is the most valuable thing a man can spend.”

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This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. 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 market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. 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 - barchart.com/stocks/indices?viewName=performance [1/1/19]

2 - investing.com/economic-calendar/ [12/28/18]

3 - cbsnews.com/news/2018-holiday-sales-soar-to-6-year-high/ [12/20/18]

4 - investing.com/economic-calendar/cb-consumer-confidence-48 [12/27/18]

5 - tradingeconomics.com/united-states/consumer-confidence [12/27/18]

6 - instituteforsupplymanagement.org/ISMReport/NonMfgROB.cfm?SSO=1 [12/6/18]

7 - bloomberg.com/news/articles/2018-12-07/u-s-payrolls-rise-below-forecast-155-000-as-wage-gain-misses [12/7/18]

8 - marketwatch.com/story/cheaper-gas-tamps-down-consumer-inflation-in-november-cpi-shows-2018-12-12 [12/12/18]

9 - forbes.com/sites/jjkinahan/2018/12/19/hawkish-now-dovish-later-fed-hikes-but-lowers-projected-2019-rate-projections [12/19/18]

10 - scmp.com/news/china/diplomacy/article/2179505/us-china-trade-war-timeline-first-tariffs-90-day-truce [12/26/18]

11 - bloomberg.com/news/articles/2018-12-27/december-early-indicators-show-china-slowed-for-a-seventh-month [12/27/18]

12 - nasdaq.com/article/british-ministers-split-over-next-brexit-steps-if-pms-deal-fails-20181220-00145 [12/20/18]

13 - tinyurl.com/ycbvf56h [12/28/18]

14 - news.morningstar.com/index/indexReturn.html [12/31/18]

15 - msci.com/end-of-day-data-search [12/31/18]

16 - barchart.com/futures/performance-leaders?viewName=chart&timeFrame=3m [12/31/18]

17 - money.cnn.com/data/commodities/ [12/31/18]

18 - cleveland.com/business/2018/12/ohio-us-home-sales-down-in-november-from-last-years-levels.html [12/19/18]

19 - freddiemac.com/pmms/archive.html [1/1/19]

20 - money.cnn.com/data/markets/russell/?page=33 [1/1/19]

21 - quotes.wsj.com/index/SPX [9/28/18]

22 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldAll [12/31/18]

23 - cnbc.com/2018/12/31/stock-market-wall-street-stocks-eye-us-china-trade-talks.html [12/31/18]