Jul 062015
 

Greece is stomping her foot

The situation in Greece has been compared to a teenage girl stomping her foot, demanding that her parents give her back the credit card with which she just ran up a huge bill. This turmoil has helped cause our markets to be down for the second straight week. Our thought is that there is more noise than substance, with the news media making most of the noise to keep viewers watching.

Greece is only 1%

The Greek national debt is $250 billion which is only 1% of the European Union’s annual output. Most of the debt is owned by the IMF and the European Central Bank and they can print money whenever they want. This should take the worry out of a collapse of the Euro.

As the markets continue to react to Greece, we are continuing to monitor this for our clients’ portfolios.

Slack in the Jobs Report

The Jobs Report last week was so-so. The unemployment number went down but we know that is because there are less people looking for jobs. The slack in the system can be seen by the fact that the wage rate has not gone up with a lower unemployment number.

Forgotten data

The news media is giving a lot of attention to Greece and it’s market impact. However, there is a lot more data that plays into the market volatility. We know that Janet Yellen, Chair of the Federal Reserve, is a big proponent of watching the labor markets. The Fed. also uses more than the Jobs Report in their policy making. When we look at all this data, we cannot see the Fed raising interest rates anytime soon.

Coming up this week

This week we will be watching the numbers on international trade and the weekly jobless claims. Most importantly we will we monitoring the Fed minutes as they are released in a few days.

We’d love to hear your comments and questions.

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Franklin Bradford, CMT
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Wealth Consultant
Email Franklin Bradford here

Ashley Page, JD, MBA
Senior Vice President
Wealth Consultant
Email Ashley Page here


Bobby Norman, CFP®
Vice President
Wealth Consultant
Email Bobby Norman here

fi-Plan Partners is an independent investment firm in Birmingham, AL, serving clients across the nation through financial planning, wealth management and business consulting. fi-Plan Partners creates strategies in the best interest of their clients using both fee based investing and transactional investing.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

Stock investing involves risk including potential loss of principal.

Jun 292015
 
#112 The Situation In Greece And Other International News That Can Impact Your Portfolio

Recap Of Last Week 

Last week ended down slightly on the news of the situation in Greece and the correction in the Chinese stock market. Oil continues to stay in the $60 per barrel range where it has been for 8 weeks. We are watching the current talks with Iran because if their oil floods the market that can cause the price to go down even further. This may help the consumer, but can hurt the economy over all.

Consumer spending is another topic we have been talking about for weeks now and last week we finally saw the number we wanted. Consumer spending increased to 1%, which is the best it has been in 5 years. On another positive note, a lot of this increase came from auto sales.

Facts About The Economy In Greece

Greece is in a bad spot. 180% of their GDP is in debt and they can not work their way out of it with only 2 – 3% GDP growth. As a country they have lost about 25% of their GDP over the last 5 years as a result of people leaving, and it is very difficult to create a new business over there because of so much red tape.

One thing that is fascinating is that you are entitled to the Greek pension at age 57. This is mostly in line with the rest of Europe. However, in Greece there are 600 jobs that are considered “hazardous”, one of which is a hairdresser, that theoretically allows you to work for 3 years, establish a base, and have a pension at age 50. Of course with an aging population that can be very problematic.

The Current Situation In Greece

Greece has built up all of this debt with their European partners that they can’t pay back. Their economy has not grown, but they have a $1.5 billion payment to the IMF due today. Instead of settling this issue over the weekend the Greek prime minister has given it to the people to vote on in a referendum next Sunday. That gives a week from when it was announced and when it will be voted on. It seems like a referendum is something they are used to doing, but actually the last referendum they pulled was back in 1974 to dissolve the monarchy. This is not something they are setup to do quickly and while it sounds easy, it is something we will be watching all week to see how practical it really is.

The banks and the stock market in Greece are closed today and will be for the remainder of the week. With the 4th of July holiday this week and markets being closed on Friday, we could see a lot of emotion and we will be watching the volatility that can come from that. Ultimately we expect to see “this too shall pass”.

Other Scenarios To Watch

The debt issues in Puerto Rico is another situation we need to be watching. This scenario is a little closer to home and it puts more of a light on municipal bonds and state type issues. Additionally, we want to continue to watch China. We have talked a lot about China in previous vlogs, but part of the volatility we are seeing right now is structural. We have to remember that they are still a neophyte and emerging economy in a lot of ways, including how they structure their financial markets. They are still learning which contributes to their volatility.

As you can see from an international standpoint there is a lot going on. We will keep you updated as we continue to work towards our Independence Day on Friday. We hope that you have a great week. Please send us your comments and questions or just pick up the phone and call us.

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Greg Powell, CIMA
President/CEO
Wealth Consultant
Email Greg Powell here

Franklin Bradford, CMT
Senior Vice President
Wealth Consultant
Email Franklin Bradford here

Ashley Page, JD, MBA
Senior Vice President
Wealth Consultant
Email Ashley Page

Bobby Norman, CFP®
Vice President
Wealth Consultant
Email Bobby Norman here

Trey Booth, CFA®
Vice President
Wealth Consultant
Email Trey Booth here

fi-Plan Partners is an independent investment firm in Birmingham, AL, serving clients across the nation through financial planning, wealth management and business consulting. fi-Plan Partners creates strategies in the best interest of their clients using both fee based investing and transactional investing.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

Stock investing involves risk including potential loss of principal.

Jun 222015
 
GDP Growth

Recap of last week

Despite another bad Friday U.S. markets were up last week. In contrast, international markets were down for the fourth week in a row. Domestic economic news focused on Janet Yellen announcing that the Fed would remain cautious about the economy and raising interest rates. Last week we also saw the NASDAQ finally rise above it’s March 2000 record high.

The real risk with Greece

The markets turned negative last week over poor news from Greece. The world markets, however, are up today from news that the Greek Prime Minister will be working with creditors on their possible default. Greece’s GDP is only four times the size of Birmingham or the equivalent of the city of Detroit. We believe Greece isn’t really driving the markets, it’s the contagion fear and risk it creates. The real risk Greece is creating is based on the fear that should they exit the European Union, other countries like Italy, Spain and Portugal could follow. While European markets contend with this, U.S. markets remain strong.

This week’s reports

What will be over shadowed by Greece are the latest economic reports coming out this week. Existing Home Sales, Durable Good Orders, and GDP will be reported along with personal income and outlays. We will be watching these as they tell us a lot about inflation and the status of the U.S. economy.

Why is GDP not doing better?

Glenn Hubbard, Dean of the Business School at Columbia, and Kevin Warsh, a professor at Stanford, wrote an interesting article in today’s Wall Street Journal asking the question about why our annual GDP isn’t growing at a rate of around 4%? With all the quantitative easing, we should be seeing growth like this but we have only seen half of that. The answer they found is that historically when you come out of a bad recession, fiscal policy is what drives a higher GDP growth rate. They sited examples in the Kennedy, Reagan, and Clinton presidential terms where there was meaningful tax reform and a better regulatory environment.

We are continuing to research and monitor the markets and economy and we will bring you more insight next week. Please send us your comments and questions or just pick up the phone and call us.GDP Growth

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Franklin Bradford, CMT
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Ashley Page, JD, MBA
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Wealth Consultant
Email Ashley Page here


Bobby Norman, CFP®
Vice President
Wealth Consultant
Email Bobby Norman here

Trey Booth, CFA®
Vice President
Wealth Consultant
Email Trey Booth here

fi-Plan Partners is an independent investment firm in Birmingham, AL, serving clients across the nation through financial planning, wealth management and business consulting. fi-Plan Partners creates strategies in the best interest of their clients using both fee based investing and transactional investing.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

Stock investing involves risk including potential loss of principal.

Jun 152015
 
#100 Interest Rate Armageddon?

Last week in the markets

Last week, despite a market sell off on Friday, most U.S. indices were up with modest gains. The housing market saw a 20% increase in mortgage applications. This could be happening because people are anticipating the Fed raising interest rates soon. Retail sales only rose a disappointing 1.2% but it is good to see a little upswing.

The blame is on Greece

The European and U.S. markets were down this morning which is being blamed a possible Greece default. After talks broke down over the weekend, a default is very likely. We see more smoke than fire as Greece is not that large of an economy having only $200 billion in annual GDP. There are bigger companies in the S&P 500. We are keeping a close watch on this situation in Greece as the deadline for the payback is June 30th.

Interest rate Armageddon?

The mainstream news macro theme for several years has been the Federal Reserve raising interest rates. Since the economy is so close to being deflationary we believe the Fed will not raise interest rates any time soon. However, no one knows for sure.

Many people believe that all this attention on the Fed could lead to stocks taking a bashing once interest rates do go up. While there have been a couple of times in the past where that has happened, our research shows that in the past stocks have increased slightly when interest rates are raised. Even though the increase is small, it will not cause an interest rate Armageddon as some people would like you to believe. History does not suggest a clamorous drop in the stock markets when interest rates are raised.

How big could the interest rate increase be?

Each time interest rates have been raised, the Fed has done it differently and there have been different surrounding circumstances. When the Fed does increase interest rates, we believe it will be a very small increase and that these historically low rates will continue for quite some time.

Preparing for an interest rate change

No one can actually predict when the Fed is going to raise interest rates. All our eggs are not in a basket labeled “The Fed is not going to raise rates”. We are risk testing every scenario so we can be prepared for our clients.

Please let us know if you have any questions and keep sending us your comments.

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Ashley Page, JD, MBA
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Bobby Norman, CFP®
Vice President
Wealth Consultant
Email Bobby Norman here

Trey Booth, CFA®
Vice President
Wealth Consultant
Email Trey Booth here

fi-Plan Partners is an independent investment firm in Birmingham, AL, serving clients across the nation through financial planning, wealth management and business consulting. fi-Plan Partners creates strategies in the best interest of their clients using both fee based investing and transactional investing.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
Stock investing involves risk including potential loss of principal.

Jun 082015
 
Do Economists Think We Are Idiots?

We had a big debate on some issues this morning as some economic news from last week got Greg really fired up. Volatility was a theme last week even though there were some good economic reports, especially on the job front and labor participation. A reported 280,000 new jobs were created in May which were considerably higher than expectations.

Do economists think we are idiots?

As we listen to the economic reporters, we have to ask, “Do economists think we are idiots?” Of course the employment numbers are higher in May. Thousands of universities across the nation just had graduation. All those new graduates have moved back home and their parents are now saying, “Go find a job.” Maybe we should call it “job inspiration” instead of job participation.”

Where are the new jobs?

Most of the new jobs were created by small and midsize companies which is very important for a growing economy. We are at a point, however, where more good news like this could make the Fed raise interest rates sooner. We are watching to see if these job numbers are a trend because we believe the Fed won’t raise rates off of one month’s reports. Be careful because politicians and the news media will keep hyping this up because they need to sell ads and stay in the public eye.

The DOW Theory breaks down

For years the financial industry has had a DOW theory: This theory states that as the larger companies in the DOW go up, the Transportation Index will follow suit. This is true about 50% of the time. Currently the DOW is up but the Transportation Index is off 6.9%. There are four reasons for this; technology, less manufacturing and more service, transportation stocks were high last year, and natural gas is being used more than coal lowering the energy stocks.

Politics and bureaucracy are slowing down economic growth

The month of May was one of the best on record for the most announcements of mergers and acquisitions. Rates are low and money is cheap which has helped companies buy their competitors. This, in turn, can boost the economy. The problem is that while there are more announcements of mergers and acquisitions, we are not seeing many of these deals closing. The Justice Department and the FTC have extended the average closing to 10 months. In the past it has been as low as 3 months. This is another example of how politics and bureaucracy are slowing down economic growth.

Two key things to watch this week

Retail sales and the Consumer Price Index numbers will be reported this week. Retail sales account for two thirds of the economy so this report will tell us if consumers are still saving money or if they are beginning to spend it. We will be looking at inflation from the PPI report as it measures this on the production level.

Please continue to send us your questions and comments.

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Greg Powell, CIMA
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Email Greg Powell here

Franklin Bradford, CMT
Senior Vice President
Wealth Consultant
Email Franklin Bradford here

Ashley Page, JD, MBA
Senior Vice President
Wealth Consultant
Email Ashley Page here


Bobby Norman, CFP®
Vice President
Wealth Consultant
Email Bobby Norman here

Trey Booth, CFA®
Vice President
Wealth Consultant
Email Trey Booth here

fi-Plan Partners is an independent investment firm in Birmingham, AL, serving clients across the nation through financial planning, wealth management and business consulting. fi-Plan Partners creates strategies in the best interest of their clients using both fee based investing and transactional investing.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

Stock investing involves risk including potential loss of principal. 

Jun 012015
 
New Market High

Global monetary policy week

The Shanghai Exchange is up 4.5% this morning because small and midsize companies’ manufacturing numbers fell. This fall led to the belief that the Chinese Central Bank will provide more stimulus to the economy. Other central banks around the world are meeting this week and should produce news that could impact the global markets. Rates could go up in one country and down in another.

Positive May market

May was a positive month for the markets. The Core Capital Good Orders were up 1% which could mean good things for the 3rd quarter as this measures business investment intentions. We are concerned about the revised GDP number that came out as worse than the original government number. There were also huge cutbacks by energy companies and lower consumer spending data.

The reality of a new market high

The media has been spinning the news with headlines of a “new market high.” Remember that the market only has to go up 1 point from the previous day to be a new market high. Year to date the S&P 500 is only up 2.4%. So the news headlines aren’t as big as they appear. Most investors’ portfolios are not tied directly to an index so their returns will be different. The S&P 500 and other indices do not have to generate income with withdrawals nor do they have fees. A new market high doesn’t always compare well with your personal investments.

New economic data

Personal income and outlays data will come out today and we will be closely watching the new employment numbers coming out on Wednesday. Other data that could impact the markets this week is OPEC’s meeting this week and talks given by several Fed governors.

Summer economic outlook

There’s an old traders’ saying, “Sell in May and go away.” To its detriment, when a pattern is established, the markets will adjust and no longer follow the script. Over the last four years, three of the summers have been positive for the markets.

Interest rate update

We believe interest rates will still not go up in June. If rates are not raised in September, it’s unlikely we will see a hike in December because there is no press conference scheduled by the Fed in December. Chairwoman Yellen would want to sit down and walk through a rate hike as the markets are usually pretty jittery when it comes to an interest rates increase.

The problem of a strong US dollar

The process that Central banks around the world use to make their predictions is called FRB/US (Federal Reserve Bank/US). FRB/US is having a hard time predicting what is going to happen with the strong US dollar because it can make the deficit worse. A strong US dollar could have an impact over the next three years with a 1.7% drag on GDP that could be two years out.

Successful investing

Successful investing is not based on where the markets are today but where they will be down the road. It’s information like all of the above that can give investors good insight. It can take ten years to recover from scenario like the 2008 crisis when consumer debt rose to very high levels. That impact will carry out through 2018. This is the kind of data we are looking that can help give investors insight.

Send us your comments and questions and we will keep you informed.

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Greg Powell, CIMA
President/CEO
Wealth Consultant
Email Greg Powell here

Franklin Bradford, CMT
Senior Vice President
Wealth Consultant
Email Franklin Bradford here

Ashley Page, JD, MBA
Senior Vice President
Wealth Consultant
Email Ashley Page here


Bobby Norman, CFP®
Vice President
Wealth Consultant
Email Bobby Norman here

Trey Booth, CFA®
Vice President
Wealth Consultant
Email Trey Booth here

fi-Plan Partners is an independent investment firm in Birmingham, AL, serving clients across the nation through financial planning, wealth management and business consulting. fi-Plan Partners creates strategies in the best interest of their clients using both fee based investing and transactional investing.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
Stock investing involves risk including potential loss of principal.