Jul 272015
 

Stocks were down last week

Stocks were down last week because of low earnings reports. Energy companies continue to be a drag on the markets, as oil is down 5 1/2 percent. On the positive side the initial jobless claims reached a 42 year low. We still, however, are waiting for wage growth to catch up with the number of job openings.

Get a feel for where the market is headed

The reports that are coming out this week that will help us get a feel for where the market is going will come from Durable Good Orders, GDP, Jobless Claims, and the Fed meeting report. We are always looking at price performance of stocks on the S&P 500 for possible places where buyers will step in. Right now that could happen around the 2050 – 2040 range. Below that would be in the 1900 – 2000 range. There is support at 2070. We will be watching these levels to try to get a feel for where the market is headed.

People are not feeling wealthy

We still maintain our position that the Fed will find it difficult to raise interest rates any time soon. While there are many positive things going on in the markets, the inflation rate is still below the Fed’s target of 2%. Inflation has been low for three years now going back to 2012. This can be good and bad depending on how you look at it.

So why has inflation continued to be an issue? We can see people are paying down debt but they are not spending money on consumer goods. This could be because wages have not gone up so people do not feel as wealthy. Inflation happens when there is more money chasing too few goods. We haven’t had this dynamic since 2007. People are not feeling wealthy at this time. This is why we think Janet Yellen will have a hard time finding enough inflation in the numbers to justify raising interest rates.

Please send us your comments and questions about where you feel the market is headed.

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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

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
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.

May 262015
 
#105 Interest Rates Are Going Up

Today we are discussing various economic issues that are holding this market back.

The State of The Affordable Healthcare Act

The burden for funding The Affordable Healthcare Act has been on owner managed businesses who are very large segment of our economy. Investors should be watching the Supreme Court case on the docket in June called King vs. Burdwell, which states that the way The Affordable Healthcare Act is being funded is unconstitutional. If this rules in favor of being unconstitutional, we believe this could be a good tailwind for owner managed businesses that a lot of people are not expecting. Furthermore, this could ignite the markets.

Interest rates are going up

Last week Janet Yellen announced that interest rates are going to go up sometime later in the year. She was not specific about an exact time frame, but she never is. Yellen sited recovering home values, a growing global economy, and an improving job situation as her reasoning for interest rates going up.

The issue of interest rates going up is very data dependent. We believe a rate hike in June is very unlikely but a possibility in September. Remember though that there is a lot of data that will come between now and then which is why we are here every day tracking it.

What has beat expectations?

Housing starts increased 20% in April which is the highest level it has been since 2007, easily beating expectations. Japan’s GDP also beat expectations growing 2.4%.

Does anyone care about Greece?

The Interior Minister of Greece stated over the weekend that they will not be paying back their loan to the IMF. The markets seemed to say, “So what, who cares,” and did not react to this news. While we look for the back page stories that will become front page stories, this is an instance where the opposite has occurred.

Short week but lots of data

While this week is short because of Memorial Day, there is a good deal of data coming out. The Durable Goods Orders numbers came out lower than expect and the Case-Shiller report shows that home prices are up, but did not meet expectations. There are other home sales reports this week as well as GDP data.

So why don’t we go to cash?

The VIX Indicator which measures volatility in the market is around 11. In 2007 and 2008 it spiked up to 40. What usually happens when it gets to this level is that the market will stay flat or drop anywhere from 2-4%. The question investors may ask is, “So, why don’t we go to cash?” We hold cash to take advantage of market opportunities and transaction costs. We believe this possible volatility is just a normal part of the markets. In other words, it rains every now and then. You don’t cancel your kids camping trip because they are predicting rain. We are watching the indicators but at this point we are not abandoning the markets.

Please keep sending us your comments and questions.

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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.

May 182015
 
#103 Can A Bull Market Climb A Wall Of Worry?

Concerns over a possible recession

Markets are moving towards an all time high which brings up the debate of whether we are in a bull market or are they about to trade back? Last week was positive overall with jobless claims at an all time low. There are some concerns about retail sales and industrial production being down. The last two times industrial production was down three months in a row we were in a recession.

Can we have a bull market in a recession?

Bad news can be good news, as one of the Fed governors this weekend mentioned that in light of the recent bad data they should push the lift back of interest rates to 2016. This will prove positive for the markets as a market can climb a wall of worry.

Earnings Season pushes a bull market

Adding to a possible bull market is the fact that 92% of S&P 500 companies have reported positive earnings. While expectations where down 3%, the reports are up 2%. While it doesn’t sound like much, it’s pretty remarkable considering the market headwinds of the rising dollar and declining oil prices. Companies are making money even though we are in this deflationary period or headed into a possible recession. Even in this climate, the market can climb a wall of worry.

Implications of the Pacific Rim Trade Agreement

The Pacific Rim Trade Agreement has moved from the back page to a front page story. This has become a potent possibility for multi-national growth. Congress is now fast tracking this trade agreement. This could be the most important vote they have this year. It impacts investors that have international positions in precision engineering, aircraft, and agriculture. This will also help jump start Japan’s economy and encourage a bull market globally.
Bull Market
Thank you for your comments and questions. Please keep them coming.

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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.
The economic forecasts set forth in the presentation may not develop as predicted.

Stock investing involves risk including potential loss of principal.

May 042015
 
#102 A Possible Market Tailwind

Current market update

We saw a lot of volatility in the markets last week but with a strong rally on Friday, the S&P 500 was down just under 1/2 of a percent from where it started Monday. While that’s not what we are looking for, it does show the strong support levels. The main cause was the GDP report that showed a tepid economy in the first quarter.

Bounce back indicators

There was this same kind of fist quarter last year but then the economy bounced back in the second quarter. Upcoming data will help us determine if that could happen again. We will start to see some of this data near the end of the week with the Jobs Report. Other indicators will be the earnings reports that are still coming out. Even though expectations where lowered, many companies are exceeding expectations.

Possible Market Tailwind

Although the news media is not reporting on the rising level of corporate debt, it continues to be something we are watching very closely. New corporate debt tells us that companies are being more active by borrowing money to expand their business. This has a rippling effect in the economy and is leading consumers to be more confident to borrow money themselves. With interest rates so low, this could be a possible market tailwind.

Investors should watch

Investors should pay attention, as we are, to how this money is being spent, how it is working, and how many times it changes hands. This could create sustainable market growth. We will keep you updated on this as the data comes out as the year progresses.

Thank you for your comments and questions. They help us provide the information you really want. Keep them coming.

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