Special Edition Commentary From Jack

Special Edition Commentary From Jack

I would just like to assure everyone that the Research Financial Strategies models are still fully invested, and we are still on a very strong technical buy chart. Please see the chart below. 

Our Growth Portfolio continues to outperform the S&P 500 benchmark in 2020 and we are maintaining the trend with positive portfolio returns for the year.   

If your investment portfolio is negative for 2020, let us give you a free, no-obligation 2nd opinion. We reacted and took advantage of the drop in the stock market. If your advisor had no plan for the recent market correction and only watched your portfolio lose money, then maybe it’s time to speak with us.

If anyone is interested in speaking with Jack about the stock market, an account review, your employer 401k allocations, or any other financial topic, please email me back and I will schedule a time that is convenient for you.  Remember, the team at Research Financial Strategies is here working for you! 

Weekly Market Commentary 05/18/2020

Weekly Market Commentary 05/18/2020

America is reopening, state by state.

That’s welcome news for many businesses, but we’re far from business as usual. Last week’s economic news included unemployment hitting an 80-year high, a record drop in retail sales (-16.4 percent), and an unprecedented decline in industrial production (-11.2 percent).

Weak consumer demand is also a concern, according to Matthew Klein of Barron’s. “…The pandemic has lowered consumer demand much more than it has damaged productive capacity. It’s much easier to bring factories back online than it is to get customers back into shops and auto dealerships…Unless consumption rebounds quickly, the world will soon be faced with an unprecedented glut of goods that can’t be sold.”

Some households may be able to sustain or increase consumption because of generous unemployment benefits. The Coronavirus Aid, Relief, and Economic Security (CARES) Act increased unemployment benefits by $600 per week. The intent was to provide Americans, who were out of work because of the pandemic, with income equal to the national average salary of $970 per week, reported Amelia Thomson-DeVeaux of FiveThirtyEight.

As it turns out, about 68 percent of those filing for unemployment – teachers, construction workers, medical assistants, food service workers, and others – are receiving more money through unemployment than they did from employers.

An analysis conducted by economists at the University of Chicago, and cited by FiveThirtyEight, found, “…the estimated median replacement rate – the share of a worker’s original weekly salary that is being replaced by unemployment benefits – is 134 percent, or more than one-third above their original wage.”

In recent weeks, the number of unemployed workers has grown to about 36 million, according to CBS News. Unusually high unemployment combined with unusually high unemployment benefits may mean some Americans may have more money to spend than they might have had otherwise. The combination could improve demand for goods. It also could make it more difficult for employers to persuade employees to return to work.

Last week, major U.S. stock indices finished lower.

Öffnungsdiskussionsorgien. The German language boasts many unique words with oddly specific meanings. You may be familiar with some German words that have become part of the English language such as schadenfreude (finding joy in other people’s trouble), wanderlust (an impulse to travel the world), and weltschmerz (sadness about the state of the world).

Amanda Sloat of ForeignPolicy (FP) reported the Germans have invented a new word to describe debates about when and how to reopen the world: Öffnungsdiskussionsorgien.

The goal of many leaders around the world is to minimize infection, minimize death, and minimize economic hardship. It’s a tall order and there is no ‘right’ answer. One thing is clear, though. People who have been on lockdown, no matter which country they reside in, have cabin fever. FP reported:

“An American expat in Spain promised her teary tween that for her 12th birthday she could help take the trash 50 yards to a communal receptacle across the courtyard; that special gift was scrapped after a police car parked nearby. To take advantage of exemptions allowing owners to walk their pets, one person in Romania took his fish on a walk, while a young woman put her cat in a bag to justify a trip to the mall.”

In the United States, Buzzfeed and BoredPanda have reported on an abundance of pandemic jokes and memes. Americans have watched Michigan’s Father Tim Pelc use a squirt gun of holy water to bless Easter baskets from a socially safe distance. We’ve also been alerted to the possibility of a baby boom that will yield Quaranteens in 2033 and endless rounds of toilet paper jokes.

Weekly Focus – Think About It

“The future belongs to those who believe in the beauty of their dreams.”
–Eleanor Roosevelt, Former First Lady, diplomat, and activist​

Best regards,

Jack Reutemann, Jr. CLU, CFP®

 

P.S.  Please feel free to forward this commentary to family, friends, or colleagues.

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Investment advice offered through Research Financial Strategies, a registered investment advisor.
* This newsletter and commentary expressed should not be construed as investment advice.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.  However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.
* To unsubscribe from the Weekly Market Commentary please reply to this e-mail with “Unsubscribe” in the subject.

 

Investment advice offered through Research Financial Strategies, a registered investment advisor.

Sources:
https://www.economist.com/graphic-detail/2020/05/15/a-plague-on-jobs (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/05-18-20_TheEconomist-A_Plague_on_Jobs-Footnote_1.pdf)
https://www.cnbc.com/2020/05/15/us-retail-sales-april-2020.html
https://www.marketwatch.com/story/us-industrial-output-collapses-in-april-2020-05-15
https://www.barrons.com/articles/trade-wars-are-coming-thanks-to-the-coronavirus-to-fix-it-close-the-wealth-gap-51589575501?mod=hp_DAY_13 (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/05-18-20_Barrons-Trade_Wars_are_Coming_Thanks_to_the_Coronavirus-To_Fix_It_Close_the_Wealth_Gap-Footnote_4.pdf)
https://fivethirtyeight.com/features/many-americans-are-getting-more-money-from-unemployment-than-they-were-from-their-jobs/
https://www.cbsnews.com/news/unemployment-claims-3-million-jobless-report-last-week/
https://www.barrons.com/market-data (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/05-18-20_Barrons-Market_Data-Footnote_7.pdf)
https://www.merriam-webster.com/dictionary/schadenfreude
https://www.merriam-webster.com/dictionary/wanderlust
https://www.merriam-webster.com/dictionary/weltschmerz
https://foreignpolicy.com/2020/05/09/coronavirus-pandemic-reopening-economy-life-after-lockdown/
https://www.boredpanda.com/quarantine-coronavirus-jokes/?utm_source=google&utm_medium=organic&utm_campaign=organic
https://www.buzzfeednews.com/article/olivianiland/priest-water-gun-meme-coronavirus?origin=shp
https://www.goodreads.com/author/quotes/44566.Eleanor_Roosevelt

Weekly Market Commentary 05/18/2020

Market Commentary – May 11, 2020

The stock market is not the economy.

It’s an important point to remember when headlines marvel that U.S. stock markets are moving higher while the U.S. economy is contracting. Stock markets are not mindful of the present moment. They are forward-looking, reflecting expectations about what will happen in the months and years to come, explained Mark Hulbert in a MarketWatch opinion piece.

In the present moment, the pandemic-induced recession is producing some brutal economic statistics. Lisa Beilfuss of Barron’s reported the unemployment rate rose to 14.7 percent last week. One-in-five Americans was out of work, and household income might be down 10 percent for the first six months of 2020.

No one is expecting great things from the economy in 2020. The Conference Board forecasts the U.S. economy will contract between 3.6 percent and 7.4 percent this year. However, the economy’s poor showing doesn’t mean stock markets will decline. John Rekenthaler of Morningstar explained:

“…neither employment statistics nor GDP [Gross Domestic Product] growth directly affect equity prices. The primary drivers are instead two sets of expectations: 1) future earnings and 2) future interest rates, with the latter being used to discount the former.”

Let’s consider earnings. There’s not a lot to celebrate in 2020, but the outlook for 2021 is positive. John Butters of FactSet reported, “Looking at future quarters, analysts predict a (year-over-year) decline in earnings in the second quarter (-40.6 percent), third quarter (-23.0 percent), and fourth quarter (-11.4 percent) of 2020. However, they also project a return to earnings growth in Q1 2021 (12.2 percent).”

The Federal Reserve is doing all it can to keep interest rates low. However, one of its most potent tools, the fed funds rate, has already been cut to near zero. Rekenthaler wrote:

“Government intervention is the new and updated version of “The Fed Put”: the idea that the Federal Reserve could always support equity prices, whenever it desired, by cutting short-term interest rates. Those rates are currently at zero, so that game can no longer be played. But the Federal Reserve can continue its newer technique of buying bonds in the open marketplace and flooding the banks with liquidity, and Congress can pass new stimulus bills…Whether such activity will benefit investors more than workers remains to be seen. Thus far, it has.”

Last week, the Standard & Poor’s 500 Index finished up 3.5 percent. The Dow Jones industrial Average gained 2.6 percent. The Nasdaq Composite rose almost 6 percent, putting it in positive territory year-to-date, according to Barron’s.

The better angels of our nature.
In his first inaugural address, President Abraham Lincoln urged unity, saying: “We are not enemies, but friends. We must not be enemies. Though passion may have strained it must not break our bonds of affection. The mystic chords of memory, stretching from every battlefield and patriot grave to every living heart and hearthstone all over this broad land, will yet swell the chorus of the Union, when again touched, as surely they will be, by the better angels of our nature.”

During the coronavirus crisis, we have seen remarkable generosity. From first responders manning the front lines, at significant personal risk, to companies and individuals taking actions that help others. Since the virus began to spread, news organizations have been sharing stories about generosity, innovation, and appreciation. Here are a few from Good News Network and The New York Times:

·        A grocery chain is paying to process and package raw milk donated by dairy farmers so the milk can be distributed through food banks and community organizations.

·        A Brooklyn landlord waived April rent for everyone living in 18 apartment buildings in an effort to ease tenants’ financial stress.
·        California partnered with the Federal Emergency Management Agency (FEMA) to create ‘Great Plates Delivered,’ which pays restaurants to deliver meals to eligible seniors.
·        The elusive street artist Banksy delivered a piece of art, featuring a new superhero – a nurse wearing a mask and a cape – to a British hospital with a thank you note.
·        A national hardware store chain bought flowers from nurseries and growers and had them delivered to moms quarantined in nursing homes on Mother’s Day.
·        Coronavirus survivors are sharing their blood so the antibodies they’ve developed can be used to save lives.

What acts of kindness and generosity have you seen, read, or heard about?

Weekly Focus – Think About It
“Always do what is right. It will gratify half of mankind and astound the other.”
–Mark Twain, Writer and humorist

 

Best regards,

Jack Reutemann, Jr. CLU, CFP®

 

P.S.  Please feel free to forward this commentary to family, friends, or colleagues.

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Investment advice offered through Research Financial Strategies, a registered investment advisor.
* This newsletter and commentary expressed should not be construed as investment advice.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.  However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.
* To unsubscribe from the Weekly Market Commentary please reply to this e-mail with “Unsubscribe” in the subject.

 

Investment advice offered through Research Financial Strategies, a registered investment advisor.

Sources:
https://www.marketwatch.com/story/this-is-the-one-leading-economic-indicator-stock-investors-should-follow-2020-04-21
https://www.barrons.com/articles/u-s-stocks-could-face-a-reckoning-as-investors-grasp-economic-damage-51588978056?mod=hp_LEAD_2 (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/05-11-20_Barrons-Joblessness_is_Soaring-Why_are_Stocks_Rising-Footnote_2.pdf)
https://www.conference-board.org/data/usforecast.cfm
https://www.morningstar.com/articles/982525/the-stock-market-is-not-the-economy
https://insight.factset.com/sp-500-earnings-season-update-may-8-2020
https://www.barrons.com/market-data (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/05-11-20_Barrons-Market_Data-Footnote_6.pdf)
https://avalon.law.yale.edu/19th_century/lincoln1.asp
https://www.goodnewsnetwork.org/kroger-buys-and-donates-50000-gallons-of-excess-milk-to-food-banks/
https://www.nytimes.com/2020/04/03/nyregion/coronavirus-nyc-landlord-mario-salerno.html
https://www.goodnewsnetwork.org/california-will-start-paying-restaurants-to-deliver-food-to-seniors-in-need/
https://www.goodnewsnetwork.org/banksy-superhero-nurse-hospital-artwork/
https://www.goodnewsnetwork.org/lowes-mothers-day-deliveries-in-2020/
https://www.nytimes.com/2020/04/13/learning/what-acts-of-kindness-have-you-heard-about-or-participated-in-during-coronavirus.html
https://www.goodreads.com/author/quotes/1244.Mark_Twain?page=2

Weekly Market Commentary 05/18/2020

Market Commentary – May 4, 2020

Weekly Financial Market Commentary

May 4, 2020

Our Mission Is To Create And Preserve Client Wealth

There are signs COVID-19 may be in retreat.

Last week, the Centers for Disease Control reported, overall in the United States, for the week ending April 25 (officially week 17 of the coronavirus), the number of:

          People visiting healthcare providers with COVID-19 symptoms declined.

·         Positive tests at public health, clinical, and commercial laboratories declined or remained similar.

·         Deaths attributed to pneumonia, influenza, or COVID-19 declined, too, although the percentage remains above normal.

This is good news since some states are beginning to reopen.

Last week, the Bureau of Economic Analysis reported on the early economic impact of COVID-19 and shelter-in-place orders, which were implemented to prevent healthcare systems from being overwhelmed by COVID-19 patients. The U.S. economy contracted 4.8 percent during the first quarter of 2020.

The contraction is expected to be more significant for the second quarter. FactSet estimates the U.S. economy will shrink 27.0 percent, quarter-to-quarter, and finish the year down 3.0 percent overall. That suggests a strong rebound in economic growth as the country gets back to work.

Despite the economic contraction, U.S. stocks finished April with the biggest monthly gain since 1987, reported Colby Smith and colleagues at Financial Times (FT). April’s gains were partly the result of fiscal and monetary support, according to FT. The publication cited a global markets strategist who, “…attributed [April’s] rally in part to the U.S. Congress and the Federal Reserve extending enormous support to the economy and financial markets in the form of relief packages and emergency lending measures.”

The Fed isn’t the only central bank providing unusual support in these uncertain times. The European Central Bank and the Bank of Japan also announced significant lending and bond buying programs last week, reported Dion Rabouin of Axios.

WHAT DO YOU GET WHEN YOU COMBINE PARENTS, CHILDREN, HOMESCHOOLING, AND REMOTE WORK?
Here are some quotes about pandemic life curated from social media by Fast CompanyBoredPandaBuzzfeed, and Today:

·         “If you had asked me what the hardest part of battling a global pandemic would be, I would have never guessed, ‘teaching elementary school math.”’ – Simon Holland

·         “Homeschooling update day 9: Today we did maths. If you have three kids, and they are awake roughly 13 hours in the day, and you’re trying to work from home, how many times will you hear the word ‘snack’? – ThreeTimeDaddy

·         “Day 3 of quarantine and distance learning from home: 6-year-old writes biography titled, ‘Why I Hate My Family’” – Z

·         “My coworker suggested I work from his fort.” – Sam

·         “Boss: I need you to- 
           [Four kids run by: one on fire, one naked, two in ski masks and capes]
           Boss: Never mind” – Rodney

·         “I know the C-Virus is scary but try working with a 4-year-old dressed like Spiderman perched on the kitchen table behind you whispering, ‘Can you hear me breathe?’” – Krista Myers Duzan

·         “The first hour of homeschooling started out strong, with some great reading comprehension exercises, and concluded with an epic tantrum over the fact that she can’t watch Frozen 3 because it does not exist.” – Jeff Kosseff

·         “…been homeschooling a 6-year-old and an 8-year-old for one hour and 11 minutes. Teachers deserve to make a billion dollars a year. Or a week.” – Shonda

How is your homeschooling and/or remote work experience going?


Weekly Focus – Think 
About It
“Rule a kingdom as if cooking a small fish,” he once told me. “If you interfere with it too much while cooking, it will fall apart and be inedible.”
–Solala Towler, Tales from the Tao: The Wisdom of the Taoist Masters

 

Best regards,

Jack Reutemann, Jr. CLU, CFP®

P.S.  Please feel free to forward this commentary to family, friends, or colleagues.

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Investment advice offered through Research Financial Strategies, a registered investment advisor.
* This newsletter and commentary expressed should not be construed as investment advice.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.  However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.
* To unsubscribe from the Weekly Market Commentary please reply to this e-mail with “Unsubscribe” in the subject.

Weekly Market Commentary 05/18/2020

Market Commentary – April 27, 2020

Weekly Financial Market Commentary

April 27, 2020

Our Mission Is To Create And Preserve Client Wealth

We live in interesting times.

There is discussion about whether the saying, “May you live in interesting times,” is a blessing or a curse. At this point in 2020, we all understand why.

Last week, the world watched in consternation as the price of oil, specifically West Texas Intermediate crude oil, dropped into negative territory. The price moved below zero because a purchase date coincided with a lack of storage space. As a result, the owners of the oil had to pay to have it taken off their hands, reported Ben Levisohn of Barron’s.

Oil prices recovered on Wednesday. Global oil producers have promised to reduce output, which would realign supply and demand, but it has yet to happen, reported Evie Liu of Barron’s. The delay may reflect a hope that coronavirus restrictions will ease, economies will begin to reopen, and demand for oil will increase.

Investors were understandably unsettled by oil prices, and U.S. stocks lost value early in the week. As oil stabilized, U.S. stocks pushed higher. The rebound in stocks stalled on news that trials for a potential COVID-19 treatment had produced disappointing results.

Thursday’s unemployment data showed 4.4 million people filed for unemployment benefits the previous week. That brought the number of unemployed Americans to more than 26 million, according to Jeffry Bartash of MarketWatch.

Earnings, which reflect companies’ profits, remained less than robust, as expected. “The blended (combines actual results for companies that have reported and estimated results for companies that have yet to report) earnings decline for the first quarter is -15.8 percent…” reported John Butters of FactSet.

The energy sector finished the week in positive territory.

Stimulus checks are arriving
The Internal Revenue Service (IRS) has distributed $157.9 billion through 88 million stimulus payments, according to Andrew Keshner of MarketWatch.

If you have recently lost a job, or you’re having difficulty paying bills, your check may already be spent. However, if you’re still working, or remain financially comfortable, think carefully about how you want to spend your checks. The money could be used to improve your long-term financial outlook or provide support to people in need. For instance, you could:

  • Contribute to an emergency fund. It’s a sound idea to have savings equal to three to six months of expenses in a rainy-day fund in case something unexpected happens, such as a coronavirus quarantine.

 In 2019, the Board of Governors of the Federal Reserve reported just 61 percent of adults had enough savings set aside to cover a $400 unexpected expense. The report stated, “During 2018, one-fifth of adults had major, unexpected medical bills to pay, with the median expense between $1,000 and $4,999. Among those with medical expenses, 4 in 10 have unpaid debt from those bills.”

  • Pay off high-interest rate debt. If your income is secure, using your check to reduce high interest rate debt may be a good choice.

In early April, the average interest rate assessed on credit cards accounts with unpaid balances was 16.61 percent. Reducing your balance, could significantly reduce the amount of interest you pay. In addition, if something unexpected happens, having a higher level of available credit could be beneficial.

Donate the amount. If you are confident you will not need the money, consider making a donation. A donation can take many forms. You could help a loved one pay bills or provide support to a church or charity.

 “…many charities and nonprofits are still struggling. Donations to some churches have plummeted, and many charities have had to cancel crucial fundraising events such as galas, bike races, and walkathons,” reported the Associated Press.

What are you planning to do with your stimulus check?

Weekly Focus – Think About It

“Do you think you remember a movie in which a knight gallops toward a castle just as its drawbridge is going up, and his white horse jumps the moat in one glorious airborne leap?

…we’re that rider. Chasing us is the dreaded coronavirus. We’re in midair, hoping we make it to the other side, where life will have returned to what we think of as normal. So, what should we do while we’re up there, between now and then? Think of all the things you hope will still be there in that castle of the future when we get across. Then do what you can, now, to ensure the future existence of those things.”

-Margaret Atwood, Time Magazine, April 16, 2020

Best regards,

Jack Reutemann, Jr. CLU, CFP®

P.S.  Please feel free to forward this commentary to family, friends, or colleagues.

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Investment advice offered through Research Financial Strategies, a registered investment advisor.
* This newsletter and commentary expressed should not be construed as investment advice.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.  However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.
* To unsubscribe from the Weekly Market Commentary please reply to this e-mail with “Unsubscribe” in the subject.

 

Investment advice offered through Research Financial Strategies, a registered investment advisor.

Sources:
https://en.wikipedia.org/wiki/May_you_live_in_interesting_times
https://www.barrons.com/articles/in-a-stock-market-like-this-anything-could-cause-the-next-panic-heres-what-to-watch-51587776542?mod=hp_HERO (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/04-27-20_Barrons-In_a_Stock_Market_Like_This_Anything_Could_Cause_the_Next_Panic-Heres_What_to_Watch-Footnote_2.pdf)
https://www.barrons.com/articles/dow-jones-industrial-average-rose-as-oil-prices-came-back-51587591022?refsec=markets (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/04-27-20_Barrons-The_Dow_Rose_457_Points_Because_Oil_Prices_Came_Back-Footnote_3.pdf)
https://www.marketwatch.com/story/jobless-claims-jump-another-44-million-25-million-americans-have-lost-their-jobs-to-the-coronavirus-2020-04-23
https://www.investopedia.com/terms/e/earnings.asp
https://insight.factset.com/sp-500-earnings-season-update-april-24-2020
https://www.marketwatch.com/story/the-irs-has-already-paid-out-over-half-the-stimulus-check-money-heres-where-it-went-2020-04-24
https://www.federalreserve.gov/publications/2019-economic-well-being-of-us-households-in-2018-dealing-with-unexpected-expenses.htm
https://www.federalreserve.gov/releases/g19/current/default.htm
https://apnews.com/0cca8af954b111ef460d823f7cd81a49
https://time.com/collection/finding-hope-coronavirus-pandemic/5820595/margaret-atwood-coronavirus-uncertainty/

Weekly Market Commentary 05/18/2020

Market Commentary – April 13, 2020

Weekly Financial Market Commentary

April 13, 2020

Our Mission Is To Create And Preserve Client Wealth

Why is the stock market doing so well when the COVID-19 pandemic has yet to peak?

At the end of last week, the Centers for Disease Control and Prevention reported the United States remains in the acceleration phase of the coronavirus pandemic. This phase ends when new cases of COVID-19 level off. The next phase should be a period of deceleration, and the number of cases should decline.

There are several different models estimating when a peak may occur, and estimates vary from state to state, according to Sean McMinn of NPR. For instance, the model cited by the White House is from The Institute for Health Metrics and Evaluation at the University of Washington. It assumes social distancing measures will stay in place through the end of May. In this circumstance:

  • New York may have peaked April 9
  • California may peak April 15
  • Pennsylvania on April 17
  • Texas on April 28
  • North Dakota on April 30
  • Wyoming on May 2

All other states have peaked or are projected to peak on or before May 2, 2020.

Despite estimates suggesting the virus will continue to spread and businesses may not reopen fully until the end of May, U.S. stock markets moved significantly higher last week. Al Root of Barron’s reported:

“The S&P 500 index rose 12 percent…its best week since 1974 – and finished 25 percent off its March low. The corresponding gain for the Dow Jones Industrial Average was 13 percent, up 27.8 percent from its low. The Nasdaq Composite jumped 10.6 percent, raising it 23 percent off its low.”

Many factors affect U.S. stock market performance, including company fundamentals (how companies perform), investor sentiment (what investors think), consumer sentiment (what consumers think), monetary policy (what the Federal Reserve does), and fiscal policy (what the federal government does). The driver supporting stock market performance last week was Federal Reserve monetary policy. Axios explained:

“The Federal Reserve announced Thursday it will support the coronavirus-hit economy with up to $2.3 trillion in loans to businesses, state and city governments…The slew of new Fed programs comes as economic conditions deteriorate at an unprecedented pace…and another 6.6 million Americans filed for unemployment benefits this week.”

There continues to be uncertainty about how the U.S. economy will recover. As a result, we are likely to see markets remain volatile.

Boredom sparks creativity. Early last year, Time Magazine cited a study that found boredom may trigger creativity. Time explained, “In the study, people who had gone through a boredom inducing task – methodically sorting a bowl of beans by color, one by one – later performed better on an idea-generating task than peers who first created an interesting craft activity.”

Recent social media and news reports are providing anecdotal evidence that supports the idea. For example, people are:

  • Creating art galleries for pets. A couple of bored 30-year-olds built a mini art gallery for their pet gerbils while on quarantine. The Good News Network reported, “The tiny space was furnished with carefully curated rodent-themed takes on classic works of art – including the ‘Mousa Lisa.’”
  • Playing real-life versions of children’s games. In Wales, a nursing home has seniors practicing social distancing while playing a real-life version of Hungry, Hungry Hippos. “Instead of using hippo mouths to capture the plastic balls, however, the women brandished baskets on sticks…,” reported Good News Network.
  • Transforming their homes. One clever person transformed glass patio doors into stained glass using painters tape and washable markers, reported BoredPanda.
  • Cooking together. Quarantine cooking clubs are catching on. For instance, one club, “…assigns a new dish every weekend; a last meal of one of the celebrities who has been a guest on the James Beard Award nominated podcast, Your Last Meal,” reported the MyNorthwest

If you’re looking for something to do, the J. Paul Getty Museum (The Getty) in Los Angeles recently asked their followers to select a favorite work of art from their collection and re-create it using three everyday household items. The museum’s blog reported on the results so far:

“You’ve re-created Jeff Koons using a pile of socks, restaged Jacques-Louis David with a fleece blanket and duct tape, and MacGyvered costumes out of towels, pillows, scarves, shower caps, coffee filters, bubble wrap, and – of course – toilet paper and toilet [paper] rolls.”

Weekly Focus – Think About It
“I wanted a perfect ending. Now I’ve learned, the hard way, that some poems don’t rhyme, and some stories don’t have a clear beginning, middle, and end. Life is about not knowing, having to change, taking the moment and making the best of it, without knowing what’s going to happen next.”
–Gilda Radner, Comedian

Best regards,

Jack Reutemann, Jr. CLU, CFP®

P.S.  Please feel free to forward this commentary to family, friends, or colleagues.

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Investment advice offered through Research Financial Strategies, a registered investment advisor.
* This newsletter and commentary expressed should not be construed as investment advice.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.  However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.
* To unsubscribe from the Weekly Market Commentary please reply to this e-mail with “Unsubscribe” in the subject.

 

Investment advice offered through Research Financial Strategies, a registered investment advisor.

* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.  However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.
* To unsubscribe from the Weekly Market Commentary please reply to this e-mail with “Unsubscribe” in the subject.

Sources:
https://www.cdc.gov/coronavirus/2019-ncov/cases-updates/summary.html
https://www.npr.org/sections/health-shots/2020/04/07/825479416/new-yorks-coronavirus-deaths-may-level-off-soon-when-might-your-state-s-peak#allstates (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/04-13-20_NPR-Coronavirus_State-By-State_Peak_Projections-Footnote_2.pdf)
https://www.barrons.com/articles/the-s-p-500-had-its-best-week-since-1974-next-up-an-economic-coma-51586560230?mod=hp_HERO (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/04-13-20_Barrons-Stocks_Just_had_Their_Best_Week_in_Decades-Get_Ready_for_a_Drop-Footnote_3.pdf)
https://www.axios.com/the-fed-rescues-wall-street-but-main-street-is-another-story-7a946388-6f0a-4f31-97f6-2e28e249b01a.html
https://www.axios.com/federal-reserve-coronavirus-lending-3616d77e-e69d-42d7-95bf-6612407cc16a.html
https://www.axios.com/stock-market-volatility-coronavirus-recession-787550a9-ba22-42b6-9dc6-bfffa085ea23.html
https://time.com/5480002/benefits-of-boredom/
https://www.goodnewsnetwork.org/quarantined-couple-makes-art-gallery-for-gerbils/
https://www.goodnewsnetwork.org/watch-seniors-play-real-life-hungry-hungry-hippos/
https://www.boredpanda.com/creative-quarantine-handmade-things/?media_id=2146779&utm_source=google&utm_medium=organic&utm_campaign=organic
https://mynorthwest.com/category/podcast_results/?sid=1148&n=Your%20Last%20Meal%20with%20Rachel%20
https://blogs.getty.edu/iris/getty-artworks-recreated-with-household-items-by-creative-geniuses-the-world-over/
https://www.goodreads.com/quotes?page=13

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