Brower Financial Group Articles

WEEKLY TIP

Market volatility is constant and inescapable. Unlike portfolio volatility, you cannot plan to try and control it. So, embrace it, and the opportunities it may present to you.

YELLEN HINTS STRONGLY AT A RATE HIKE

Thursday, Federal Reserve chair Janet Yellen told Congress that the central bank could raise the benchmark interest rate “relatively soon,” calling current monetary policy merely “moderately accommodative.” She added that Fed officials envision “only gradual increases in the federal funds rate over time to achieve and maintain maximum employment and price stability.” Friday, the Fed Rate Monitor Tool at Investing.com put the possibility of a December rate hike at 91%.^1,2

WEEKLY TIP

Given the desire to travel and live well, the first few years of retirement may be expensive ones. Before and during those years, be mindful of economic and market cycles. They could affect your portfolio, and, by extension, your plans.

BLUE CHIPS HIT ALL-TIME HIGHS

Donald Trump’s unexpected presidential election win did not rattle Wall Street. Instead, bulls saw the prospect of greater federal outlays and less business regulation in the near future. The Dow Jones Industrial Average closed at a new record Friday: 18,847.66. The Dow 30 had its finest week since 2011, gaining 5.36%. As for the S&P 500, it advanced 3.80% in five days to 2,164.45. Settling at 5,237.11 Friday, the Nasdaq Composite rose 3.78% on the week.^1,2

WEEKLY TIP

Remember that you can gift up to $14,000 to as many people as you wish in 2016. This year, gift tax only applies after lifetime gifts exceed $5.45 million.

NEW DATA SHOWS BRIGHTER JOBS PICTURE

Unemployment fell to 4.9% in October as firms added 161,000 net new workers, but that was just one positive from the Department of Labor’s latest summary of the U.S. employment situation. Year-over-year wage growth reached 2.8%, the best number seen since June 2009, as average hourly pay rose ten cents last month. The U-6 rate (underemployment + unemployment) fell 0.2% to 9.5%. In addition, hiring totals across August and September were revised higher by 44,000.¹

WEEKLY TIP

If you are newly married and don’t have a will, why not create one? It is a thoughtful and very responsible move.

ECONOMY EXPANDS 2.9% in THIRD QUARTER

After just 1.4% growth in Q2, this was welcome news. Surging exports and greater inventory investment and federal spending made Q3 the best quarter for the economy in two years, according to the Department of Commerce. The federal government’s core PCE price index was up 1.7% for the quarter versus 1.8% in Q2.¹

CONSUMER CONFIDENCE INDICES DESCEND

Last week, the Conference Board’s gauge of household confidence came in at 98.6 for October, down from 103.5 in September. The University of Michigan’s final October consumer sentiment index slipped to 87.2 from its prior mark of 87.9.²    

WEEKLY TIP

If you are trying to rebuild or ramp up your retirement savings in your forties or fifties, avoid grasping at straws. Extremely speculative, high-risk investments are often hard to understand and may drastically underperform compared to their hype.

WEEKLY TIP

If you are under 35, see if you can save 15% of your salary toward retirement. If your company matches your retirement plan contributions, count the employer match as part of that 15%.

HIRING PICKED UP IN THE 3RD QUARTER

Employers added 156,000 net new jobs to their payrolls in September, the Department of Labor stated Friday. The August gain was revised up to 167,000, so monthly job growth averaged 192,000 in Q3, improved from 146,000 in Q2. The unemployment rate ticked up to 5.0% in September; the U-6 underemployment rate remained at 9.7%. Yearly wage growth reached 2.6%, with the average hourly wage rising six cents to $25.79.^1,2

WEEKLY TIP

Some pension plans let retirees choose between smaller lifelong income payments or a large lump sum. If one or both spouses are in line to receive pensions, a couple should at least explore some of the possibilities for lump sum investment.

NO ADVANCE IN CONSUMER SPENDING

Personal spending was flat in August even as personal incomes rose 0.2%. These numbers from the Department of Commerce fell short of expectations: economists polled by MarketWatch had forecast a 0.2% gain in both categories. In other news linked to consumer spending, the federal government revised second-quarter GDP up to 1.4% in its third estimate; it had previously put Q2 growth at 1.1%.¹      

WEEKLY TIP

By tracking a company’s typical month-to-month sales cycle, a business owner can identify when to put money into reserve to see a business through leaner months on the way to boom times.

FED WAITS TO RAISE INTEREST RATES

Federal Reserve officials decided against a rate hike last week, but two details in the central bank’s latest policy statement suggested an upward move was near. One, the Federal Open Market Committee voted 7-3 against raising the federal funds rate – an unusually close margin. Two, the Fed’s new dot-plot forecast showed consensus for a rate increase before the end of 2016. “Our decision [to wait] does not reflect a lack of confidence in the economy,” Fed chair Janet Yellen told the media after the announcement. “We’re generally pleased with how the U.S. economy is doing.”¹

WEEKLY TIP

Just married? About to marry? Develop a plan to save jointly for your financial goals. If you both save for them, they may be attained more quickly.

RETAIL SALES DECREASE SLIGHTLY

Shoppers bought 0.3% less goods and services in August, according to the latest monthly report from the Department of Commerce – but minus auto sales, the decline was just 0.1%. Retail sales were still up 1.9% from year-ago levels, with online sales rising 10.9% in 12 months.

Will volatility seize Wall Street? Or will calm prevail?

Wall Street has had a rather calm summer. How about fall? Will volatility increase before and after Election Day?