Monthly Archives: June 2018

POCKETBOOK: Week ending June 17, 2018

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  • Not so subtle signs

The great divide between our two America’s — one in which the wealthy enjoy the fruits of their fortunes and the much larger group that finds making it harder and more challenging than ever—is not-so subtly showing signs of widening.

On the one hand, the Fed says the economy is roaring along just fine even guestimating GDP growth could hit something like 4% this year. On the other, the second rise in key short-term rates this year from 1.75 to 2% may add pennies to one’s saving accounts and money market fund accounts. But, it is also making a bigger dent  for those  who will see increases on the interest rates charged by credit card accounts,  rates on mortgages, variable line-of-credit accounts,  car loans. etc.

And everybody is noticing. Two examples: CNBC reported that half of Americans aren’t taking summer vacations this year and  real estate developers are offering super deals for new home buyers.

In my local paper on Friday (6/15/18), I saw  new home developers offering  mighty attractive discounts to entice  new home buyers to buy.

At On Top of the World, a 55+ community in Ocala, Florida where new homes are priced from the $160s to over $400s, ran a full-page read, “GET MORE FOR LESS” offering a 25% on all options.

Divosta, a developer with a huge and long-standing presence in Palm Beach County, was —get this— giving a free pool with screen enclosure—to new home buyers at their Sonoma Isles development in Jupiter through June 18th.

That said, my adult life’s experience in South Florida has shown me that whenever  real estate developers start discounting their prices and/or offering what’s typically costly upgrades, it’s been a sign that they’re concerned about sales.

The good news here is  anybody who can qualify and afford a new home at either of these developments has got to love getting any kind of discount or a new pool.

The bad news is  not everyone can either qualify for or afford to buy a new home these days. And even small interest rate hikes upward only exasperate that problem.

Now imagine what a number of interest rate hikes upward will do.

 

  • Market Quick Glance

LISTEN UP!!!! Two, yes, not one but two of the indices followed here scored big last week: Both the NASDAQ and the Russell 2000 hit new all-time record numbers last week. Yahoo for  them.

That’s something to crow about particularly since the rest of the investing arena is in a little bit of quandary with interest rates on the rise. As we all know, any move in any direction of interest impacts all sorts of things including equities.

Below are the weekly and 1-year index performance results for four major indices— including the dates each reached new highs—according to CNBC.com based on prices at the close of business on Friday, June 15, 2018.

DJIA 1.50% YTD ouch as that index is down again from the previous week’s return of 2.42%

  • 1 yr Rtn 14.27% big downward move from the previous week’s 19.52%

Most recent DJIA all-time high was reached on January 26, 2018 of 26,616.71. The previous high was reached January 18, 2018 was 26,153.42.

 

-S&P 500 3.97% YTD up a hair from last week’s 3.94%.

•1 yr Rtn 14.27% up a bit from last week’s 14.19%

The S&P 500 reached its most recent all-time high on January 26, 2018 of 2,872.87. The previous high was reached on January 19, 2018 of 2810.33.

 

-NASDAQ 12.21% YTD a whopping big move up from last week’s 10.75%

  • 1yr Rtn 25.64% also a big up from last week’s 20.94%

Nasdaq reached a BRAND NEW ALL-TIME HIGH on June 14,2018 of 7,768.6. The previous highs was reached on March 13, 2018 of 7,637.27

 

-Russell 2000 9.66% YTD up from last week’s 8.92%

  • 1yr Rtn 19.42% up from last week’s 18.15%

The Russell 2000 reached a BRAND NEW ALL-TIME HIGH on June 12, 2018 of 1,686.37. The previous high was reached on January 24, of 1,615.52.

 

-Mutual funds

Last week’s data not available yet. Data below is from previous week:

The total return performance of the funds under the U.S. Diversified Equity Funds heading enjoyed an average return of 5.11% at the close of business on Thursday, June 7, 2018, according to Lipper. That’s up a lot from the previous week’s average total return of 2.84%.

In the big time skids this year are Latin American Funds. Of the 33 that Lipper tracks, the y-t-d average total return was underwater at -12.00%.

Other World Equity Funds that haven’t fared well so far this year was India Funds, -7.50%. And in third underwater place Emerging Markets Funds, -1.38%.

Overall, World Equity Funds are up 0.90%.

Visit www.allaboutfunds.com for more information about how various equity and fixed-income funds have rewarded investors over the short-and long-term, based upon Lipper data. Short-term meaning weekly and monthly performance returns; longer-term includes quarterly, year-to-date, 1-yr, 2-yr, 3-yr and 5-yr returns.

 

  • Golden opportunities?

If you’re a believer in Morningstar data and research, the pros over at that Chicago-based firm aren’t expecting much in returns from that precious metal we call gold.

In a recent column by Kristoffer Inton, “Gold Steady in Face of Rate Hikes”, had this to write about the recent the impact of interest rates on gold: “This rate doesn’t change our view…. We continue to expect the gold price to fall to $1,225 per ounce by then end of 2018…. “

He continued:  “Additionally, although the recent rise in inflation bodes well for gold, we think that higher inflation will only spur a more rapid pace of rate hikes.”

And then there is this from a recent ETFTrends.com story: “China is the world’s largest consumer of many commodities, including precious metals.

“Tariffs on China could be a game changer for metals markets, ” George Gero, managing director at RBC Capital Markets, told the WSJ.”

The ETFTrends.com story points out that one area precious metals are making positive strides is in inverse or bearish ETFs.

If you’re a fan of gold, that’s an area worth investigating.

Sometimes down pays up.

 

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POCKETBOOK: Week ending June 9, 2018

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Telling lines.
  • Fickle trickle

Funny how the average guy and gal have to use a magnifying glass to see the effect of Trump’s trickle down economic policies in their day-to-day lives.

Yes, businesses are expanding, the unemployment rate is down and the stock market has yet to stumble and fall. But unless you’re in the top 10 percent of wage earners, odds are your salary hasn’t increased much over the past couple of years.

Wealth equality in the U.S. is and has been a rising problem for decades. Statistica.com reported that in 2017, the lower-income 50 percent of the population owned about 1.1% of total wealth while that sliver of the top 1% owned 35% of it.

That spread doesn’t bode well for the majority of Americans who hope and believe that their hard work will come with huge financial rewards for them and their families in the coming years. But while hard work is a virtue in itself, it comes with no guarantees of everyone becoming a multi-millionaire.

That said, every working person can build a nest egg. How big that nest egg grows to depends more on goal-setting, focus and perseverance than it does most everything else—including market conditions and government policies.

 

  • Market Quick Glance

Last week, NASDAQ made the greatest gains, now up over 10% for the year, behind it was the Russell 2000 with a year-to-date return of nearly 9%.

So it continues to be a kinda sorta small-cap world.

Below are the weekly and 1-year index performance results for four major indices— including the dates each reached new highs—according to CNBC.com based on prices at the close of business on Friday, June 8, 2018.

DJIA 2.42% YTD  up again and a lot from the previous minus week’s close of -0.34%

  • 1 yr Rtn 19.52% down from the previous week’s 16.51%

Most recent DJIA all-time high was reached on January 26, 2018 of 26,616.71. The previous high was reached January 18, 2018 was 26,153.42.

 

-S&P 500 3.94% YTD up from last week’s 2.28%

  • 1 yr Rtn 14.19% up from last week’s 12.53%

The S&P 500 reached its most recent all-time high on January 26, 2018 of 2,872.87. The previous high was reached on January 19, 2018 of 2810.33.

 

-NASDAQ 10.75% YTD up from last week’s 9.43%

  • 1yr Rtn 20.94% up a hair from last week’s 20.93%

NASDAQ reached a brand new all-time high on March 13, 2018 of 7,637.27. The previous high was reached on March 9, 2018 of 7,560.81.

 

-Russell 2000 8.92% YTD up from last week’s 7.32%

  • 1yr Rtn 18.15% up from last week’s 18.05%

The Russell 2000 reached an all-time high on January 24, of 1,615.52. The previous high was reached on January 16, 2018 of 1,604.02.

 

-Mutual funds

Following the indices returns, the total return performance of the funds under the U.S. Diversified Equity Funds heading enjoyed an improved average y-t-d return–it was  5.11% at the close of business on Thursday, June 7, 2018, according to Lipper. That’s up a lot from the previous week’s average total return of 2.84%.

In the big time skids arena this year are Latin American Funds. Of the 33 that Lipper tracks, the y-t-d average total return was underwater at -12.00%.

Another of the  World Equity Funds that haven’t fared well so far this year was India Funds, -7.50%. And in third underwater place Emerging Markets Funds, -1.38%.

Overall, World Equity Funds are up 0.90%.

Visit www.allaboutfunds.com for more information about how various equity and fixed-income funds have rewarded investors over the short-and long-term, based upon Lipper data. Short-term meaning weekly and monthly performance returns; longer-term includes quarterly, year-to-date, 1-yr, 2-yr, 3-yr and 5-yr returns.

 

  • Recession ahead? Yes. Sometime.

Lots of chatting about an upcoming recession. Comedian and political commentator Bill Maher even put his two cents worth in the other night with respect to it.

Not in favor of his words. Then again, his point is well taken as American voters have a historic tendency to vote with respect to how fat their pocketbooks are. So a recession happening prior to voting time could have a big impact in taking Trump out of office.

That said, recessions happen. They are a natural part of our economic world. Always have been. Always will be.

That means, it should come as no surprise at all to read that economists at the National Association of Business Economics are foreseeing a recession beginning next year or in early 2020.

And why do they think that? Well, after a steaming economy and a bull market running something like 9,10,11 years or so means it’s a sooner-or-later, for sure, natural event that’s gonna happen. Sometime.

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POCKETBOOK: Week ending June 1, 2018

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•More bull?

Wall Street’s talking heads are never at a loss of words. Or outlooks. Here’s what one bull sees.

Ed Yardeni, president of Yardeni Research thinks that there is still plenty of money to be made in this market, has a S&P 500 index year-end target price of 3100 —that’s 13% above where it stands today—and sees the small-cap rally continuing.

In a recent CNBC.com story, Yardeni said, “Small cap stocks are on fire, at record highs, because they are not as exposed to the global economy in currency and protectionism.”

And, he’s  not alone in his small-cap rally thinking.

We shall see.

 

  • Market Quick Glance

It’s been a small-cap world for anyone paying attention to the NASDAQ and Russell 2000 indices as each has made some nice strides in a positive direction lately and last week.

Below are the weekly and 1-year index performance results for four major indices— including the dates each reached new highs—according to CNBC.com based on prices at the close of business on Friday, June 1, 2018.

DJIA -0.34% YTD once again back into minus territory from the previous week’s

+0.14%.

•1 yr Rtn 16.51% down from the previous week’s 19.61%

  • Most recent DJIA all-time high was reached on January 26, 2018 of 26,616.71. The previous high was reached January 18, 2018 was 26,153.42.

 

-S&P 500 2.28% YTD up from last week’s 1.78%

  • 1 yr Rtn 12.53% down a tad from last week’s 12.68%

The S&P 500 reached its most recent all-time high on January 26, 2018 of 2,872.87. The previous high was reached on January 19, 2018 of 2810.33.

 

-NASDAQ 9.43% YTD up a heap from last week’s 7.68%

  • 1yr Rtn 20.93% up from last week’s 19.80%

NASDAQ reached a brand new all-time high on March 13, 2018 of 7,637.27. The previous high was reached on March 9, 2018 of 7,560.81.

 

-Russell 2000 7.32% YTD a jump up from last week’s 5.95%

  • 1yr Rtn 18.05% down from last week’s 17.60%

The Russell 2000 reached an all-time high on January 24, of 1,615.52. The previous high was reached on January 16, 2018 of 1,604.02.

 

-Mutual funds

Your basic equity fund lost a little ground last week.

The average performance of the funds under the U.S. Diversified Equity Funds heading had a total return of 2.84% year-to-date at the close of business on Thursday, May 31, 2018. That’s lower than it was one week before, (May 26), it was 3.34%.

It’s been a Small-Cap Growth funds’ world lately as the average y-t-d return for them clocked in at 10.75% last Thursday. That’s up from the previous week.

Science & Tech funds with home grown as well as global companies in their portfolios continue to do well, too.

Not so hot have been World Equity Funds—the average one’s return was underwater at -0.86% last week.

World Income Funds have fared worse with the average y-t-d total return of the 750 funds that fall under this heading of -2.57%.

Visit www.allaboutfunds.com for more information about how various equity and fixed-income funds have rewarded investors over the short-and long-term, based upon Lipper data. Short-term meaning weekly and monthly performance returns; longer-term includes quarterly, year-to-date, 1-yr, 2-yr, 3-yr and 5-yr returns.

 

  • Our poor kids

No matter how great you think last week’s job report was, or how great you think the economy is, if you step back and take an objective view, President Trump’s personal business management style for America has rewarded the wealthy far more than it has the middle, and lower classes.

Philip Alston, a U.N. human rights investigator released a report that he will present to the United Nations Human Rights Council later this month, pointed out that while Trump has cut benefits and health insurance to the poor in America, his reforms have been “financial windfalls” for the mega-rich and large corporations.

Nothing new there. But what I found was of particular importance was how hard hit his policy changes have been for  our kids.

Alston said that nearly 41 million people, 12.7 percent, live in poverty in the U.S. Of them 18.5 million live in extreme poverty and one in three kids are poor.

Worse yet, he said that the United States has the highest youth poverty rate among industrialized countries.

That’s nothing to be proud about no matter what figures the Trump Administration boasts about.

 

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