February 2014 Newsletter from Sumner Wealth Management

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Wealth Management Newsletter

 

Friday, 06 December 2019

 
 

Dear Visitor,

I sincerely hope that 2014 is treating you well!  As always, see below for the latest industry news.

 

Global Equity Markets Tumble

Global equity markets tumbled this week, as concerns over emerging markets continued to rise. After bumping up against 1,850 earlier in the week, the S&P 500 dropped 2.6 percent to end the week below 1,800. Investment grade fixed income benefited from the associated flight to safety that comes from emerging markets turmoil, with the yield on the U.S. 10-Year Treasury Note falling 10 basis points to 2.72 percent.

 

Index Returns (%)

Source:  Bloomberg

Index

1 Week

 YTD

1 Year

Dow Jones 30 -3.52 -4.21 14.39
S&P 500 -2.63 -3.14 19.34
Russell 2000 -2.08 -1.68 26.18
MSCI EAFE -2.00 -1.78 12.22
S&P GS Commodities -0.95 -0.93 -4.81
U.S. Trade-Weighted $ -0.95 0.52 0.84

 

Index Levels

Source:  Bloomberg

Index

 Current Week (01/24/14)

 Prior Week (1/17/14)

 Year End (12/31/12)

Year Ago (01/25/13)

Dow Jones 30 15,879 16,459 16,577  13,896
S&P 500 1,790 1,839 1,848  1,503
Russell 2000 1,144 1,168 1,164  905
MSCI EAFE 1,881 1,920 1,916  1,680
S&P GS  Commodities 4,784 4,669 4,830  5,007
U.S. Trade-Weighted $ 80.45 81.23 80.04  79.75
U.S. 10Yr Treasury Yield(%) 2.72 2.82 3.03  1.95

 

Emerging vs. Developed Markets

Economic growth in emerging markets has certainly not been as compelling of late as that within developed markets. This trend was reinforced this week as activity in China's factory sector contracted in January for the first time in six months, according to the preliminary Markit/HSBC Purchasing Managers' Index (PMI) survey. The People's Bank of China (PBOC) has been seeking to curb high debt levels to head off financial risks as the Chinese economy gradually shifts away from investment-based growth towards consumption-based growth.

 

Emerging Market Currencies Take Hit   

Exacerbating the weaker economic news from China was the beating some emerging market currencies took this week. As evidenced early last summer when Federal Reserve (the Fed) Chairman Ben Bernanke laid out an initial tapering timeline, emerging market currencies have once again come under pressure now that the Fed has commenced to gradually reduce its bond buying program. Countries such as Argentina and Turkey rely heavily on foreign funding, and, with the possibility of higher interest rates available elsewhere (e.g. U.S. 10-year yields recently hit three percent), capital may leave these countries in favor of more developed economies.

 

Unemployment Rate Insight 

The U.S. economic data calendar was very light this week. While initial jobless claims came in pretty much as expected, it was the first report to show that about 1.35 million unemployed Americans lost emergency extended unemployment benefits after Congress allowed the program to expire at the end of 2013. As such, the size of the labor force is set to fall by almost the same amount, which would lower the official unemployment rate. Though estimates vary, the January unemployment rate could subsequently drop towards six percent (it was reported to be 6.7 percent in December). While the January number is not reported until February 7, it would not be surprising to hear the Fed address this dynamic during their meeting next week.

 

A Look at Corporate Earnings 

The composite picture for fourth quarter earnings so far supports the notion that, in many respects, earnings are coming in better than the very negative pre-season announcements let on, just as in previous quarters. However, with the Fed appearing set to potentially reduce its asset purchase program by another $10B next week, it may be that both stocks and bonds will continue to take some form of "breather," with stocks pausing after having possibly moved too far too fast last year, and interest rates backing and filling as well.

 

Upcoming Economic Announcements

Source:  Bloomberg

Day

Release

Period

Consensus

Prior

M New Homes Sales Dec 459k 464k
T Durable Goods Orders Dec 1.5% 3.4%
T S&P/Case-Shiller 20 City Home
Composite Index (MoM)
Nov 0.90% 1.05%
T Consumer Confidence Jan 77.7 78.1
W FOMC Rate Decision Jan 29 0.25% 0.25%
Th 80.45 81.23 80.04  79.75
Th Initial Jobless Claims Jan 25 326k 326k
Th GDP (QoQ Annualized) Q4 3.4% 4.1%
Th Pending Home Sales (MoM) Dec 0.3% 0.2%
F Employment Cost Index Q4 0.4% 0.4%

 

 

North Carolina 529 Investors

As of January 1, 2014, North Carolina no longer offers a state tax deduction on annual contributions to its in-state 529 college savings plan.  Previously, North Carolina taxpayers could deduct up to $2,500 for individual filers and $5,000 for joint filers.

 

 

Services Offered:

  • Business & Personal Financial Planning
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  • Retirement Plan Consulting & Design (401k)
  • Investment Programs
  • Tax & Estate Planning Strategies
  • Life, Health, Disability, and Long-Term Care Insurance
  • Medicare Supplement Plans

 

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Sumner Wealth Management,Inc. | 517 Alcove Road | Suite 202 | Mooresville | NC | 28117

(704) 660.5510 x401 | www.sumnerwealthmanagement.com | msumner@ssnrep.com

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