March 2014 Newsletter from Sumner Wealth Management

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Wealth Management Newsletter

 

March 2014

 
 

Dear Visitor,

I hope you are well and awaiting for the arrival of Spring.  March is the month of March Madness, comes in like a lion and goes away like a lamb, and then their is a possible snow storm too.  It sounds like the market!  I expect the market to be volatile this year and I also expect a correction at some point.  If you feel your portfolio is not diverse, this would be a good time to make an appointment so we can review your current financial situation.  The review cost nothing to you, plus you will receive some great advice.

 

S&P 500 Reaches New High       

Despite some mild profit-taking at the end of the week (presumably due to escalating Russia-Ukraine tensions), equity markets enjoyed a solid week. The S&P 500 finally broke through 1,850 to join both the NASDAQ and Russell 2000 at new highs for the year. Although the Dow Jones Industrial Average also gained over one percent this week, it is lagging behind the other indices. The Dow is comprised of larger, multinational companies whose operations are more exposed to emerging market economies, which, in general, and some currencies in particular (e.g. Turkey, Argentina), have been under more stress in 2014.

Index Returns (%) 

Source:  Bloomberg

Index

 1 Week

YTD

1 Year

Dow Jones 30

1.36

-1.54

15.84

S&P 500

1.26

0.60

22.48

Russell 2000

1.55

1.64

19.25

MSCI EAFE

0.57

1.06

17.02

S&P GS Commodities

-0.14

2.85

2.70

U.S. Trade-Weighted $

-0.59

-0.33

-3.09

Index Levels

Source:  Bloomberg

Index

 Current Week (02/28/14)

Prior Week (2/21/14)

Year End (12/31/12)

Year Ago

(03/01/13)

Dow Jones 30

16,322

16,103

16,577

14,090

S&P 500

1,859

1,836

1,848

1,518

Russell 2000

1,183

1,165

1,164

915

MSCI EAFE

1,936

1,925

1,916

1,654

S&P GS Commodities

4,967

4,974

4,830

4,837

U.S. Trade-Weighted $

79.77

80.24

80.04

82.31

U.S. 10Yr Treasury Yield(%)

2.66

2.73

3.03 

1.85

Investors Expecting Economic Growth to Resume Upward Trend    

While investors may have hoped that economic growth in 2014 would gather steam in order to justify 2013's lofty returns, so far economic data has been clearly surprising to the downside. From the two most recent Non-Farm Payrolls reports, to retail sales, to housing, to industrial production, economic data for December and January has predominantly been on the soft side. So then why are equity markets mostly at new highs for the year? Investors most likely view weather-related effects on the economy as transitory, and consensus is that the weather has been much poorer than usual, thereby dampening economic activity. This consensus view was further substantiated this week by reassurances from such retailers as Macy's and WalMart, who both cited substantial weather-related store closings in January, and into February. Clearly, investors are "seeing through" the current weakness and expecting economic growth to resume an upward trend. Next week, investors will also be focused on the Institute of Supply Management Manufacturing and Non-Farm Payrolls reports for February. Since both of these reports disappointed last month, the February reports may face extra scrutiny for hints of weather-related effects on manufacturing and job creation. 

Euro-Zone Precariously Close to Deflation    

While the U.S Federal Reserve does not meet until March 18-19, the European Central Bank (ECB) meets next week on March 6. Inflation in the Euro-zone has persisted below one percent for some time now, precariously close to outright deflation. While ECB President Mario Draghi clarified this week that deflation does not currently exist in the region, he did vow that the ECB is prepared to act in case potential downside risks to price stability arise. The ECB has several tools at their disposal in order to stabilize prices, such as cutting interest rates by another 25 basis points or expanding their balance sheet (similar to the Federal Reserve's quantitative easing).

Upcoming Economic Announcements

Source:  Bloomberg

Day

Release

Period

Consensus

Prior

M

Personal Income

Jan

0.2%

0.0%

M

Personal Spending

Jan

0.1%

0.4%

M

ISM Manufacturing

Feb

52.0

51.3

W

ADP Employment Change

Feb

160k

175k

W

ISM Non-Manufacturing

Feb

53.5

54.0

Th

ECB Interest Rate Decision

Mar 6

0.25%

0.25%

Th

Initial Jobless Claims

Feb 28

338k

348k

F

Change in Non-Farm Payrolls

Feb

150k

113k

F

Change in Private Payrolls

Feb

155k

142k

F

Unemployment Rate

Feb

6.6%

6.6%

F

Consumer Credit

Jan

$14.000B

$18.756B


 

I hope you found this information beneficial and please do not hesitate to contact me with any concerns or questions.  Have a great Month!

 

Sincerely,

Mark Sumner

 

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Contact Information

(704) 660.5510 x401

msumner@ssnrep.com

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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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