June - Sumner Wealth Management

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June Newsletter

 

2014

 
 

Dear Visitor,

A number of events have occured over the past month to drive the markets to a postive outcome.  Below are past and current events, along with economic outlook for the upcoming month. 

 

S&P 500 Reaches All-Time High

The S&P 500 finally broke above 1,900 to all-time highs, and the yield on the U.S. 10-Year Treasury Note drifted below 2.5 percent. Despite these breakthroughs, financial markets were fairly quiet this month, perhaps awaiting the Institute of Supply Management (ISM) surveys (manufacturing and non-manufacturing), the Non-Farm Payroll Report for May, and the European Central Bank's (ECB) monthly interest rate meeting.

 

Index Returns (%) 

Source:  Bloomberg

Index

 1 Week

YTD

1 Year

Dow Jones 30

0.67

0.85

10.60

S&P 500

1.21

4.07

17.96

Russell 2000

0.74

-2.50

15.28

MSCI EAFE

0.93

2.14

14.95

S&P GS Commodities

-1.42

3.43

8.27

U.S. Trade-Weighted $

-0.01

0.44

-3.58

 

Index Levels

Source:  Bloomberg

Index

 Current Week (5/30/14)

Prior Week (5/23/14)

Year End (12/31/13)

Year Ago

(5/31/13)

Dow Jones 30

 16,717

16,606

16,577

15,116

S&P 500

1,924

1,901

1,848

1,631

Russell 2000

1,135

1,126

1,164

984

MSCI EAFE

1,957   

1,939

1,916

1,702

S&P GS Commodities

4,995

5,067

4,830

4,614

U.S. Trade-Weighted $

 80.39

80.39

80.04

83.38

U.S. 10Yr Treasury Yield(%)

2.47

2.53

3.03 

2.13

 

Investors Awaits Updated Economic Data            

First quarter Gross Domestic Product (GDP) was revised down from 0.1 percent to a surprising -1.0 percent. Perhaps even more surprising was stocks' slightly positive response to this negative revision. With most of the drop in the revision due to inventory depletion, markets took solace that future economic growth would benefit from the need for inventories to be replenished. Given that, and with the unseasonably poor winter behind, investors will be looking to next week's releases (considered to be the two most important of the month) for confirmation of the recent improvement in economic data, such as the Conference Board's Index of Leading Indicators. 

 

Looking Ahead to the ECB's Meeting             

Since its last meeting in early May, markets have been eagerly anticipating the ECB's meeting in early June (scheduled for next Thursday). The ECB is concerned that Eurozone inflation remains too low. Every major central bank, except the ECB, has adopted some form of "money printing" policy. One move the ECB could take is to cut its interest rate. Another would be to somehow impose negative interest rates on bank deposits. Of course, the ECB could also launch a quantitative easing (QE) program of its own. Markets will be watching the ECB announcement and closely listening to ECB President Mario Draghi's press conference. Since the May meeting, President Drahgi has offered increasing confirmation that some sort of policy announcement is in the works.

 

Historical Perspective on Stock & Bond Movements           

With yields on the U.S. 10-Year Note falling below 2.5 percent, the extreme pessimism towards bonds that started 2014 has now moved more towards some measure of optimism. In addition, with the S&P 500 breaking above 1,900, near-term sentiment towards stocks has also climbed towards optimistic levels. Over the last 14 years this has been an unusual occurrence, happening less than five percent of the time (Source: Sentimentrader.com). Since 1998, bonds, and bond sentiment, have typically received a flight-to-quality boost when stocks, and stock sentiment, have fallen. However, prior to 1998 stock and bond market movements exhibited slight positive correlation, not the negative correlation experienced since the LTCM/Russian default crisis of 1998. With this in mind, the effects of any continued upswing in economic data will need to be carefully monitored going forward, not only for its effects on interest rates, but equities as well.

 

Referral Program             

The first month for the referral program resulted with some great meetings with potential clients.  These meetings were just a review of their current financial situation along with somne advice which all was free. So, for the next 5 months of the program, I am looking forward to meeting many other families/business owners who need some guidence. 

Please visit my website under the Referral Program tab for details.

 

 

Sumner Wealth Managament, Inc.

Mark Sumner

Financial Advisor

 

 

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Services Offered:

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

 

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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