Vorisek Financial Weekly Market Update for August 15, 2018

WMR Logo (002).jpg

Good morning!

The longest bull market for the S&P 500 since 1950 lasted 3,452 calendar days, i.e., the near 9 ½ years from 10/11/90 to 3/24/00.  The current bull market for the S&P 500 was 3,441 calendar days long as of last Friday 8/10/18, i.e., the approximate 9 ½ years from 3/09/09 to 8/10/18, having gained +410% (total return) or an average of +18.9% per year.  The current bull would have to continue until Wednesday 8/22/18 (i.e., just 9 days from today) to reach 3,453 calendar days (source: BTN Research).            

With 2 months to go in fiscal year 2018 (i.e., the 12 months ending 9/30/18), the US government has recorded a $684 billion deficit, larger than any full year deficit over the last 5 fiscal years (i.e., 2013-2017).  Although deficit spending is the norm for America (45 of the last 50 fiscal years have seen our outlays exceed our revenues), only 4 of our annual deficits in history have exceeded $700 billion (in 2009-2012) and they coincided with the country’s emergency plan to pump newly printed money into an ailing economy.  The current deficit occurs not as the nation pulls itself out of a prolonged contraction, but rather in the 9th year of an economic expansion (source: Treasury Department).       

US Treasury debt and mortgage-backed securities held by the Federal Reserve as of 8/01/18 totaled $4.04 trillion, down from $4.24 trillion as of 8/02/17.  The $200 billion reduction is the result of the Fed’s plan that started in October 2017 that allowed billions of dollars of Treasury bonds to mature each month without reinvesting the principal.  With an increasing supply of Treasury bonds at auction and one fewer buyer (the Fed) in the game, interest rates may be poised to rise (source: BTN Research).   

Notable Numbers for the Week:

  1. HEALTHY GAIN - The total market capitalization of the US stock market was $31.1 trillion as of 7/31/18.  At its bear market low on 3/09/09, the total US market capitalization was $7.6 trillion (source: Wilshire). 

  2. NOT AS OPTIMISTIC - 65% of Americans surveyed in July 2018 think “it’s a good time to buy a house.”  That percentage was as high as 83% in December 2014 and hasn’t been as low as 65% since December 2008 (source: University of Michigan Surveys of Consumers).

  3. TRILLIONS - The size of the US economy reached $2.5 trillion in 1979, doubled to $5 trillion in 1988, doubled again to $10 trillion in 2000, and finally doubled again to $20 trillion in 2018 (source: OMB).  

  4. NOT THE USA - There are 10 countries in the world that currently maintain the top credit rating from each of the 3 major credit rating agencies, including Canada, Germany and Sweden (source: Trading Economics).

This message and any attachments contain information, which may be confidential and/or privileged, and is intended for use only by the addressee(s) named on this transmission. If you are not the intended recipient, or the employee or agent responsible for delivering the message to the intended recipient, you are notified that any review, copying, distribution or use of this transmission is strictly prohibited. If you have received this transmission in error, please (i) notify the sender immediately by email or by telephone and (ii) destroy all copies of this message. If you do not wish to receive marketing e-mails from this sender, please reply to this email with the word REMOVE in the subject line. By industry regulation, we cannot accept time-sensitive information via e-mail. If you would like to execute a trade or if you have time sensitive information for me, please call my office. We cannot guarantee receipt of, nor the timing of placement, for investment orders received via e-mail.

If you do not want to receive further editions of this weekly newsletter, please contact Jayne Weddington at 614-431-4328 or e-mail us at info@vorfin.com.  You may also write us at 300 W. Wilson Bridge Rd., Suite 320, Worthington, OH 43085. Securities and Investment Advisory Services offered through FSC Securities Corp., a broker/dealer and registered investment advisor. Member FINRA/SIPC. Vorisek Financial Corporation is not affiliated with FSC Securities Corporation or registered as a broker dealer or investment advisor.

Vorisek Financial Weekly Market Update for August 8, 2018

WMR Logo (002).jpg

Good morning!

Economists can debate if the +157,000 new net hires by US employers in July 2018 was enough to keep up with the growing American labor force.  What is not up for debate is how much better off millions of workers are today.  There are 6.28 million out-of-work Americans as of 7/31/18, equal to a 3.9% jobless rate (i.e., 156.0 million Americans have jobs).  Just 9 years ago (7/31/09), 14.60 million Americans were out of work and the nation’s unemployment rate was 9.5%, on its way to a peak jobless rate of 10% in October 2009 (source: Department of Labor).        

The American economy, by many measurements, is booming: robust growth of +4.1% in the 2nd quarter 2018; an unemployment rate of just 3.9%; a domestic stock market (using the S&P 500 as the benchmark) that is up +7.4% YTD (total return); a nearly 9 ½ year bull market run for stocks that has produced an annualized return of +19.0% per year; an increase of +1.8 million new homeowners in just the last 12 months.  Coming out of the Great Recession of 2008-09, Americans that had money in real estate and in stocks have flourished (source: BTN Research).             

The last bank in the US to fail and require a federal bailout occurred nearly 8 months ago.  During the 3 years 2009-11, a staggering 389 banks failed, an average of 11 per month.  Of the 536 bank failures that have occurred in the USA during the 15 years ending 7/31/18, more than half have taken place in just 4 states.  51% of the bank failures (271) have happened in Georgia (92), Florida (73), Illinois (66) and California (40) (source: Federal Deposit Insurance Corporation). 

Notable Numbers for the Week:

  1. WHAT HAVE YOU DONE LATELY? - Of the 27 stocks in the S&P 500 index that gained at least +60% in 2017, 9 of those stocks have a negative return YTD through 7/31/18 (source: BTN Research).

  2. SIGNIFICANT - 19% of the US population is currently receiving a monthly benefit payment from Social Security, i.e., 62 million beneficiaries out of 328 million Americans (source: Social Security).  

  3. OVERSPEND - During the first 7 months of 2018 (i.e., 1/01/18 to 7/31/18), the total outstanding debt of the US government increased by $820 billion to $21.313 trillion (source: Treasury Department).  

  4. MID-TERMS - Democrats lost 63 House seats and 6 Senate seats in the November 2010 elections, i.e., the first mid-terms during the Obama administration.  The first mid-terms during the Trump administration will take place on 11/06/18 or 3 months from today (source: Congress). 

This message and any attachments contain information, which may be confidential and/or privileged, and is intended for use only by the addressee(s) named on this transmission. If you are not the intended recipient, or the employee or agent responsible for delivering the message to the intended recipient, you are notified that any review, copying, distribution or use of this transmission is strictly prohibited. If you have received this transmission in error, please (i) notify the sender immediately by email or by telephone and (ii) destroy all copies of this message. If you do not wish to receive marketing e-mails from this sender, please reply to this email with the word REMOVE in the subject line. By industry regulation, we cannot accept time-sensitive information via e-mail. If you would like to execute a trade or if you have time sensitive information for me, please call my office. We cannot guarantee receipt of, nor the timing of placement, for investment orders received via e-mail.

If you do not want to receive further editions of this weekly newsletter, please contact Jayne Weddington at 614-431-4328 or e-mail us at info@vorfin.com.  You may also write us at 300 W. Wilson Bridge Rd., Suite 320, Worthington, OH 43085. Securities and Investment Advisory Services offered through FSC Securities Corp., a broker/dealer and registered investment advisor. Member FINRA/SIPC. Vorisek Financial Corporation is not affiliated with FSC Securities Corporation or registered as a broker dealer or investment advisor.

Vorisek Financial Weekly Market Update for August 1, 2018

WMR Logo (002).jpg

Good morning!

The real estate crisis that exploded across the globe more than a decade ago forced an untold number of Americans (mostly Millennials) to delay their purchase of the “American Dream” – owning a home.  Over the 10 years from 6/30/07 to 6/30/17, the number of “renter” households in the USA increased by 8.4 million to 43.4 million (up +24%), while the number of “owner” households was flat, increasing by just 0.9 million to 76.1 million (up just +1%).  However, over just the last year (the 12 months from 6/30/17 to 6/30/18), the trend has reversed as the number of “renter” households actually declined by 0.1 million to 43.3 million, while the number of “owner” households jumped by 1.8 million to 77.9 million (source: Census Bureau).                

The race towards a global trade war slowed last Wednesday (7/25/18) when US President Donald Trump and European Union President Jean-Claude Juncker announced the establishment of a “joint executive working group” that would focus on lowering tariffs between the US and the 28-nation EU, the 2 largest trading blocks in the world representing just under half of the globe’s economy.  Unsaid but clearly implicit in their post-meeting statement was the coordination of the US and the EU against Chinese trade violations, always the end target of the Trump White House (source: BTN Research). 

The US economy grew by +4.1% in the 2nd quarter 2018, i.e., quarter-over-quarter increase expressed as an annualized result, the best performance during the Trump administration.  In the last dozen years (48 quarters), there have been just 4 quarters that reported a higher growth rate (source: Commerce Department).  

Notable Numbers for the Week:

  1. A WILD TIME - The 10 best trading days for the S&P 500 in the last 10 years (i.e., 7/01/08 to 6/30/18) all occurred between 7/01/08 and 3/31/09, i.e., the first 9 months of the last 10 years.  The 9 months match the 8 months before and the 1 month after a “bear” market that ended on 3/09/09 (source: BTN Research). 

  2. ALREADY HAPPENING - Before the Trump White House began threatening to impose trade tariffs, the United States already was imposing a 2.5% tariff on imported foreign vehicles.  American autos exported to the 28-nation European Union were already subject to a 10% tariff (source: BTN Research).

  3. IT’S A GLOBAL MARKETPLACE - The companies in the S&P 500 received 43% of their 2016 sales from foreign customers (source: S&P Global Inc.)

  4. INSURED PROPERTY - Property and casualty insurers paid out a record $135 billion globally in 2017, the highest amount ever.  Catastrophes included hurricanes, earthquakes and wildfires (source: Munich Re).  

This message and any attachments contain information, which may be confidential and/or privileged, and is intended for use only by the addressee(s) named on this transmission. If you are not the intended recipient, or the employee or agent responsible for delivering the message to the intended recipient, you are notified that any review, copying, distribution or use of this transmission is strictly prohibited. If you have received this transmission in error, please (i) notify the sender immediately by email or by telephone and (ii) destroy all copies of this message. If you do not wish to receive marketing e-mails from this sender, please reply to this email with the word REMOVE in the subject line. By industry regulation, we cannot accept time-sensitive information via e-mail. If you would like to execute a trade or if you have time sensitive information for me, please call my office. We cannot guarantee receipt of, nor the timing of placement, for investment orders received via e-mail.

If you do not want to receive further editions of this weekly newsletter, please contact Jayne Weddington at 614-431-4328 or e-mail us at info@vorfin.com.  You may also write us at 300 W. Wilson Bridge Rd., Suite 320, Worthington, OH 43085. Securities and Investment Advisory Services offered through FSC Securities Corp., a broker/dealer and registered investment advisor. Member FINRA/SIPC. Vorisek Financial Corporation is not affiliated with FSC Securities Corporation or registered as a broker dealer or investment advisor.

Vorisek Financial Weekly Market Update for July 25, 2018

WMR Logo (002).jpg

Good morning!

For the week ending 7/13/18, the domestic production of crude oil in the United States reached 11.0 million barrels a day, the highest volume ever generated in America.  That total is more than double the 5.1 million barrels of oil the US produced just 10 years ago.  But our economy, the world’s largest, still required daily imports of 9.1 million barrels of crude, 40% of which is imported from Canada (source: Department of Energy).   

The US may be pressing ahead with tariffs on another $500 billion of Chinese imports coming into the United States, but elsewhere many trade duties are being eliminated.  The 28-nation European Union and Japan signed an agreement last week in Tokyo (completed after 5 years of negotiations) to eliminate about 99% of the tariffs on Japanese goods sold to the EU countries, and in turn about 99% of the tariffs on EU exports headed to Japan will also be lifted.  Speculation is being voiced on Wall Street as to whether investors can expect to see a “Powell Put” (i.e., a lowering of interest rates by the Fed to counteract stock market tumbles due to an escalating trade war), much like the recurring “Bernanke Put” that came to the rescue of the US economy in 2007-08 (source: BTN Research).    

4 East Coast states (New York, Connecticut, Maryland and New Jersey) filed suit last week against the federal government, claiming that the $10,000 “state and local tax” (SALT) deduction limitation that is part of the 2017 “Tax Cuts and Jobs Act” is an “unconstitutional assault” on its residents.  At issue is the legality of the arrangement in which state taxpayers make a “charitable contribution” to a fund set up by their city, allowing them to receive a “tax credit” against their property taxes.  Just 6 states nationally get 51% of the SALT deduction’s use (source: Internal Revenue Service).                  

Notable Numbers for the Week:

  1. EIGHT IN TWENTY - The S&P 500 has had 8 declines of at least 10% but less than 20% over the last 20 years.  The last 10% “correction” ended on 2/08/18 or 5 ½ months ago (source: BTN Research).  

  2. GOOD BANKS - As of last Friday (7/20/18), there has not been a bank failure in the United States in 217 days (i.e., more than 7 months) that required a federal bailout from the FDIC.  That the longest stretch between bank failures since 9/28/07 or nearly 11 years ago (source: Federal Deposit Insurance Corporation). 

  3. TOP SHELF INCOME - 1 out of every 22 individual income tax returns (4.5%) filed for tax year 2015 reported adjusted gross income of at least $200,000 (source: Internal Revenue Service).

  4. NO COMMUTE NECESSARY - 23% of American workers did some of their work or all their work from home in 2017 (source: Department of Labor).

This message and any attachments contain information, which may be confidential and/or privileged, and is intended for use only by the addressee(s) named on this transmission. If you are not the intended recipient, or the employee or agent responsible for delivering the message to the intended recipient, you are notified that any review, copying, distribution or use of this transmission is strictly prohibited. If you have received this transmission in error, please (i) notify the sender immediately by email or by telephone and (ii) destroy all copies of this message. If you do not wish to receive marketing e-mails from this sender, please reply to this email with the word REMOVE in the subject line. By industry regulation, we cannot accept time-sensitive information via e-mail. If you would like to execute a trade or if you have time sensitive information for me, please call my office. We cannot guarantee receipt of, nor the timing of placement, for investment orders received via e-mail.

If you do not want to receive further editions of this weekly newsletter, please contact Jayne Weddington at 614-431-4328 or e-mail us at info@vorfin.com.  You may also write us at 300 W. Wilson Bridge Rd., Suite 320, Worthington, OH 43085. Securities and Investment Advisory Services offered through FSC Securities Corp., a broker/dealer and registered investment advisor. Member FINRA/SIPC. Vorisek Financial Corporation is not affiliated with FSC Securities Corporation or registered as a broker dealer or investment advisor.

Vorisek Financial Weekly Market Update for July 18, 2018

WMR Logo (002).jpg

Good morning!

Strong economies need crude oil to feed their growth.  But disruptions in Africa (Libya) and North America (Canada) are raising concerns about the world supply of oil: will the top producers of crude (Saudi Arabia, Russia, and the United States) be able to increase their output to make up the difference?  The fear is that a reduced supply of oil could lead to higher prices which can reduce global consumption.  The 3 largest oil consumers worldwide are the USA, China and India (source: International Energy Agency).     

US tariffs that have been in place for 6 weeks have not dented investor enthusiasm for domestic stocks at this time.  The S&P 500 finished last week at 2801, its highest close since 2/01/18, and the tech-dominated NASDAQ Composite closed at 7826, its highest closing value ever.  Stock buyers may believe a self-inflicted trade war is a battle that the United States can win, tilting the corporate playing field in favor of American exporters.  The reality is that our nearly 9 ½ year old bull market will change direction at some point, but it didn’t happen last week (source: BTN Research).                

Anthony Kennedy, the longest serving current Supreme Court justice, is retiring at the end of this month.  Kennedy’s 30 ½ years on the nation’s top judicial court ranks him as the 14th longest serving justice in history.  4 of the 9 current justices have served at least 23 years.  Supreme Court justices have “life tenure” (source: Supreme Court).      

Notable Numbers for the Week:

  1. DOLLARS IN, DOLLARS OUT - After 9 months of fiscal year 2018 (i.e., the 9 months ending 6/30/18), the USA has collected $1 of tax receipts for every $1.24 of outlays, creating a deficit to date of $607 billion (source: Treasury Department).

  2. CAPITALIST WITH A CONSCIENCE - 6 out of 7 Millennials (86%) would “consider” taking a cut in pay in order to work for a company that follows “a mission and values” that aligned with their own.  Millennials were born between 1981-97 and are age 21-37 in 2018 (source: LinkedIn Workplace Culture Trends).

  3. REPETITIVE PROCESS - 40% of the robots used in the United States today are in the auto industry (source: Department of Transportation).  

  4. HEAD SOUTH FOR WORK - The government divides the USA into 4 geographical areas: Northeast, South, Midwest and West.  As of May 2018, the Northeast states had 1.075 million job openings while the states in the South had 2.432 million job openings.  The total number of job openings nationwide: 6.638 million (source: Department of Labor).        

This message and any attachments contain information, which may be confidential and/or privileged, and is intended for use only by the addressee(s) named on this transmission. If you are not the intended recipient, or the employee or agent responsible for delivering the message to the intended recipient, you are notified that any review, copying, distribution or use of this transmission is strictly prohibited. If you have received this transmission in error, please (i) notify the sender immediately by email or by telephone and (ii) destroy all copies of this message. If you do not wish to receive marketing e-mails from this sender, please reply to this email with the word REMOVE in the subject line. By industry regulation, we cannot accept time-sensitive information via e-mail. If you would like to execute a trade or if you have time sensitive information for me, please call my office. We cannot guarantee receipt of, nor the timing of placement, for investment orders received via e-mail.

If you do not want to receive further editions of this weekly newsletter, please contact Jayne Weddington at 614-431-4328 or e-mail us at info@vorfin.com.  You may also write us at 300 W. Wilson Bridge Rd., Suite 320, Worthington, OH 43085. Securities and Investment Advisory Services offered through FSC Securities Corp., a broker/dealer and registered investment advisor. Member FINRA/SIPC. Vorisek Financial Corporation is not affiliated with FSC Securities Corporation or registered as a broker dealer or investment advisor.

Vorisek Financial Weekly Market Update for July 11, 2018

WMR Logo (002).jpg

Good morning!

Washington political decisions are intersecting significantly with the global supply of oil.  The State Department announced last week its intention to cut off all Iranian oil exports by November 2018, i.e., driving the rogue nation’s oil exports from 2.5 million barrels a day to zero.  The attempt to financially squeeze Iran will greatly test the strength of the White House relationship with China and India, the primary importers of Iranian crude.  To replace Iran’s oil in the global market, President Trump is pressuring Saudi Arabia to increase its oil production by 2 million barrels a day, action that OPEC’s largest player could achieve within 6 months but not without additional drilling and expense.  The price of oil closed at $73.80 a barrel last week, up +23% YTD (source: BTN Research). 

Tariffs on an estimated $34 million of Chinese imports went into effect at midnight Washington time last Thursday night (7/05/18), impacting 818 different Chinese products.  Additional tariffs will target as much as $216 million of Chinese imports in the coming months should China retaliate against the US.  To the surprise of many stock market watchers as the 2 largest global economies careen towards a possible trade war, the S&P 500 shrugged off the conflict and gained ground last week with the index closing last Friday up +4.3% YTD (total return) (source: BTN Research).                  

The November mid-term congressional elections, set for 11/06/18, are less than 4 months away.  The S&P 500 gained just +2.2% (total return) in the 4 months leading up to the 2014 mid-terms, a fraction of the +16.0% gained in the 4 months leading up to the 2010 mid-terms (source: BTN Research).       

Notable Numbers for the Week:

  1. HOW HIGH ARE YOURS? - 45 US states collect statewide sales taxes, i.e., 5 states (Alaska, Delaware, Montana, New Hampshire and Oregon) have no state sales tax.  California has the highest state sales tax (7.25%) in the nation (source: Tax Foundation). 

  2. FEWER LINES - A draft of the new Form 1040 for tax year 2018 released in late June 2018 has just 23 lines, compared to 79 lines on the existing Form 1040 tax form (source: Internal Revenue Service).   

  3. KIDS COST MONEY - The annual household costs of a family with 2 adults and 2 children is 140% of the annual household costs of a family with 2 adults and no children (source: Organization for Economic Cooperation and Development). 

  4. NEXT CENTURY - With a life expectancy of 81.3 years, a baby girl born in the United States next year (2019) could anticipate living until the year 2100 (source: National Vital Statistics Reports). 

This message and any attachments contain information, which may be confidential and/or privileged, and is intended for use only by the addressee(s) named on this transmission. If you are not the intended recipient, or the employee or agent responsible for delivering the message to the intended recipient, you are notified that any review, copying, distribution or use of this transmission is strictly prohibited. If you have received this transmission in error, please (i) notify the sender immediately by email or by telephone and (ii) destroy all copies of this message. If you do not wish to receive marketing e-mails from this sender, please reply to this email with the word REMOVE in the subject line. By industry regulation, we cannot accept time-sensitive information via e-mail. If you would like to execute a trade or if you have time sensitive information for me, please call my office. We cannot guarantee receipt of, nor the timing of placement, for investment orders received via e-mail.

If you do not want to receive further editions of this weekly newsletter, please contact Jayne Weddington at 614-431-4328 or e-mail us at info@vorfin.com.  You may also write us at 300 W. Wilson Bridge Rd., Suite 320, Worthington, OH 43085. Securities and Investment Advisory Services offered through FSC Securities Corp., a broker/dealer and registered investment advisor. Member FINRA/SIPC. Vorisek Financial Corporation is not affiliated with FSC Securities Corporation or registered as a broker dealer or investment advisor.

Vorisek Financial Weekly Market Update for June 27, 2018

WMR Logo (002).jpg

Good morning!

With 1 trading week remaining in the first half of 2018, the S&P 500 is up +4.0% YTD (total return) through Friday 6/22/18.  Over the last 25 years (i.e., 1993-2017), the S&P 500 has produced an average gain of +9.7% per year.  The first 6 months of the year (i.e., January-June) have gained an average of +4.5% over the last 25 years.  The stock index has experienced much success in the 2nd half of the year as it has closed at its calendar year high during the final 6 months of the year (i.e., July-December) 74% of the time since 1950.  In 15 of the last 25 years, the index’s calendar year high has occurred during the month of December (source: BTN Research).          

For the last 35 years (1983-2017), the total income of our nation’s Social Security program (i.e., payroll taxes collected plus interest income) has exceeded the total cost of the program (i.e., benefits paid out plus administrative expenses), a streak that has been projected to end in 2018.  Total Social Security program benefits forecasted to be paid out in 2018: $992 billion or $2.7 billion per day (source: Trustees Report 2018). 

The world has been bracing for a trade war for months as multiple countries have promised to match US tariffs dollar-for-dollar.  The potential impact on American manufacturers, farmers and consumers will play out in the coming months.  American consumers bought $2.41 trillion of imported goods in calendar year 2017.  22% of that total ($526 billion) were purchases of Chinese products, including cell phones, computers and TVs (source: Commerce Department).      

Notable Numbers for the Week:

  1. THE SAME NUMBER - There are as many Americans with outstanding student loan debt (45 million) as there are retired American workers (45 million) who are receiving monthly Social Security retirement benefits (source: Social Security Trustees Report 2018). 

  2. OLDER FOLKS - The population of the United States has doubled since 1950, while the number of Americans at least age 65 has quadrupled since 1950 (source: Social Security).      

  3. BOYS AND GIRLS - A baby girl born in the United States in 2017 has a “life expectancy at birth” of 81.4 years, 55 months longer than the “life expectancy at birth” (76.8 years) of an American baby boy born last year (source: Social Security).

  4. BEFORE TRADE DISPUTES - US farm income has dropped by 52% over the last 5 years because of falling commodity prices (source: Department of Agriculture).

This message and any attachments contain information, which may be confidential and/or privileged, and is intended for use only by the addressee(s) named on this transmission. If you are not the intended recipient, or the employee or agent responsible for delivering the message to the intended recipient, you are notified that any review, copying, distribution or use of this transmission is strictly prohibited. If you have received this transmission in error, please (i) notify the sender immediately by email or by telephone and (ii) destroy all copies of this message. If you do not wish to receive marketing e-mails from this sender, please reply to this email with the word REMOVE in the subject line. By industry regulation, we cannot accept time-sensitive information via e-mail. If you would like to execute a trade or if you have time sensitive information for me, please call my office. We cannot guarantee receipt of, nor the timing of placement, for investment orders received via e-mail.

If you do not want to receive further editions of this weekly newsletter, please contact Jayne Weddington at 614-431-4328 or e-mail us at info@vorfin.com.  You may also write us at 300 W. Wilson Bridge Rd., Suite 320, Worthington, OH 43085. Securities and Investment Advisory Services offered through FSC Securities Corp., a broker/dealer and registered investment advisor. Member FINRA/SIPC. Vorisek Financial Corporation is not affiliated with FSC Securities Corporation or registered as a broker dealer or investment advisor.

Vorisek Financial Weekly Market Update for June 20, 2018

WMR Logo (002).jpg

Good morning!

If the 2007-08 US economy was a “patient” in free-fall, the “medicine” provided by the Federal Reserve was to reduce interest rates to historically low levels to stimulate borrowing and spending by American consumers.  The action, unprecedented in our nation’s history, kept the cost of borrowing at near zero for 7 years until December 2015.  In the subsequent 2 ½ years, the Fed has raised short-term rates 7 times (including last week’s rate hike) and has signaled another 5 possible rate hikes by the end of 2019.  Their logic: the “patient” is now experiencing accelerating growth and rapid job creation, causing the Fed to turn its concern to the possibility of rising inflation and its inherent problems (source: BTN Research).                   

The spread between the 10-year Treasury note yield and the 2-year Treasury note yield fell to just 35 basis points last Thursday 6/14/18, i.e., 2.94% less 2.59%, the tightest spread between the 2 debt instruments since 8/27/07 or almost 10-years ago.  Some, but not all market watchers believe that if expectations for interest rates for the next 2 years are growing, but not expectations for the next 10 years, the implication is that the bond market thinks the Fed will go “too far” in raising short-term rates, leading to a slower US economy and thus lower yields on the longer-end of the curve (source: BTN Research).  

Oil production in the United States reached 10.9 million barrels per day for the week ending 6/08/18, the highest level recorded for our country per records that have been maintained since 1920 or nearly a century ago.  Oil production 10 years ago (June 2008) was just 5.1 million barrels per day (source: US Energy Information Administration). 

Notable Numbers for the Week:

  1. TO AGE NINETY - 25% of Americans that reach age 65 will live at least another 25 years to age 90 (source: Social Security Administration). 

  2. LOTS OF RULES - Medicare covers the cost of 100 days of care at a “skilled nursing facility.”  A new 100-day benefit clock begins if the patient has gone 60 days without requiring a “skilled level of care” (source: Medicare).  

  3. SURPRISE - 23% of households headed by individuals at least age 75 will experience an “extraordinary” out-of-pocket medical expense of at least 1% of household income this year (source: JP Morgan Chase & Co. Institute). 

  4. A FORCE - China has more millennials (400 million) than the population of the United States (328 million).  Millennials were born between 1981-97 and are age 21-37 in 2018 (source: Financial Times).

This message and any attachments contain information, which may be confidential and/or privileged, and is intended for use only by the addressee(s) named on this transmission. If you are not the intended recipient, or the employee or agent responsible for delivering the message to the intended recipient, you are notified that any review, copying, distribution or use of this transmission is strictly prohibited. If you have received this transmission in error, please (i) notify the sender immediately by email or by telephone and (ii) destroy all copies of this message. If you do not wish to receive marketing e-mails from this sender, please reply to this email with the word REMOVE in the subject line. By industry regulation, we cannot accept time-sensitive information via e-mail. If you would like to execute a trade or if you have time sensitive information for me, please call my office. We cannot guarantee receipt of, nor the timing of placement, for investment orders received via e-mail.
If you do not want to receive further editions of this weekly newsletter, please contact Jayne Weddington at 614-431-4328 or e-mail us at info@vorfin.com.  You may also write us at 300 W. Wilson Bridge Rd., Suite 320, Worthington, OH 43085. Securities and Investment Advisory Services offered through FSC Securities Corp., a broker/dealer and registered investment advisor. Member FINRA/SIPC. Vorisek Financial Corporation is not affiliated with FSC Securities Corporation or registered as a broker dealer or investment advisor.

Vorisek Financial Weekly Market Update for June 13, 2018

WMR Logo (002).jpg

Good morning!

In 1983, Alan Greenspan had yet to begin his 18 ½ year run as Fed Chairman (that started 4 years later in August 1987).  Yet it was in 1983 (35 years ago), that Greenspan first left his financial footprint when he chaired a committee that recommended changes to Social Security that were successfully passed in Congress.  The modifications – pushing back the “normal retirement age” and raising the payroll tax rate – saved the Social Security program from looming insolvency and added a projected 75 years to its lifespan.  Greenspan-type leadership is needed again in 2018.  Last week’s release of the annual Social Security Trustees report stated that “if substantial actions are deferred for several years, the changes necessary to maintain Social Security solvency would be concentrated on fewer years and fewer generations” (source: Social Security Trustees 2018 Report).         

The US trade deficit, i.e., imports exceeding exports, was $46.2 billion in April 2018, our smallest monthly deficit since September 2017.  What’s driving the shrinking deficit – rising exports.  US corporations exported $211.2 billion of goods and services in April, an all-time monthly record for the United States (source: Commerce Department).      

Conventional Wall Street wisdom says that stocks suffer during rising interest rate periods.  The Federal Reserve has raised short-term interest rates 6 times since 12/16/15 (i.e., over the last 30 months), for a total increase of 1.5 percentage points.  Yet over that 2 ½ year period (12/16/15 to last Friday 6/08/18), the S&P 500 has gained +41.1% (total return), an average return of +14.9% per year (source: BTN Research).  

Notable Numbers for the Week:

  1. MORE AND MORE OF THE STATE BUDGET - The 5 retirement systems supporting defined benefit pension plans for state workers in Illinois will require a fiscal year 2019 (i.e., the 12 months that begin 7/01/18) contribution of $8.5 billion, more than triple the $2.8 billion contributed in fiscal year 2009 (source: State of Illinois).  

  2. FIND A NEW BUYER – Since Janet Yellen announced on 9/20/17 a plan to shrink the Fed’s balance sheet by having bonds mature without reinvesting the principal into newly issued bonds, the “securities held outright” by the Fed have declined by $117 billion to $4.1 trillion (source: Federal Reserve). 

  3. NOT SO GOLDEN - 46% of the San Francisco Bay Area residents surveyed plan to move from California within the “next few years” primarily due to the cost of housing and traffic (source: Bay Area Council poll). 

  4. EMAIL – If passed, HR 4610 (“Receiving Electronic Statements to Improve Retiree Earnings Act”) would eliminate the 1974 ERISA requirement to deliver hardcopy retirement plan documents to participants (source: House).

This message and any attachments contain information, which may be confidential and/or privileged, and is intended for use only by the addressee(s) named on this transmission. If you are not the intended recipient, or the employee or agent responsible for delivering the message to the intended recipient, you are notified that any review, copying, distribution or use of this transmission is strictly prohibited. If you have received this transmission in error, please (i) notify the sender immediately by email or by telephone and (ii) destroy all copies of this message. If you do not wish to receive marketing e-mails from this sender, please reply to this email with the word REMOVE in the subject line. By industry regulation, we cannot accept time-sensitive information via e-mail. If you would like to execute a trade or if you have time sensitive information for me, please call my office. We cannot guarantee receipt of, nor the timing of placement, for investment orders received via e-mail.  If you do not want to receive further editions of this weekly newsletter, please contact Jayne Weddington at 614-431-4328 or e-mail us at info@vorfin.com.  You may also write us at 300 W. Wilson Bridge Rd., Suite 320, Worthington, OH 43085. Securities and Investment Advisory Services offered through FSC Securities Corp., a broker/dealer and registered investment advisor. Member FINRA/SIPC. Vorisek Financial Corporation is not affiliated with FSC Securities Corporation or registered as a broker dealer or investment advisor.

Vorisek Financial Weekly Market Update for June 6, 2018

WMR Logo (002).jpg

Good morning!

Despite growing trade tensions, US stocks advanced late last week, surprising many investors.  The “temporary exemptions” from the steel and aluminum tariffs that had previously been granted to Canada, Mexico and the 28 nations of the European Union all expired last Friday (6/01/18), setting the stage for retaliatory tariffs on a range of US exports.  Instead of being scared off however, stock investors were boosted by the news of a North Korea/US summit that is back on the calendar for next week and a May 2018 American jobless rate of only 3.8%.  The US has not reported a lower unemployment rate since December 1969 (source: Department of Labor).              

The monthly collection of jobs data in the USA is a combination of science and art.  60,000 American households are asked to complete employment surveys by the 12th of the month.  The employment status of the individuals in those 60,000 households is then extrapolated to project national figures for our country’s actual 120 million households, i.e., just 1 out of every 2,000 households provides the data that determined May’s 3.8% jobless rate (source: Department of Labor).  

On 11/30/16 with the price of oil at $49.44 a barrel, the 14-members of OPEC agreed to slash production by 1.2 million barrels a day, along with additional cuts of 600,000 barrels a day from non-OPEC member countries (including Russia) – a combined reduction of 1.8 million barrels a day.  OPEC and Russian oil officials will discuss boosting the global oil supply by 1 million barrels a day when they meet on 6/22/18.  The price of oil closed at $65.81 a barrel on Friday 6/01/18 (source: BTN Research).      

Notable Numbers for the Week:

  1. JUST THREE - The top company in the Fortune 500, an annual evaluation based upon total revenues for the previous calendar year, has been held by just 3 different companies over the 63 years that the magazine has published the rankings (source: Fortune).

  2. STRONG BANKS - No US banks failed during the first 5 months of 2018 (January-May), the first time that has occurred since 2006.  Since 2007, 531 banks have failed, an average of 48 per year over the last 11 years (source: FDIC).  

  3. THEY REALLY OWE NOTHING - An estimated 45% of the 176.1 million tax returns projected to be filed next year for tax year 2018 will legally pay zero federal income tax (source: Tax Policy Center).

  4. JUST IN TIME FOR SUMMER TRAVEL - The Euro was worth $1.1685 as of 5/31/18, down from $1.2012 as of 12/31/17, i.e., Euro down and US dollar up.  A stronger greenback means Americans will pay less to travel in Europe this summer (source: BTN Research).

This message and any attachments contain information, which may be confidential and/or privileged, and is intended for use only by the addressee(s) named on this transmission. If you are not the intended recipient, or the employee or agent responsible for delivering the message to the intended recipient, you are notified that any review, copying, distribution or use of this transmission is strictly prohibited. If you have received this transmission in error, please (i) notify the sender immediately by email or by telephone and (ii) destroy all copies of this message. If you do not wish to receive marketing e-mails from this sender, please reply to this email with the word REMOVE in the subject line. By industry regulation, we cannot accept time-sensitive information via e-mail. If you would like to execute a trade or if you have time sensitive information for me, please call my office. We cannot guarantee receipt of, nor the timing of placement, for investment orders received via e-mail.

If you do not want to receive further editions of this weekly newsletter, please contact Jayne Weddington at 614-431-4328 or e-mail us at info@vorfin.com.  You may also write us at 300 W. Wilson Bridge Rd., Suite 320, Worthington, OH 43085. Securities and Investment Advisory Services offered through FSC Securities Corp., a broker/dealer and registered investment advisor. Member FINRA/SIPC. Vorisek Financial Corporation is not affiliated with FSC Securities Corporation or registered as a broker dealer or investment advisor.