Vorisek Financial Weekly Market Update for February 20, 2019

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Good morning!

Congress came close to yet another self-inflicted shutdown (it would have been our 4th in just the last 13 months), but a hard-fought compromise between Washington lawmakers finally provided a spending plan for fiscal year (FY) 2019.  Most of the media attention has been directed at 2% of the $61.6 billion allocated to the Department of Homeland Security (i.e., the $1.375 billion earmarked for a border security wall), but 82% of the $333 billion, 1,169-page bill detailed the FY 2019 spending approved for 8 other federal departments, including the State Department, Commerce Department and the Department of Housing and Urban Development (source: BTN Research).          

The 2 economic superpowers in the world – the USA and China – have just 10 days to end the trade war that began 7 months ago in July 2018.  Negotiators for both countries spent last week in Beijing and now have moved the talks to Washington D.C. this week.  If the 2 countries don’t come to an agreement by Friday 3/01/19 or agree to extend that deadline, US-imposed tariffs on $200 billion of Chinese imports will more than double to 25% from 10% currently (source: BTN Research).

Retail spending nationwide (technically “Retail & food services” spending) fell 1.2% in December 2018 to $506 billion, the largest month-over-month percentage drop in the USA since September 2009.  But that unexpected report, suggesting that the American consumer may be backing up, failed to derail the US stock market.  The S&P 500 is up +11.0% YTD (total return) through the first 7 weeks of 2019 (source: BTN Research).            

Notable Numbers for the Week:

  1. COUNTRY IN CHAOS - Venezuela has the largest estimated oil reserves in the world (301 billion barrels), nearly 8 times the estimated reserves of the United States (39 billion) (source: World Atlas). 

  2. THE RICHEST FIVE PERCENT - The top 5% of US taxpayers in tax year 2016 (the latest year for which tax data has been released) made at least $197,651 of adjusted gross income (AGI), received 35% of all AGI nationwide and paid 58% of all the federal income tax paid by Americans (source: IRS). 

  3. BORROWING - The US government has maintained financial records since 1789, i.e., 230 years.  From 1789 to 3/16/09 (220 years), our government created $11 trillion of debt.  From 3/16/09 to 2/11/19, i.e., the last 10 years, our government created another $11 trillion of debt, reaching a record $22 trillion (source: Treasury Department).    

  4. EXPENSIVE EDUCATION - Outstanding student loan debt in the USA was $1.46 trillion as of 12/31/18, up +128% from $640 billion as of 12/31/08 (source: Federal Reserve Bank of New York). 

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 February 13, 2019

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Good morning!

It was less than 2 months ago (12/19/18) that the Federal Reserve raised short-term interest rates for the 4th time in 2018 and released a post-meeting statement that indicated 2 more rate hikes were likely to occur in 2019.  In spite of that message, bond market watchers had already begun to suspect that support for those rate hikes was waning, suspicions that were validated when the Fed’s public statement following their most recent 1/30/19 meeting suggested that their next interest rate move could be “down” instead of “up.”  Over the last 30 years, the shortest span of time between the end of a rate-tightening cycle (i.e., raising rates) and the first Fed easing (i.e., cutting rates) was just 3 meetings over 5 months in 1995, i.e., a 2/01/95 rate hike to a 7/06/95 rate cut (source: Federal Reserve).         

It has been an unexpected gift for the American housing industry: the average interest rate nationwide on a 30-year fixed rate mortgage was 4.41% last week, down more than ½ of 1% (from 4.94%) in just the last 3 months.  That lower interest rate translates into a “principal and interest” payment on a $300,000 mortgage that is nearly $100 a month less, i.e., $1,504 per month compared to $1,599 per month (source: Freddie Mac). 

The bull market for stocks is now inside of a month to its 10-year anniversary that will be achieved on 3/09/19.  The current bull run for the S&P 500, already the longest in US history, will need a continuation of the expansion of corporate profits to keep the bull running (source: BTN Research). 

Notable Numbers for the Week:

1.     SHORT-TERM – 52.3% of all US Treasury debt at the end of fiscal year 2018 (9/30/18) had a maturity of less than 3 years, i.e., debt that will mature before 9/30/21 and will be rolled over or paid off (source: Treasury Department).

2.     NOT STOPPING - 48% of working Americans surveyed in 2018 anticipate working past age 65, up from just 16% of workers who felt that way 30 years earlier (source: Employee Benefit Research Institute).  

3.     CARS - The sales of vehicles in China in 2018 totaled 28.1 million, down 3% from 28.9 million in 2017, China’s first year-over-year decline in vehicles sales in 20 years (source: China Association of Automobile Manufacturers).

4.     FIRST STATE TO DO THIS - Publicly held companies domiciled in the state of California are required by a new state law to have at least 1 woman on their board of directors by 12/31/19.  The gender requirement increases to “2 of 5 directors” or “3 of 7 directors” by 12/31/21 (source: National Public Radio).    

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 February 6, 2019

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Good morning!

The S&P 500 gained +8.0% (total return) in January 2019, a performance that ranks in the top 4% of monthly returns in the last 30 years, i.e., the 13th best month out of the last 360 months.  Ironically, the S&P 500 lost 9.0% (total return) in December 2018, a performance that ranks in the bottom 2% of monthly returns in the last 30 years, i.e., the 7th worst month out of the last 360 months.  Much of the market enthusiasm for the rapid bounce back is the result of the Fed’s announcement last week that it is inclined to hold interest rates steady for an undefined period of time (source: Federal Reserve).                

In spite of a partial government shutdown that lasted 35 days through Friday 1/25/19, American employers reported an increase of +304,000 new net jobs in January 2019, a record 100th consecutive month of jobs gains in our country, i.e., from October 2010 through and including January 2019.  An average of +202,000 new jobs each month have been created over the 100-month run, including +2.8 million in just the last 12 months (source: Department of Labor).          

Numerous government reports used by investors have been delayed by the 5-week federal shutdown, including data on our nation’s housing industry, trade deficit and monthly budget results.  The timing of President Trump’s annual State of the Union address was also impacted, now scheduled for Tuesday 2/05/19 (source: House of Representatives). 

Notable Numbers for the Week:

1.     YELLEN vs. POWELL - During the 4-years that Janet Yellen served as Fed Chair (i.e., 2/03/14 to 2/02/18), the S&P 500 gained +72.4% on a total return basis (an average of +14.6% per year) and achieved 156 record closing highs.  The first year for Jerome Powell serving as Fed Chair ends today (2/05/18 to 2/04/19).  Over the last year, the S&P 500 has set 5 all-time closing highs while losing 0.04% (total return) (source: BTN Research). 

2.     REQUIRED MINIMUM DISTRIBUTIONS - If you turned age 70 ½ sometime in 2018, then you must begin taking annual withdrawals from your IRA accounts no later than 4/01/19.  If you delay your 1st withdrawal until 4/01/19, you must also take a 2nd distribution by 12/31/19 (source: Internal Revenue Service). 

3.     HOW LONG COULD YOU LAST? - Just 29% of working Americans surveyed in the summer 2018 had emergency savings set aside that would allow them to survive at least 6 months without any current cash flow from a job (source: Bankrate’s Financial Security Index). 

4.      ONE ESPRESSO PLEASE - 27% of 1,000 Millennials surveyed in July 2018 spend more money on coffee each month than what they set aside and invest monthly for their eventual retirement (source: Lendedu.com).

 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 January 30, 2019

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Good morning!

It was a shutdown that started on 12/22/18 when Congress failed to sign off on 7 of the 12 annual spending bills that it is required by law to authorize by the start of a fiscal year, i.e., in this case by 10/01/18.  Those 7 spending bills, still unresolved as of today, represent an estimated $313 billion of annual government spending (out of a $4.4 trillion annual budget) and impacted 800,000 federal employees (out of 157 million working Americans).  When the partial government shutdown ended after 35 days last Friday 1/25/19, the government had recorded the longest shutdown in our nation’s history, eclipsing the previous record of 21 days (set in 1996) by 2 weeks.  The agreement that was reached however was simply a 3-week stop-gap (to Friday 2/15/19) that allows for additional discussions between Washington lawmakers (source: BTN Research).      

Our nation’s weekly report on initial claims for unemployment benefits (for the week ending 1/19/19) showed that just 199,000 jobless Americans applied for first-time assistance, the lowest level in the United States since 11/15/69 or more than 49 years ago.  By comparison, at the depths of the real estate crisis that began in 2008, first-time claims for jobless benefits reached 665,000 for the week ending 3/28/09 (source: DOL). 

Stocks (as measured by the S&P 500 stock index) peaked on 9/20/18, bottomed on 12/24/18 (falling nearly 20%) and now have retraced 54% of that loss in a span of just one month.  That rapid of a bounce-back is not customary: since the end of WWII, the S&P 500 has taken an average of 24 months to erase bear market tumbles of at least 20% (source: BTN Research).    

Notable Numbers for the Week: 

1.     OTHER PEOPLE’S MONEY - 59% of 1,001 registered voters surveyed in early January 2019 support the idea of raising the top individual marginal tax rate from 37% to 70% (source: Hill-HarrisX poll). 

2.     CRAZY HIGH - For the 13 consecutive years from 1951-1963, the top individual marginal tax rate was at least 91%.  The top individual marginal tax rate for 2019 is 37% (source: Internal Revenue Service).    

3.     JOBS - Iowa had the lowest unemployment rate (2.4%) in the nation as of 12/31/18.  Texas added +391,800 jobs in 2018 (to 12.7 million), more than 3 times the +121,900 jobs added in New York (source: Department of Labor). 

4.     REALLY?! - 1,777 Americans filed with the Federal Election Commission to run for president in 2016, a requirement for candidates who raise or spend at least $5,000 of contributions and expenditures (source: FEC). 

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 January 23, 2019

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Good morning!

If the widely expected 2019 global slowdown is impeding the US stock market, that message has yet to reach Wall Street.  The S&P 500, representing 81% of the US stock market, has climbed +6.6% YTD (total return).  Market enthusiasts will point to the index’s +13.6% climb since its Christmas Eve meltdown, while market pessimists recognize the S&P 500 is down 8.9% from its all-time closing high (2931 on 9/20/18).  Investors this week will be weighing the impact of China’s announcement on Monday (1/21/19) of +6.4% growth of its economy in the 4th quarter (its worst result since early 2009), news that could rattle the nerves of stock investors (source: BTN Research).        

China’s “below expectation” report of its 4th quarter growth rate may ripple across to the energy industry.  The trifecta of sluggish global demand for crude oil, rising US oil production in the Permian Basin and increasing inventories of gasoline would suggest falling oil and gas prices is inevitable in 2019.  Oil experts however expected rising oil prices in 2018 due to OPEC production cuts, but instead the price of crude oil fell by 24% last year (source: BTN Research).  

On Saturday (1/19/19) President Trump offered Democrats a compromise to end the country’s government shutdown – protection from deportation for children brought to the USA illegally in exchange for the funding of a border security wall.  The Senate takes up Trump’s idea with new legislation today (Tuesday 1/22/19) to end the 32-day shutdown, the longest in US history (source: White House).           

Notable Numbers for the Week:

  1. NOT EVEN FIVE PERCENT - The US population was 328 million as of 1/15/19, 4.4% of the world’s population (7.55 billion) as of that date, i.e., only 1 out of every 23 humans is an American (source: Census Bureau). 

  2. SOME MAKE A LOT - 5% of the 150.3 million tax returns filed for tax year 2016 reported adjusted gross income (AGI) of at least $200,000, received 35% of all AGI and paid 58% of all federal income tax (source: IRS).      

  3. YOU ARE ON YOUR OWN - 58% of 1,504 small businesses surveyed in August and September 2018 (defined as American companies with 2-99 employees) do not offer any retirement benefits, e.g., defined benefit pension plan, profit-sharing plan or a 401(k) defined contribution plan (source: LIMRA).  

  4. WHY DON’T THEY? - 137 million Americans voted in the November 2016 presidential election when Donald Trump became president.  Another 113 million “voting-age” Americans could have voted but did not (source: United States Elections Project). 

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 January 16, 2019

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Good morning!

President Donald Trump went directly to the American public in a national address last Tuesday (1/08/19) to pitch his concept of border security: $5.7 billion for a steel barrier and another $2.8 billion for immigration judges, border patrol agents and the technology to detect weapons and drugs at our border.  The total cost of President Trump’s border plan ($8.5 billion) is equal to what the US government will spend every 18 hours during fiscal year 2019.  But Washington lawmakers continued their political “game of chicken” throughout the weekend as the shutdown reaches day # 24 on Monday 1/14/19, the longest shutdown in US history (source: BTN Research).      

It didn’t solve the most difficult issues and it didn’t involve the key trade negotiators, but the US and China did move the ball down the field last week closer to a permanent tariff truce agreement.  The leverage that the US has identified is that China’s economy is slowing much quicker than had been expected.  Beijing is motivated to strike a deal to avoid any further US tariffs that are scheduled to come into play on 3/02/19.  America’s negotiators may not be satisfied until China reduces the subsidies that they currently provide its domestic companies, and also agrees to respect the copyrights that exist to protect the intellectual property of US multinational firms (source: BTN Research).              

Credit the recent Fed statement that suggests that there are no more rate hikes in the foreseeable future with providing the US stock market with the tailwind it had been missing.  Fed Chairman Jerome Powell’s admission that investors “should anticipate that we’re going to be patient” moved the S&P 500 upward last week as the index ended week # 2 of 2019 with a +3.6% YTD (total return) gain (source: BTN Research).               

Notable Numbers for the Week:

  1. MAJORITY OF THE TIME – Of the 10 bear markets for the S&P 500 index that have occurred since the end of WWII (i.e., declines of at least 20%), 7 took place concurrently with a recession (source: BTN Research).  

  2. GOING UP - Earnings per share of companies in the S&P 500 are projected to increase +8% in 2019.  Actual earnings per share increased +20.5% in 2018 (source: FactSet).  

  3. COMPLETE YOUR TAXES NOW - As a result of the December 2017 “Tax Cuts and Jobs Act,” 65% of US taxpayers will pay less in taxes for tax year 2018 than they did in tax year 2017, 6% will pay more and the remaining 29% will experience no material change up or down (source: Tax Policy Center).  

  4. BE PATIENT - Individuals who receive a referral from a general practitioner wait on average 5 months before receiving treatment from a specialist under Canada’s publicly funded health-care system (source: Fraser Institute).

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 January 9, 2019

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Good morning!

Today (Monday 1/07/19) marks the 17th day of the government shutdown that began on Saturday 12/22/18, a duration that would tie for the 2nd longest stoppage in US history.  There have now been 21 government shutdowns (the first was in 1976), the longest lasting 21 days.  In each of the previous 20 shutdowns, all affected employees (both furloughed “non-essential” personnel who were sent home and are not working and “essential” workers who are working without pay) eventually were paid 100% of their back pay after Congress passed a law to provide the lost wages once the shutdown ended (source: Congressional Research Service).  

When Congress is considering tax legislation that affects the US economy, lawmakers look to the Joint Committee on Taxation (JCT) and the Congressional Budget Office (CBO) for projections (called “dynamic scoring”) on how the proposed law changes could impact the behavior of US taxpayers.  E.g., a proposed increase in tax rates may cause some Americans to work less and invest differently.  But House Democrats introduced legislation last week on the first day of the new 2019 Congress that would end “dynamic scoring,” suggesting a belief that US taxpayers do not change their behavior in response to tax law changes (source: House of Representatives).

US employers added a net +312,000 employees in December 2018, its best monthly gain of the year.  There were 156.95 million employed Americans as of the end of 2018 (a record total), up from 154.07 million at the end of 2017, a gain of +2.88 million working Americans during the year (source: Department of Labor). 

Notable Numbers for the Week:

  1. TIME IN THE MARKET - Since 1950 (i.e., 1950-2018), the S&P 500 index has been up 54% of 17,361 trading days, 60% of 828 months, 66% of 276 quarters and 72% of 69 years.  The S&P 500 consists of 500 stocks chosen for market size, liquidity and industry group representation.  It is a market value weighted index with each stock's weight in the index proportionate to its market value (source: BTN Research).  

  2. SUPER SENIORS - The number of Americans at least age 75 is projected to double over the next 20 years, rising from 23 million in 2020 to 45 million in 2040 (source: Census Bureau). 

  3. THEY FORGOT TO PLAN - 62% of the 43 million Americans on Social Security receive at least 50% of their retirement income via their monthly Social Security benefit (source: Social Security Administration).

  4. RECORD - The US field production of crude oil reached 11.7 million barrels a day in November 2018, an all-time monthly record volume based upon data maintained since January 1920 (source: Department of Energy).

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 January 2, 2019

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Good morning!

The federal government shutdown that began on Saturday 12/22/18 is now in its 12th day.  The problem: Congress has passed just 5 of the 12 spending bills that it is required to complete each year.  Those 5 bills however represent 75% of the anticipated $1.25 trillion of discretionary government spending for fiscal year 2019, i.e., the 12 months ending 9/30/19 (note that the USA will spend an additional $3.10 trillion in mandatory expenses during the fiscal year).  The remaining 7 spending bills that have yet to pass a disgruntled Congress have left 9 government departments without funding, including Homeland Security.  800,000 federal workers have been impacted, including 420,000 “essential” workers who are required to work without pay and 380,000 employees that have been furloughed, i.e., they will stay home and not receive any pay (source: BTN Research).     

Arguably the biggest surprise of 2018 was the collapse in the price of crude oil.  At $45.41 a barrel at year-end, oil prices are down 24% since 12/31/17, down 41% since 10/03/18 and down 11% during the month of December.  Fears of a slowing global economy coupled with expectations of robust production from US shale oil producers have steamrolled in the short-run the December 2018 announcement from OPEC and Russia to cut production by 1.2 million barrels a day in 2019 (source: BTN Research). 

The S&P 500 finished 2018 down 4.4% (total return), its first “down year” since 2008.  Over the last 50 years (1969-2018), the S&P 500, a $22 trillion index as of 12/31/18, has gained +9.8% per year (source: BTN Research).    

Notable Numbers for the Week:

  1. UP vs. DOWN - The split between “up” and “down” trading days for the S&P 500 over the last 50 years (i.e., 1969-2018, encompassing a total of 12,611 trading days) is 53% “up” and 47% “down.”  The split during calendar year 2018 (there were 251 trading days last year) was also 53/47 (source: BTN Research).  

  2. COST OF HOUSING - The average interest rate nationwide on a 30-year fixed rate mortgage was 4.55% at the end of 2018.  The record low national average was 3.31% as of 11/22/12 or just over 6 years ago (source: Freddie Mac). 

  3. BAILOUT NOT NEEDED - No US bank failed in 2018, the first calendar year to achieve that result since 2006 (source: Federal Deposit Insurance Corporation). 

  4. OVERSPENDING - The national debt of the United States was $21.867 trillion as of Friday 12/28/18, an increase of $11.3 trillion over the last 10 years (source: Treasury Department).

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 December 19, 2018

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Good morning!

In the last 3 months, the S&P 500 has gone from an all-time record closing price to suffering its second “10% correction” of 2018.  The index, on fears of a slowing global economy and a looming “trade war” with China, has fallen 11.3% since 9/20/18 and now finds itself in negative total return territory for the year-to-date with just 10 trading days remaining in the year (off 0.9% through last Friday 12/14/18).  Another concern is that multiple central banks (the US Federal Reserve, the Bank of England and the European Central Bank) have shut down their “print and purchase” stimulus programs at the exact time that some foreign economies could use a jumpstart (source: BTN Research).       

It had been a foregone conclusion that the Federal Reserve would raise short-term interest rates this week, its 4th bump in 2018 and 9th in the last 3 years.  Textbook economic logic says that low unemployment (3.7%), rising wages (+3.1% over the last year) and strong economic growth (+3.5% in the 3rd quarter 2018) lead to higher prices.  But inflation remains surprisingly low (+2.1% over the last 12 months), possibly giving the Federal Reserve a reason to pause its rate raising program (source: Federal Reserve).                   

The United States is just 2 months into fiscal year 2019 (i.e., the 12 months ending 9/30/19), but already our nation has overspent its way to a $305 billion deficit through 11/30/18.  As recently as fiscal year 2007, our full-year deficit ($161 billion) was less than $305 billion (source: Treasury Department).   

Notable Numbers for the Year 2018:

  1. HUGE IMPACT - 43% of the Fortune 500 companies in 2017 (i.e., the 500 largest US companies as measured by annual revenues last year) were founded or co-founded by either an immigrant to the United States or by the child of an immigrant (source: Center for American Entrepreneurship). 

  2. ROBBING PETER TO PAY PAUL - New Jersey passed a 2017 law (“Lottery Enterprise Contribution Act”) that redirects the proceeds from the state’s lottery to the state’s pension system for 30 years.  The lottery funds, about $1 billion annually, was supporting K-12 education in New Jersey (source: Manhattan Institute).      

  3. BIG AND REALLY BIG - 58 publicly-held US companies produced at least $1 billion of sales per week in 2017, up from 39 companies that accomplished that level of weekly sales in 2007.  Just 1 domestic company generated more than $1 billion of sales per day during 2017 (source: Fortune).  

  4.  MORE OUT THAN IN - The total cost of the Social Security program in 2018 ($1.003 trillion) is projected to exceed its total income ($1.001 trillion), resulting in the program’s first deficit since 1982 (source: Social Security).

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 December 12, 2018

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Good morning!

Investors vacillated between the “hope” early in the week that a US/China “trade truce” existed, to the “fear” by week’s end that there really is a “trade war” going on.  But even if the US is able to leverage its global clout into convincing China to back off on its trade retaliation, that might not be enough to drive down our trade deficit in the near term, i.e., foreign imports purchased in excess of domestic exports sold.  American consumers, showing no signs of an impending recession, bought $267 billion of foreign imports in October 2018, the largest monthly total of foreign purchases made since October 2008 (source: Department of Commerce).       

The optics are pretty straight forward: cut the production of a desirable commodity and the price of that product should go up.  That’s what the 15 OPEC countries and Russia believe will happen as a result of their plan to cut 1.2 million barrels a day of crude oil.  Their logic could fall flat if the global economy softens (lessening the demand for crude) or if US shale oil production ramps up and fills in the production shortfall created by the action of OPEC and Russia (source: BTN Research).       

After 49 of 52 trading weeks in 2018, we’re back to zero.  The S&P 500 continued its extreme volatility, stumbling into the weekend with a +0.3% gain YTD (total return).  Investors sold stocks and bought bonds, driving the yield on the 10-year Treasury note down to 2.85%, its lowest level in 3 ½ months.  The rout might have been worse if not for a report that the Fed is considering a rate-hike pause (source: Federal Reserve).     

Notable Numbers for the Week:

  1. FIND A WAY TO START - A November 2018 survey of 1,161 employed adults determined that the average age at which this group began saving for retirement was 31 years old.  The most common reason given for not starting sooner was “not making enough money” (source: Nationwide Retirement Institute). 

  2. IS THE END NEAR? - 65% of 500 global money managers surveyed in October and November 2018 predict that the US bull market will end in 2019.  The current bull run is 3 months short of 10 years in length as of today.  The survey included investors in 28 countries worldwide (source: Natixis).     

  3. STRONG - Through 3 quarters of 2018, the US economy has grown +2.4% YTD, a pace that is equal to +3.2% annual growth.  That would be the best expansion for our economy in 13 years (source: Commerce Department).

  4. OPEC’S WORST NIGHTMARE - The US field production of crude oil reached 11.5 million barrels a day in September 2018, an all-time monthly record volume (based upon records maintained since January 1920) and a +21% increase in production in just the last 12 months (source: Department of Energy).

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.