Vorisek Financial Weekly Market Update for December 12, 2018

WMR Logo (002).jpg

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.

Vorisek Financial Weekly Market Update for December 5, 2018

WMR Logo (002).jpg

Good morning! 

It took just a single sentence to change the sentiment that had gripped the US stock market for the last 2 months.  In a speech last week Fed Chairman Jay Powell said that interest rates are “just below” where they are likely to settle for an extended period of time.  Stock investors, previously stung by a comment made by Chairman Powell in October that interest rates at that time were a “long way” from their “neutral point,” jumped to the conclusion that the Fed may have only one more rate hike to go (occurring in December 2018) before stopping.  By the stock market’s close last Friday (11/30/18), the S&P 500 had rallied to a +5.1% YTD result (total return) (source: BTN Research). 

The threat by the US to raise tariffs on Chinese imports from 10% to 25% on 1/01/19 is now off the table.  Instead the two countries on Saturday (12/01/18) agreed to negotiate for the next 3 months (until 3/01/19) with the goal of eliminating all existing tariffs.  The best news for American businesses that sell globally was the Chinese pledge to purchase a “very substantial” amount of American exports going forward (source: White House)     

The next 2-year session of Congress (the 116th edition) begins one month from today (1/03/19) as Democrats take control of the House under a Republican president for the first time since 2008.  The “lame duck” session of Congress however only has until this Friday (12/07/18) to pass several spending bills for fiscal year 2019 to avoid our nation’s 15th government shutdown since 1980 and the 3rd during the Trump administration.  Seven of the 12 agencies that require annual congressional approval of their budgets will not have funding beyond this Friday without a new spending bill (source: Congress).       

Notable Numbers for the Week:

  1. BIG BEARS - Since the end of World War II (1945), the 3 worst bears for the S&P 500 are: (1) 48% drop in 1973-74; (2) 49% drop in 2000-02; and (3) 57% drop in 2007-09 (source: BTN Research).  

  2. MY HOUSE, MY PIGGY BANK - “Cash-out refis,” i.e., a homeowner taking out a new mortgage that is larger than his/her previous mortgage and pocketing the difference, peaked in 2006 when American homeowners pulled out $320 billion of home equity during a rising housing market.  Homeowners pulled out just $15 billion of their home equity through “cash-out refis” in the 3rd quarter 2018 (source: Freddie Mac).   

  3. SLOWING DOWN - The median sales price of existing homes sold nationwide increased +3.8% on a year-over-year basis through October 2018.  That’s the smallest year-over-year growth in the median sale price in the USA since March 2012 (source: National Association of Realtors).    

  4. TARGET PRICE - The annual operating budget of Saudi Arabia, heavily dependent on the price of oil, required a breakeven crude oil price of $83 a barrel in 2017 and $85-$87 a barrel in 2018 (source: IMF).

     

    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 November 28, 2018

WMR Logo (002).jpg

Good morning!

This “correction” feels different, but is it because it’s the most recent tumble or have circumstances changed?  When the S&P 500 closed last Friday (11/23/18), the index had fallen 10.2% from its 9/20/18 all-time closing high, making the decline the 6th drop of at least 10% (but less than 20%) since this 9 ¾ year bull run began on 3/10/09.  Following the first 5 “corrections,” investors who had missed out on the market advance rushed in, “buying on the dip” and pushing stock prices higher.  Now stock buyers must evaluate the future impact of slowing global growth and upcoming Fed rate hikes before utilizing that strategy again (source: BTN Research).                    

Here’s what the “smart money” was forecasting for crude oil prices in 2018: the US would impose oil export sanctions on Iran’s daily production of 2 million barrels, causing oil shortages that could push $60 a barrel oil (its price from 12/31/17) to $100 a barrel.  The reality is that instead of shortages causing rising prices, an oversupply of oil has driven market prices down as reflected by last week’s closing price of $50.42 a barrel.  Oil analysts did not anticipate the technological explosion that was taking place in the industry that has allowed operation teams in the field to benefit from an increased use of information technology.  This data, used to determine “where” to drill and “how” to drill, is helping to create more oil domestically than ever in our history (source: NYMEX).             

Leaders from the United States and China will meet later this week in Buenos Aires, Argentina at the G-20 Summit.  Investors will be looking for the 2 superpowers to change course on the trade tariffs that have shaken the globe’s economic balance in 2018 (source: BTN Research).         

Notable Numbers for the Week:

  1. EDUCATION - Outstanding student loan debt in the USA was $360 billion as of 3/31/05, doubled to $720 billion as of 12/31/09 and now has doubled again to $1.44 trillion as of 9/30/18 (source: Federal Reserve). 

  2. BACKSTOP - The Pension Benefit Guaranty Corporation (PBGC) was forced to take over an average of 9 failed pension plans per month over the last 15 fiscal years, i.e., 2004-2018 (source: PBGC).   

  3. DOES NOT COVER EVERYTHING - Medicare beneficiaries are still responsible for an average of $5,503 per year of “out-of-pocket” health care spending.  That total is projected to increase to $7,877 per year by the year 2030 (source: Kaiser Family Foundation). 

  4. HIRE A VETERAN - As of October 2018, there are 19.1 million veterans of the military in the USA, of which 9.1 million have full-time jobs in the private sector (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 November 21, 2018

WMR Logo (002).jpg

Good morning!

In spite of strong domestic economic growth in the 3rd quarter 2018 (US GDP grew by an annualized +3.5% on a quarter-over-quarter basis), more American stock investors have become active sellers than active buyers in the last 2 months.  Their concern is the fear of a global economic slowdown and the ripple effect it could have on American businesses.  Third quarter GDP results from both Germany and Japan showed shrinking (not growing) economies and “year-over-year” consumer spending in China, the 2nd largest economy in the world, fell in October 2018 to its weakest growth rate since May 2018 (source: TradingEconomics.com).

But the flipside of a global economic slowdown is falling oil prices.  The price of crude oil closed at $67.59 a barrel on Friday 10/26/18.  From that point, the price of crude oil fell for the next 12 trading days through Tuesday 11/13/18, bottoming at $55.69 a barrel (down 17.6%).  That’s the longest stretch of consecutive down days for oil according to records maintained for the last 35 years.  Falling crude prices suggests that the oil market believes there may be an oversupply of crude oil worldwide in 2019.  Any drop of oil prices (leading to lower gasoline prices) is a boost for the US economy, putting more spendable money in the pockets of American consumers (source: NYMEX).                  

Rising mortgage rates (the average 30-year fixed rate mortgage reached 4.94% last week) will negatively impact the building industry at some point, but that pullback has yet to be felt.  The number of construction jobs nationally grew by +330,000 in the last 12 months, reaching 7.3 million for the first time since April 2008, just before the global real estate crisis hit (source: Associated General Contractors of America).  

Notable Numbers for the Week:

  1. WAGE HIKE - Average hourly earnings of private sector workers increased by +3.14% for the year ending October 2018, the first time the annual increase has been at least +3% since April 2009 (source: DOL).  

  2. GOOD LUCK - At least 136 California cities asked its voters in 2018 to approve tax hikes (e.g., sales tax) to pay for the pension benefits previously promised to municipal workers (source: CalWatchDog.com).   

  3. FORCE THEIR HAND - 401(k) plans with “auto-enrollment” have an average participation rate of 85% vs. 63% for plans that do not have “auto-enrollment” (source: Alight Solutions LLC). 

  4. IN THE CROSSHAIRS - In 2017 the United States imported $192 billion of new autos and light trucks (representing 8.3 million vehicles), more than 3 times the $57 billion of new autos and light trucks that were exported out of the United States (source: WorldAtlas.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 November 14, 2018

WMR Logo (002).jpg

Good morning!

If Americans thought the noise emanating from Washington was loud during the last two years, the results from the 2018 midterm elections will likely amplify partisan sounds from lawmakers.  Last Tuesday’s voting (11/06/18) was the 4th consecutive midterms where at least one chamber of Congress (either the House or the Senate or both) flipped the controlling party.  Voting in 2006 (House and the Senate changed), 2010 (House changed), 2014 (Senate changed) and now 2018 (House changed) has altered the balance of power in Washington.  Wall Street must now pivot from campaign rhetoric to critical financial issues: trade tensions between the US and China and a Federal Reserve committed to higher interest rates (source: BTN Research).   

Republican Donald Trump will occupy the White House for at least 2 more years, but control of Congress will now be split.  Republicans retain control of the Senate and Democrats now have a majority in the House.  Over the last 80 years (1938-2017), the S&P 500 has gained +11.1% per year (total return) when control in Congress was split, regardless of the party in the White House.  The stock index also has gained an average of +15.3% in the 1-year following the last 17 midterm elections (1950 – 2014), returning a positive gain during each of the 17 “1-year periods” (source: BTN Research).  

An estimated 10,400 Americans will turn 65 years old each day in 2019.  This group represents the 9th year of 19 years of “Baby Boomers” turning age 65.  An estimated 11,500 Americans will turn 65 years old each day in the year 2029 (source: Government Accountability Office).

Notable Numbers for the Week:

  1. BONDS, NOT STOCKS - 73% of the investment portfolios of US life and health insurance companies at the end of 2017 were invested in bonds while just 3% of their assets were invested in stocks (source: NAIC).     

  2. THAT WOULD HURT - Individual income taxes paid by American taxpayers would have to increase by +46% in order to eliminate our $779 billion deficit from fiscal year 2018 (source: Treasury Department). 

  3. YOU PROMISED - The Western Pennsylvania Teamsters and Employers Pension Fund filed in early November 2018 for an approval from the Treasury Department to reduce pension benefits by up to 30% to more than 21,000 current retirees.  The pension fund, with more than $700 million of assets, is forecasted to be insolvent by 2029 without the reductions.  The pension cuts would begin 8/01/19 (source: Pittsburgh Post-Gazette).   

  4. STAYING PUT - Between 2016 and 2017, 6 out of every 7 Americans (86%) lived in the same house or apartment on a year-over-year basis, i.e., they did not move (source: Census Bureau).

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 November 7, 2018

WMR Logo (002).jpg

Good morning!

The midterm elections take place tomorrow (Tuesday 11/06/18) across the United States.  All 435 House seats and 35 of 100 Senate seats are up for grabs.  History is on the side of the party not occupying the White House – going back to 1934, the sitting president’s party has lost seats in the House of Representatives in 18 of 21 midterm elections (86%) and lost seats in the Senate in 15 of 21 midterms (71%).  Democrats lost 63 House seats and 6 Senate seats in the November 2010 midterm elections, i.e., 2 years into the Obama administration’s first term in the White House, the same point in time that the Trump administration finds itself today (source: Congress).         

The USA added a net +250,000 jobs last month, its 97th consecutive month of job gains.  There are 149.8 million workers in our country today, split 85/15 between the private sector (127.4 million) and the public/government sector (22.4 million).  Surprisingly, the number of private sector workers has increased +13.6 million in the last decade while the number of public/government sector workers has declined slightly (down 0.2 million) (source: Department of Labor).           

Former Fed Chairperson Janet Yellen has no political aspirations, allowing her to voice what few Washington lawmakers would be willing to say.  At an investment conference last Tuesday (10/30/18) in Washington D.C., Yellen said “if I had a magic wand, I would raise taxes and cut retirement spending.”  She lamented the buildup of our national debt, a liability that she described as “unsustainable.”  Our country’s outstanding debt reached a record $21.7 trillion last week (source: Charles Schwab Impact conference).   

Notable Numbers for the Week:

  1. OWNERS AND RENTERS - The 111.7 million households that existed in the United States on 9/30/08 were split 68/32 between 75.9 million owners and 35.8 million renters.  The 121.4 million households in the United States on 9/30/18 were split 64/36 between 78.1 million owners and 43.3 million renters (source: Census Bureau).

  2. SHIFTING THE RISK - Between 1975 and 2014, the number of defined benefit pension plans in the private sector fell by 57% while the number of defined contribution plans increased by +208% (source: DOL).

  3. NOT A PENNY - 39% of Millennials have accumulated no funds for their eventual retirement.  Millennials were born between 1981-97 and are age 21-37 in 2018 (source: Personal Capital).    

  4. THE RIGHT MATE - For Americans who got married in 2017 for the first time, the median age for men was 29.5 years old and the median age for women was 27.4 years old (source: Census Bureau). 

     

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 October 31, 2018

WMR Logo (002).jpg

Good morning!

The S&P 500, the most widely followed stock index in the United States, is down 9.3% from its all-time closing high set just over a month ago on 9/20/18.  This drop is the index’s 12th pullback of at least 5% that has taken place during its 9 ½ year bull run.  With just 3 trading days remaining in October 2018, the S&P 500 has lost 8.7% (total return), a downturn that would rank this month as the worst since February 2009 (a loss of 10.7%).  It was 10 years ago this month (October 2008) that the S&P 500 lost 16.8% just as the global real estate crisis was beginning (source: BTN Research).    

The Trump administration announced ambitious plans on Friday 10/19/18 to create “opportunity zones” to encourage investment in distressed real estate areas in the USA, e.g., Detroit, Cleveland, Chicago, Sacramento.  An investment into an “opportunity fund” that is held at least 10 years would potentially avoid any taxation.  The proposed tax breaks are intended to attract much needed capital to areas that have never recovered from the 2008-09 recession (source: White House).       

Outstanding student loans reached a record $1.41 trillion as of 6/30/18, up a startling +9.1% per year over the last 10 years.  For parents of a child born in 2018, the future costs of college are daunting.  If that child attends an average public in-state 4-year college (during the years 2036-2040) and if the annual price increases for public colleges experienced over the last 30 years (+5.4% per year) continued into the future, the aggregate 4-year cost of the child’s college education (including tuition, fees, room & board) would be $237,262 or $59,315 per year (source: College Board). 

Notable Numbers for the Week:

  1. SUPER-SIZE IT - 35% of workers surveyed in the fall of 2017 who are participating and contributing to a 401(k) or similar defined contribution plan are deferring more than 10% of their pre-tax wages (source: Transamerica Retirement Survey of Workers December 2017).  

  2. HOME SWEET HOME - Only 46% of 1,025 retirees surveyed own their home free and clear of any debt.  54% of retirees still have a mortgage or they rent (source: Society of Actuaries).  

  3. CREDIT NEW DRILLING METHODS - The Permian Basin, a 90,000 square mile stretch of land from West Texas to New Mexico, produces 3.3 million barrels a day of crude oil.  That amount has doubled in the last 4 years and is projected to increase another +50% in the next 5 years (source: IHS Markit).  

  4. FREQUENT FLYERS - The top 1% of Americans ranked by their dollar usage of health care represent 22.8% of total health care expenditures (source: Agency for Healthcare Research and Quality).

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 October 24, 2018

WMR Logo (002).jpg

Good morning!

When Ben Bernanke announced his plans in November 2008 to stave off what he feared could be a “depression” and not just a “recession,” long-time market watchers had never heard of “Quantitative Easing” (QE).  The concept of “printing new money” and using those funds to “purchase bonds” to drive the cost of borrowing down was unprecedented.  The QE strategy ran for 6 years (to October 2014) and resulted in $4 trillion of new assets on the Fed’s balance sheet.  Janet Yellen’s plan from 9/20/17 began the unwinding of QE (and shrinking of the Fed’s balance sheet) by having bonds mature without reinvesting the principal into new bonds.  “Quantitative Shrinking” has resulted in $266 billion of bonds roll off the Fed’s balance sheet as of last week.  The challenge for the bond market is to replace the Fed’s “buying footprint” with another major bond purchaser.  Without that new buyer, interest rates would likely rise (source: Federal Reserve).          

The federal government completed fiscal year 2018 as of 9/30/18.  The financial result: $3.3 trillion of tax revenue collected vs. $4.1 trillion of outlays.  The nation’s budget deficit was $779 billion, our 17th consecutive year of spending outpacing revenue.  The USA has run a budget deficit in 53 of the last 58 fiscal years, i.e., 1961-2018.  The only surplus years were 1969, 1998, 1999, 2000 and 2001 (source: Treasury Department). 

The impact of the “Tax Cuts and Jobs Act” legislation is already being felt by businesses.  Corporate income taxes collected during fiscal year 2018 were $204.7 billion, down 31.1% from the previous fiscal year (2017) total of $297.0 billion.  Corporate income taxes collected in fiscal year 2015 were $343.8 billion (source: Treasury Department). 

Notable Numbers for the Week:

  1. WHERE ARE THE WORKERS? - From the 2.1 million job openings in the United States reported in July 2009 while the country was mired in a recession, that number has jumped to record 7.136 million as of August 2018.  The 5 million increase in job openings since mid-2009 is equivalent to 100,000 new available jobs in each of our 50 states (source: Department of Labor).   

  2.  MORE EQUITY - The average loan-to-value ratio in the US housing market as of 6/30/08 was 55%.  The average loan-to-value ratio in the US housing market as of 6/30/18 was 40% (source: Federal Reserve). 

  3. SPENDING - 62% of the $4.108 trillion of total outlays for the US government during the recently completed fiscal year 2018 was in just 4 categories – Social Security ($988 billion), National Defense ($665 billion), Medicare ($589 billion) and Net Interest Expense ($325 billion) (source: Treasury Department).  

  4. MOM AND DAD - The national median cost in 2017 for an assisted living facility (private 1-bedroom accommodation) was $3,750 per month or $45,000 per year (source: Genworth). 

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 October 17, 2018

WMR Logo (002).jpg

Good morning!

Perhaps last week was the beginning of the bear market for stocks that has been widely anticipated by some equity prognosticators for more than 5 years.  But then again maybe the tumble will be just another buying opportunity for investors who have been stuck on the sidelines.  From its all-time closing high of 2931 set on 9/20/18, the S&P 500 has been down 12 of the next 16 trading days, losing 5.5% (total return).  October has rightfully earned its reputation as the most “volatile” month – 5 of the 7 worst days for the S&P 500 since 1950 have occurred during October, along with the 3 best days for the index since 1950.  This upcoming Friday (10/19/18) marks the 31st anniversary of the “Black Monday” stock market crash of 1987, a 1-day drop of 20.5%.  Remarkably, the S&P 500 still gained +5.3% for all of 1987 (source: BTN Research).                        

The “cost of living adjustment” (COLA) made to Social Security benefits is calculated based upon the year-over-year increase in prices during the 3rd quarter of subsequent years.  The +2.8% COLA that will be applied to benefits beginning in January 2019 is based on the change of prices from the 3rd quarter 2017 to the 3rd quarter 2018.  The +2.8% bump represents the largest COLA boost in 7 years and will increase the average monthly Social Security benefit to $1,461 (source: Social Security).   

As the yield on the 10-year US Treasury note climbs, so does the rate on fixed rate mortgages.  The national average rate on a 30-year fixed rate mortgage rose to 4.90% last week, its highest level since April 2011 and up 0.99 percentage points from a year earlier (source: Freddie Mac).     

Notable Numbers for the Week:

  1. CRUDE INTO FUEL - The USA has 135 operable oil refineries in 2018, 123 fewer than the 258 refineries that America had in operation in 1983 or 35 years ago (source: Energy Information Administration). 

  2. JAPAN IS OUT, CHINA IS IN - In 2008, China’s economy ($4.5 trillion) was smaller than Japan’s ($4.9 trillion).  In 2018, China’s economy ($12 trillion) is more than twice the size of Japan’s ($5 trillion) (source: BTN Research).  

  3. PLEASE LEAVE NOW - During the depths of the mortgage crisis, 1,050,500 homeowners had their homes repossessed during 2010.  Just 133,290 homes were repossessed during the first 6 months of 2018 (source: Attom Data). 

  4. DEBT FOREVER - 44% of homeowners between the ages of 60-70 who have outstanding mortgage debt anticipate still having some mortgage debt when they retire (source: American Financing)  

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 October 10, 2018

WMR Logo (002).jpg

Good morning!

It was 10 years ago (10/16/08) that Warren Buffet wrote his “Buy America, I Am” op-ed article in the New York Times.  Buffett encouraged stock investors to “be fearful when others are greedy and be greedy when others are fearful.”  Buffett’s letter was released less than 5 months before the stock market bottomed on 3/09/09, ending a 57% decline of the S&P 500.  The index closed at 946 on 10/16/08 and has more than tripled since then to close at 2886 last Friday 10/05/18.  A decade has passed since Buffett’s op-ed appeared and the crippling bear has become a long-running bull.  The question facing investors today has no obvious or simple answer: do they stay in the market and risk going down, or do they step out of the market and risk missing out? (source: NY Times). 

When bond investors believe the global economy is on a roll, they naturally worry about the speedbumps that may exist around the next corner.  Multiple central banks have been raising short-term interest rates since late 2015, leading to the concern that they will tighten too much and ultimately restrain worldwide economic growth.  The yield on the 10-year Treasury note has climbed 0.33 percentage points in just the last month to close last week at 3.23%, its highest level since May 2011 (source: BTN Research).                

The latest round of “good” news pushing yields higher was Friday’s jobs report that measured our nation’s unemployment rate at 3.7%, the lowest rate in the USA since December 1969.  Less than 6 million Americans who are actively looking for work are jobless today, our best result since December 2000 (source: Department of Labor). 

Notable Numbers for the Week:

  1. MORE MONEY - 618 US employers surveyed in the 1st quarter 2018 anticipate offering a starting base salary of $65,000 to college graduates with a bachelor’s degree, $85,000 to workers coming “direct-from-industry” and $105,000 to MBA graduates (source: Corporate Recruiters Survey Report 2018). 

  2. A DIFFICULT CONVERSATION TO HAVE - 53% of 2,638 widows surveyed in the 3rd quarter 2018 admit that they and their deceased husbands had no financial plan in place in the event that either spouse died (source: Merrill Lynch/Age Wage). 

  3. IT JUST DEPENDS - Life expectancy at birth varies by as much as 20 years depending upon the county where you are born in the United States (source: Dwyer-Lindren et al., JAMA Internal Medicine 2017).  

  4.  NO MONTHLY PAYMENT DUE - In 2011, 1 of 3 American homeowners (34%), owned their homes free and clear of any debt, i.e., no mortgage loan or line of credit.  In 2017, 2 of 5 American homeowners (40%) owned their homes free and clear of any debt (source: 2017 American Housing Survey).

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.