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.

Vorisek Financial Weekly Market Update for December 5, 2018

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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

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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

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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

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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.