Vorisek Financial Weekly Market Update for September 19, 2018

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Good morning!

The ratio today of working Americans to jobless Americans is 25-to-1, i.e., there are 155.54 million Americans with full-time jobs vs. 6.23 million out-of-work Americans.  But employers are still posting a record number of job listings.  The 6.94 million job openings nationwide are the largest number ever reported by American businesses.  Restless workers are feeling quite confident about the prospects for finding another job.  3.58 million employees quit their jobs just last month.  As a result, wages may continue to climb as employers fight for increasingly mobile employees.  If this occurs, inflation could accelerate, and the Federal Reserve would be forced to raise short-term interest rates again (source: Department of Labor).           

With just one month to go in fiscal year 2018 (i.e., the 12 months ending 9/30/18), the government has incurred an $898 billion deficit.  But September has produced a surplus in each of the last 6 fiscal years (2012-2017), driven by estimated tax payments made by self-employed individuals.  The year’s final full-year deficit number is still likely to be the largest in our country since 2012 (source: Treasury Department).       

After adjusting numerical data from the past for the impact of inflation, the median household income in 2017 ($61,372) is the highest ever recorded in the United States, besting the previous record for median household income ($60,309) set just the year before in 2016.  Before 2016, the peak for median household income was $60,062 set in 1999 (source: Federal Reserve Bank of St. Louis).    

Notable Numbers for the Week:

  1. NONE - As of the end of 2017, 19% of Millennials and 12% of Baby Boomers had no money (either pre-tax or post-tax) invested in the stock market.  Millennials were born between 1981-97 and were ages 20-36 in 2017, while the Baby Boomers were born between 1946-64 and were ages 53-71 in 2017 (source: Vanguard). 

  2. MORE CONCENTRATED - America’s 5 largest banks control 47% of all banking assets, up from 29% in 1998 or 20 years ago (source: Federal Reserve Bank of St. Louis). 

  3. BLANK CHECK - An estimated 44.4% of all US individual taxpayers will legally pay zero federal income tax for tax year 2018 on their Tax Form 1040 that is due 4/15/19 (source: Tax Policy Center).  

  4. BONDS - There is less outstanding municipal bond debt today ($3.8 trillion) than there was in 2010 ($4.0 trillion).  Over the same time period, outstanding Treasury debt has increased +69% to $14.9 trillion (source: SIFMA).

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 September 12, 2018

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Good morning!

The Trump White House believes the “Tax Cuts and Jobs Act” legislation, signed by the president on 12/22/17, will create +3% annual economic growth in the USA, a level last achieved in 2005.  The US economy produced annualized growth of +3.2% during the first 6 months of 2018, reaching $20.4 trillion in size as of 6/30/18.  Surprisingly tax reform will be back in the news this week in Washington as the House Ways & Means Committee debate an extension of the new tax cuts even though they are already in place for another 7 years until 2025 (source: Congress).               

Average hourly wages of private sector workers climbed to a record $27.16 (equal to $54,000 in annual compensation) in August 2018.  That hourly rate is up +2.9% over the last year (i.e., August 2017 to August 2018) and represents the best year-over-year bump in wages since May 2009.  Economists have been at a loss to explain the meager wage gains achieved in the recent past while the jobless rate has tumbled below 4%.  The strong wage gains along with 201,000 new net jobs last month increases the probability of another Fed rate hike when they meet in 2 weeks on September 25-26 (source: DOL). 

It has been 10 years since Treasury Secretary Hank Paulson announced on 9/07/08 his plan to take control of mortgage giants Fannie Mae and Freddie Mac.  The government initially pledged up to $200 billion of financial support in anticipation of future mortgage defaults, ultimately disbursing $187 billion.  The controversial bailout was not a financial failure: Fannie and Freddie have paid back $271 billion to taxpayers over the decade, resulting in an $84 billion profit (source: Treasury Department).                   

Notable Numbers for the Week:

  1. OUR NEIGHBORS TO THE NORTH – Approximately 75% of $421 billion of goods exported by Canada in 2017 (stated in US dollars) was purchased by American consumers (source: WTEx).    

  2. SPENDING WAY TOO MUCH - 71% of 251 economists surveyed in late July 2018 believe the current fiscal policy of the US Congress is “too stimulative,” a significant jump from the 20% of economists who felt that way in August 2017 (source: National Association for Business Economics).        

  3. GRADUAL INCREASES - Between June 2004 and June 2006, the Fed met and raised short-term interest rates by ¼ of 1% at 17 consecutive Fed meetings.  Since 12/14/16, the Fed has met and raised short-term interest rates by ¼ of 1% at 6 of the last 14 Fed meetings (source: Federal Reserve).   

  4. NO PILOTS - The Navy awarded an $805 million contract on 8/30/18 for the construction over the next 6 years of 4 unmanned tanker planes that will be able to refuel fighter jets in mid-flight (source: Navy).

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 September 5, 2018

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Good morning!

When the “North American Free Trade Agreement” (NAFTA) became effective nearly 25 years ago (1/01/94), its intent was to establish regional economic cooperation between the US, Canada and Mexico.  However, in America’s “rust belt” states, NAFTA has been blamed for the loss of well-paying manufacturing jobs that migrated south to Mexico.  In the months leading up to his November 2016 election, Candidate Trump called NAFTA “the worst trade deal the US has ever signed.”  Last week President Trump announced an agreement between the US and Mexico to rework portions of NAFTA without bringing Canada into the negotiations.  If Canada wants to be part of the “new” NAFTA, the White House may force them to open parts of its agricultural business (e.g., dairy and poultry) to American farmers (source: BTN Research).              

The levying of new tariffs on goods imported from China has warranted numerous headlines since April, but the reality is that more than half of the imports purchased by American consumers are already hit with an extra cost.  65% of the goods imported into the USA in 2016 were subject to a tariff.  The average tariff on all imported goods was just 1.73% on a dollar-weighted basis.  The largest tariffs were 33% levied on imported tobacco and 16% on imported sugar (source: Federal Reserve Bank of St. Louis).

Following the NASDAQ Composite’s close of 5049 on 3/10/00, the next 2 ½ years resulted in a painful 78% fall to 1114 on 10/09/02.  The technology-oriented index didn’t close back above 5049 until 4/24/15.  The new record close for the NASDAQ Composite is 8110 that was set last week on Wednesday 8/29/18 (source: BTN Research).         

Notable Numbers for the Week:

  1. WHERE WE ARE - With 4 months to go in 2018, the S&P 500 is up +9.9% YTD (total return).  The index has gained +10.1% per year over the last 50 years, i.e., 1968-2017 (source: BTN Research). 

  2. BORROW THEIR WAY OUT OF A DEBT PROBLEM – Chicago is considering borrowing $10 billion in the bond market because of the city’s $28 billion pension funding shortfall (source: Chicago CFO Carole Brown).   

  3. WHO OFFERS WHAT - 65% of 1,825 American employers surveyed in the 4th quarter 2017 offer a defined contribution retirement plan (e.g., 401(k) plan) to their employees.  Just 13% of the employers provide an employer-funded defined benefit pension plan (source: Transamerica Retirement Survey). 

  4. CHILD CARE - The average annual cost of hiring a nanny to watch one child is $30,160, equal to $580 a week (source: Care.com Cost of Care 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.

Vorisek Financial Weekly Market Update for August 29, 2018

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Good morning!

Standard & Poor’s has maintained stock indices for 95 years (back to 1923).  From just 90 stocks that were tracked in 1926, the commonly recognized S&P 500 took shape in 1957 and is the premier equity benchmark used by money managers.  The index achieved 2 all-time records last week.  The S&P 500 closed on Friday (8/24/18) at 2875, its highest close ever.  Last week’s rally also pushed the index’s current bull run (which began on 3/10/09) to 3,455 days in length, its longest duration in history (source: BTN Research).    

The spread between the 10-year Treasury note yield and the 2-year Treasury note yield fell to just 19 basis points last Friday, i.e., 2.82% less 2.63%, the tightest spread between the 2 debt instruments since 8/2/07 or 11 years ago.  Some, but not all, economists view a flattening yield curve as a sign of future economic weakness.  In fact, the last 7 recessions in the USA have been preceded by an "inverted" yield curve, i.e., the 2-year note yield exceeding the 10-year note yield (source: Federal Reserve Bank of Cleveland).                 

As had been expected, the Treasury Department released “proposed” regulations last week that would stop states from implementing a workaround to the $10,000 “state and local tax” (SALT) deduction limitation that is part of the 2017 “Tax Cuts and Jobs Act” (TCJA).  The government rejected the arrangement by which taxpayers would make a “charitable contribution” to a fund set up by their city, while at the same time allowing them then to receive a “tax credit” against their property taxes.  Taxpayers in just 2 states (California and New York) utilize 33% of the deduction (by dollar) and just 6 states get 51% of the SALT deduction’s use (source: Internal Revenue Service).                      

Notable Numbers for the Week:

  1. UP AND UP - 17 stocks in the S&P 500 gained at least +70% in calendar year 2017.  6 of the 17 stocks have gained at least +40% YTD through last Friday 8/24/18 (source: BTN Research). 

  2. MEDICARE IS NOT ENOUGH - 62% of American seniors (at least age 65) that file for bankruptcy do so because they are overwhelmed by medical expenses (source: “Graying of U.S. Bankruptcy: Fallout from Life in a Risk Society,” Deborah Thorne, University of Idaho). 

  3. NEED WORK? - 52% of the 2.4 million new jobs created in the United States in the 12 months ending 7/31/18 were produced in just 6 states – Texas (377,100 jobs), California (332,700), Florida (210,600), New York (117,000), North Carolina (106,900) and Washington (102,500) (source: Department of Labor). 

  4. ROLL THE DICE - Between 6/30/17 and 6/30/18, average home prices increased in all 50 US states.  Nevada’s +17.0% average home price gain led the nation over the last year (source: FHFA).    

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

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

Vorisek Financial Weekly Market Update for August 22, 2018

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Good morning!

The outstanding debt of the United States reached $21.4 trillion as of last Thursday 8/16/18, a record amount.  The debt, up $914 billion since the end of 2017, consists of $15.7 trillion of “debt held by the public” (i.e., investors, both domestic and foreign) and $5.7 trillion of “intergovernmental” debt (i.e., loans from other government departments).  The average interest rate paid by the government on its interest-bearing debt (i.e., the $15.7 trillion owed to investors) was 2.457% as of 7/31/18, 1.9 percentage points lower than the cost of debt a decade earlier in 2008.  The concern is what happens if interest rates retrace their steps back above 4%.  Every 1 percentage point increase in the cost of debt on our nation’s $15.7 trillion of publicly held debt is equal to $157 billion of annual interest expense (source: Treasury Department).

Foreign investors have not backed off from their love of US Treasuries.  From $1 trillion of holdings in 2000, foreign buyers (led by China and Japan) have increased their position of treasuries to more than $6.2 trillion today (source: Treasury Department).            

At the low point for mortgage interest rates (November 2012), homebuyers could borrow $100,000 on a 30-year fixed mortgage at 3.31%, requiring a monthly “principal and interest” payment of just $439.  Borrowing that same $100,000 today at 4.53% (the current national average) requires a monthly “principal and interest” payment of $508.  The goal of every homeowner: to join the 38% of American homeowners that currently own their primary residence free-and-clear of any debt (source: Census Bureau).         

Notable Numbers for the Week:

  1. INCREASING COSTS – Inflation (using the “consumer price index”) advanced +2.95% on a year-over-year basis ending 7/31/18, inflation’s largest annual increase since December 2011The consumer price index (CPI) is a measure of inflation compiled by the US Bureau of Labor Studies (source: Department of Labor).    

  2. WHERE THEIR ECONOMY CAN GROW - Personal consumption by American consumers represents 70% of the US economy.  Personal consumption by Chinese consumers represents just 39% of the Chinese economy (source: Business Week).   

  3. GREEN ACRES - The average “farm real estate value” is $3,140 an acre in 2018, including land and buildings, an increase of +3.8% per year over the last 10 years (source: Department of Agriculture).   

  4. SOARING COLLEGE COSTS - 44 million Americans owe $1.41 trillion in student loan debt as of 6/30/18, a +139% increase (up $820 billion) in just the last 10 years (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 August 15, 2018

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Good morning!

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

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

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

Notable Numbers for the Week:

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

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

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

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

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

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

Vorisek Financial Weekly Market Update for August 8, 2018

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Good morning!

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

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

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

Notable Numbers for the Week:

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

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

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

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

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

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

Vorisek Financial Weekly Market Update for August 1, 2018

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Good morning!

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

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

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

Notable Numbers for the Week:

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

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

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

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

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

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

Vorisek Financial Weekly Market Update for July 25, 2018

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Good morning!

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

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

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

Notable Numbers for the Week:

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

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

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

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

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

Vorisek Financial Weekly Market Update for July 18, 2018

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Good morning!

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

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

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

Notable Numbers for the Week:

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

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

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

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

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

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