Vorisek Financial Weekly Market Update for November 7, 2018

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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

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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

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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

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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

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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.

Vorisek Financial Weekly Market Update for October 3, 2018

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Good morning! 

Domestic stock investors have been riding a wave of success in 2018.  The S&P 500, an index representing 80% of the nation’s $32 trillion of stocks, just finished the 3rd quarter last week and is up +10.6% YTD (total return).  The final 3 months of the year have historically been the best quarter for US stocks.  The S&P 500 has gained an average of +5.0% for the “October-November-December” time period over the last 25 years, resulting in just 5 “down” 4th quarters since 1993 (source: BTN Research).         

Federal Reserve Chairman Jay Powell, on the job for only 8 months, is rightfully upbeat.  Powell recently said that “our economy is strong, growth is running at a healthy clip, unemployment is low, the number of people working is rising steadily, and wages are up.”  As expected last week, the Fed raised short-term interest rates for the 3rd time this year and indicated its game plan is to raise rates an additional 4 times by the end of 2019.  But more increases in rates would mean higher borrowing costs which could lead to lower profit margins for American businesses (source: Federal Reserve). 

Fiscal year 2019 begins today (10/01/18) and thankfully Washington is open for business.  A shutdown was avoided because House and Senate lawmakers passed legislation that gives Congress an additional 10 weeks (to 12/07/18) to agree upon limits for the 7 (of 12) spending bills that have yet to be completed.  That work will be on Washington’s agenda after the 11/06/18 mid-term elections (source: Congress).              

Notable Numbers for the Week:

  1. NOT READY - 30 of 50 US states do not have sufficient reserves set aside today to absorb the financial impact of an economic recession, forcing them to raise taxes/fees or reduce benefits (source: S&P Global).            

  2. WHAT IS YOUR END PLAN? - 59% of “working age” Americans (defined as adults between the ages of 21-64) have not accumulated assets in any retirement account – defined benefit pension plan, defined contribution plan (e.g., 401(k) plan) or an IRA (source: National Institute on Retirement Security). 

  3. IT JUST DEPENDS - The median rent today for a 1-bedroom apartment in San Francisco is $3,400.  The median rent today for a 1-bedroom apartment in Omaha, NE is $825.  The median rent today for a 1-bedroom apartment in Charlotte, NC is $1,275 (source: GOBankingRates).   

  4. SERVING TIME - 47 investment bankers worldwide received jail time as a result of the 2008 global recession, including 25 bankers from Iceland.  Just 1 American investment banker went to prison, receiving a 30-month sentence for “fraudulently inflating” the prices of mortgage-backed securities (source: Financial Times).

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

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

Vorisek Financial Weekly Market Update for September 26, 2018

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Good morning!

The USA implemented its 3rd round of tariffs aimed at Chinese imports last week.  The latest target was $200 billion of products shipped to America, on top of the $34 billion of imports earmarked in July and another $16 billion in August.  Together the $250 billion of Chinese imports now subject to tariffs represents half of all Chinese imports coming into the USA.  China has responded with retaliatory tariffs on $110 billion of American exports, payback that represents levies on 85% of the goods American businesses sell to China.  If the tit-for-tat battle continues, China may resort to other strategies, e.g., currency manipulation.  A weaker yuan would make the cost of Chinese imports cheaper to American buyers, offsetting the impact of the new tariffs (source: BTN Research).      

Equity investors have effectively navigated rising interest rates, Washington gridlock and international conflict (North Korea and Syria) in 2018.  The S&P 500 climbed to yet another all-time closing high last week, its 19th record close this year and 207th during its ongoing 9 ½ year bull market run.  The stock index is up +11.1% YTD (total return) with just over 3 months to go in the year (source: BTN Research).    

Hurricane Harvey hit Texas more than a year ago (on 8/25/17) and caused $125 billion in damages (inflation adjusted), the 2nd costliest weather disaster in US history, trailing only Hurricane Katrina (2005).  Hurricane Florence hit North Carolina on 9/14/18, killing 43 people and causing an estimated $38-50 billion in damages (source: National Hurricane Center, Moody’s Analytics).      

Notable Numbers for the Week:

  1. THIS YEAR - Last Wednesday (9/19/18), the national debt reached $21.494 trillion, an increase of $1 trillion from our nation’s outstanding debt of $20.493 trillion as of 12/31/17 (source: Treasury Department). 

  2. WE ARE IMPORTANT TO THEM - 19% of Chinese exports are purchased by American consumers, making the US the # 1 trading partner of China (source: WTEx). 

  3. JUST IN CASE - 27% of 2,000 adults surveyed own group life insurance through a policy made available by their employer but paid for by the employee.  70% of those purchasing the group insurance have death benefits of no more than $100,000 (source: OneAmerica/The Harris Poll).

  4. SOFTENING MARKET - 20% of the single-family homes for sale in San Diego dropped their asking price in June 2018, the highest percentage to do so in any major US city.  14% of single-family homes nationwide lowered their asking price in June 2018 (source: Freddie Mac).

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 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).

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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 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.