Vorisek Financial Weekly Market Update for August 23, 2017

Good morning!

Equity investors cannot claim a history of correctly predicting turns in the stock market.  More often than not, nervous investors become overly pessimistic shortly before a market advance or they become markedly optimistic not long before a bear market tumble starts.  In a weekly survey that gauges equity investors’ sentiments for the upcoming 6 months, the most recent results provide little guidance for market watchers: 34% of investors are bullish, 33% are bearish and the remaining 33% are neutral, i.e., neither positive or negative on the stock market (source: American Association of Individual Investors).          

For the 6 years from November 2008 through October 2014, the Fed’s innovative plan to “print and purchase” $3.5 trillion of Treasury debt may have kept the American economy from falling into a depression by pushing interest rates down to historically low levels.  But now 3 years removed from the end of “quantitative easing,” the wheels are beginning to turn in order to unwind the Fed’s balance sheet as the QE programs are put in reverse.  How stock valuations and interest rates will react when the Fed shrinks its balance sheet is unknown as we have never been down this path before (source: BTN Research).         

Health insurance companies originally had a 6/21/17 deadline for the submission of a “qualified health plan” application for participation in 2018 ACA insurance exchanges.  The June application must have included proposed 2018 health insurance premium rates.  Changes to those 2018 premiums can be made through 9/05/17, a key deadline as some insurers continue to evaluate their participation in the ACA exchanges for the next year.  Open enrollment for 2018 signups begins 11/01/17 (source: Health and Human Services). 

Notable Numbers for the Week:

1.     CONSIDER THIS - A new state law in Colorado (House bill # 1041) requires high school guidance counselors to discuss alternatives to college as part of a student’s academic and career planning, e.g., military service and trade schools.  The law is effective for the school year that begins this month.  70% of all 2016 high school graduates enrolled in college (source: Department of Labor).   

2.     DONE WITH IT - 42 million Americans owe $1.34 trillion in student loan debt.  Historically, 60% of borrowers fully repay their student debt within 8 years of beginning repayment (source: CFPB). 

3.     MILITARY FORCE - There are 18.8 million military veterans in the United States.  The size of our active duty military is 1.3 million, including 472,000 in the US Army (source: USA Facts).       

4.     CRIMINAL RECORD - 324 individuals were convicted of crimes relating to the global real estate crisis that exploded worldwide in 2008 (source: Sigtarp).   

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