Vorisek Financial Weekly Market Update for August 29, 2018

WMR Logo (002).jpg

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.