Strength, Growth, and Tension
Weekly Update – June 11, 2018
As last week ended, tension between the U.S. and some of its greatest allies was on the rise. Trade remained a hot-button topic ahead of the G-7 meeting in Canada, but investors seemed largely unfazed by the drama.[1] In fact, all 3 domestic indexes posted strong results: The S&P 500 added 1.62% and the NASDAQ gained 1.21%, with both indexes notching their 3 rd week of gains in a row.[2]The Dow ended Friday up 2.77% for the week – recording both its highest level and largest weekly gain since March.[3] International stocks were also up, with the MSCI EAFE increasing by 0.91%.[4]
While geopolitical headlines keep unfolding, new data continues to indicate that the U.S. economy is on solid ground. Let’s examine a few updates we received last week:
1. The trade deficit decreased in April.
The latest trade data was largely positive, with the trade deficit hitting a 7-month low and coming in nearly $3 billion lower than expected. In April, exports reached their highest level in history. The economists at First Trust believe that this strong performance could push the 2 nd-quarter Gross Domestic Product (GDP) as high as 5%. [5]
2. The labor market continues to tighten.
The latest Job Openings and Labor Market Survey (JOLTS) gave an interesting perspective on our current labor market. [6] Right now, more jobs are available than unemployed people looking for them. Since JOLTS began almost 20 years ago, this has never happened before. The data indicates that employers are struggling to hire people for open jobs – and that the economy is at full employment. [7]
3. The services sector is expanding.
May data from the ISM non-manufacturing index showed that the services sector has experienced its 2 nd-best beginning of a year since the index launched in 1997. Business activity and new orders had very positive performance, which could contribute to continuing service-sector growth for the months ahead. The report also showed prices increasing and provided more data that employers are having a hard time filling jobs in this tight labor market. [8]
What is ahead this week?
We will receive two major central bank reports this week – and the historic U.S.-North Korea summit is on the docket as well.
President Trump and North Korea’s leader Kim Jong Un are meeting on Tuesday. The talks should cover North Korea’s nuclear program, but no one can say for sure what market impact it may have.
On a more predictable note, most analysts expect the Federal Reserve to announce its latest interest rate hike on Wednesday. While the markets have likely priced in this increase already, the Fed’s projections for the rest of 2018 could affect investor sentiment.
Meanwhile, on Thursday, experts expect the European Central Bank (ECB) will announce a plan to finally wind down its quantitative easing. If the ECB doesn’t share a timeline for ending this recession-era program, investors may interpret the move as a sign that policymakers are concerned about the EU’s economic outlook.[9]
With a lot to consider this week, we encourage you to remember that many data updates indicate our economy is performing well. As the information unfolds, we’re here to help you separate relevant reports from headline hype. Contact us any time if you have questions about how these details may affect your financial life.
ECONOMIC CALENDAR
Tuesday: Consumer Price Index
Wednesday: FOMC Meeting Announcement
Thursday: Jobless Claims, Retail Sales
Friday: Industrial Production, Consumer Sentiment
Notes: All index returns (except S&P 500) exclude reinvested dividends, and the 5-year and 10-year returns are annualized. The total returns for the S&P 500 assume reinvestment of dividends on the last day of the month. This may account for differences between the index returns published on Morningstar.com and the index returns published elsewhere. International performance is represented by the MSCI EAFE Index. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly.
“Wealth is the ability to fully experience life.”
– Henry David Thoreau
Thai Beef and Veggie Stir-Fry
Serves 4
Ingredients:
- 1 pound beef sirloin
- 8 ounces green beans
- ¼ cup Thai green curry paste
- 1 13.5-ounce can of unsweetened light coconut milk
- 1 8-ounce can of bamboo shoots
Directions:
- Cut the beef into thin slices. Add ¼ teaspoon kosher salt to season.
- Heat a large skillet on medium-high. Spread 1 tablespoon of olive oil on heated skillet. Cook the beef in the skillet until it is browned, 2-3 minutes on each side. Move to a plate.
- As the beef cooks, cut the green beans in half. Hold for later.
- Put the Thai green curry paste into the skillet and stir while cooking, 2 minutes.
- Stir in the unsweetened light coconut milk. Bring the mix to a simmer.
- Put the green beans into the skillet and cook until the beans are tender, 3-5 minutes.
- At the same time, pour out the liquid from the can of bamboo shoots.
- Put the beef and the bamboo shoots in the skillet, and thoroughly heat.
- Serve the dish over cooked rice. Sprinkle it with fresh basil.
Recipe adapted from Good Housekeeping[10]
Don’t Say This to Beginner Golfers
You’re taking your friend for his first golf game. You’ve provided a few tips and some basic golf instruction. The beginner has spent time at the range. You’ve been golfing for years, but you’ve never actually taught another player.
You want to help him and instill the same passion for the game that you’ve developed. But there’s a big problem.
While beginning players face challenges that may lead to frustration and, ironically, serve to inspire, beginning “instructors” may unknowingly disenchant new players from ever playing the game again.
How can you turn off new players from golf in seconds flat? By sprinkling your well-meaning advice heavily with dreaded clichés, said in an overbearing, condescending tone.
Here they are in all their ignominy:
- “Keep your head down.”
- “Keep your eye on the ball.”
- “Straighten your left arm.”
- “Keep your head still.”
- “Pause at the top.”
- “Swing slower.”
“Most of these are detrimental to any golfer,” said Jason Birnbaum, one of Golf Digest’s Best Young Teachers and Director of Instruction at Manhattan Woods Golf Club. “They create tension and are terrible swing thoughts when it comes to improvement.”
Birnbaum urges “instructors” to tell novices to the game to make half swings and to use tees anywhere.
“You want to give them every chance to succeed early,” he said.
One last surefire tip to get new players excited about golf: Don’t keep score.
Tip adapted from Golf Magazine [12]
How to Go Solar
Solar power is going down. The price of solar photovoltaics (PV) is dropping fast. Since 2008, the cost has fallen more than 75%.
By some estimates, converting to solar power can save homeowners tens of thousands of dollars over 20 years.
Here are some tips for determining whether solar is right for you:
- Is your home a good fit? Is your monthly power bill less than $100? Winterizing your home might be a better bet.
- Do the math. Check with local providers to determine initial costs.
- How about those incentives and rebates? Do research on federal and state incentives. Rebates can reduce upfront costs by nearly 50%.
- Read the fine print. Before signing a contract with solar PV installers, check the warranties on parts and accessories. After all, you’re in this for the long haul.
- Where does the sun shine? Does your roof get adequate exposure? Shade from trees may block access to the sun’s rays and heat.
- Check out leasing companies. Going solar can be a big initial investment. In many states, some companies can install PVs for no money down. Visit https://www.energysage.com/solar/financing/companies/ for more information.
One major advantage to going solar is the long-term cost. The sun isn’t about to raise its monthly rates anytime in the next few millenniums.
Tip adapted from EarthShare [14]
Zack Alkhamis CRPC, CFS
Matthew Jarrell, CFS, AIF
Timothy A. McAfee, CPA, CFP, PPC, MST
The Retirement Wealth Management Group
7900 Kirkland Court
Portage, MI 49024
269-978-0238
zack.alkhamis@lpl.com
http://www.retirementwealthmanagementgroup.com
Portage, MI 49024
269-978-0238
zack.alkhamis@lpl.com
http://www.retirementwealthmanagementgroup.com
Copyright © 2018. All Rights Reserved.
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[1] www.marketwatch.com/story/dow-futures-slide-130-points-as-g-7-leaders-feud-over-trade-2018-06-08
www.marketwatch.com/story/dow-futures-slide-130-points-as-g-7-leaders-feud-over-trade-2018-06-08
www.marketwatch.com/story/dow-futures-slide-130-points-as-g-7-leaders-feud-over-trade-2018-06-08
[5] www.ftportfolios.com/Commentary/EconomicResearch/2018/6/6/the-trade-deficit-in-goods-and-services-came-in-at-46.2-billion-in-april
[6] www.ftportfolios.com/Commentary/EconomicResearch/2018/6/5/the-ism-non-manufacturing-index-rose-to-58.6-in-may
[8] www.ftportfolios.com/Commentary/EconomicResearch/2018/6/5/the-ism-non-manufacturing-index-rose-to-58.6-in-may
[9] www.marketwatch.com/story/stock-market-investors-brace-for-week-packed-with-fed-ecb-and-north-korean-drama-2018-06-09?dist=markets
[10] www.goodhousekeeping.com/food-recipes/easy/a47888/thai-beef-and-veggie-stir-fry-recipe/
[11] www.irs.gov/newsroom/multimedia-center