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Weekly Market Commentary (April 8, 2020)

 
 
The Markets
  
In the Wizard of Oz, Dorothy says to her little dog, "Toto, I've a feeling we're not in Kansas anymore." Today, many of us understand Dorothy's trepidation and uncertainty better than ever before.
 
COVID-19 has changed our world in ways previously unimaginable. In many states, Americans shelter at home, venturing out for groceries, medicine, and other essentials. Parents have become teachers guiding online schoolwork, often while balancing their own work and online meetings. We are learning to manage the loneliness, frustration, and anxiety that accompany quarantine conditions.
 
We are also learning to cope with rapid and unexpected financial upheaval. In less than a month, businesses have adapted to changed circumstances. Some are laying off or furloughing workers. Others have put equipment and technology in place to allow continued or remote operations. Our collective hope is the curve will flatten.
 
Despite solid performance early on, the first quarter of 2020 was one of the worst ever for U.S. stock markets.
 
At the start of the quarter (and the year), investors were confident despite concerns about trade. Many asset classes finished 2019 on a positive note. The Standard & Poor's 500 Index and the Dow Jones Global (ex U.S.) Index both finished the year with double-digit increases. Bonds and gold delivered positive returns, too.
Markets stuttered in January when conflict arose between the United States and Iran but recovered quickly as tensions eased. Soon thereafter, the United States and China reached a preliminary trade agreement. Investors were thrilled and the Dow Jones Industrial Average surpassed 29,000 for the first time ever.
 
It wasn't until late January that news of the coronavirus outbreak in China began to unsettle investors. Many were concerned that precautions designed to slow the spread of the virus could also slow China's economic growth and, by extension, global economic growth.
 
Major U.S. stock indices continued to gain value in February. At the time, Ben Levisohn of Barron's reported, "They say the best defense is a good offense. The U.S. stock market may offer both... loading up on U.S. stocks looks like the right move. That's because the world's problems [coronavirus in China and lackluster economic growth in the European Union] might actually make U.S. markets more attractive."
 
The early-March decline in U.S. stock markets was triggered by price wars in the oil market. Natasha Turak of CNBC reported that Saudi Arabia and Russia failed to reach agreement about output, which sparked a price war. The subsequent supply and demand imbalance - the market was glutted with oil in a time of falling demand - caused oil prices to drop sharply.
 
Demand for oil continued to drop as coronavirus spread into more countries. U.S. stocks reflected concerns that COVID-19 could become the catalyst for recession in the United States and elsewhere, reported Heather Long and colleagues at The Washington Post. Uncertainty increased when, during U.S. earnings calls, many companies were unable to quantify the potential impact of coronavirus on their businesses.
 
As the potential human toll of the virus became better understood, many states closed non-essential businesses and issued shelter-in-place orders. Investors began selling shares to ensure they had cash available. As a result, shares were sometimes sold at low prices with little regard for long-term performance potential.
 
Nicholas Jasinski of Barron's reported monetary and fiscal stimulus, including relief for individuals and businesses, has helped restore some optimism to markets. In addition, greater certainty about the potential dimensions of the virus may be restoring confidence. He wrote:
 
"Now, investors seem to be moving on to the next stage of the coronavirus market: picking winners and losers. The correlation between stocks in the S&P 500 index has retreated from its recent near record-high levels, a sign that investors may be considering them more on their own merits. And day-to-day index volatility has fallen significantly since the Dow's three-day surge."
 
It is possible we have passed peak uncertainty. While the exact dimensions of the coronavirus remain unknown, investors' fears have begun to recede. Barron's reported the CBOE Volatility Index (VIX), Wall Street's fear gauge, closed below 50 last week for the first time since early March.
 
Major U.S. stock indices finished last week lower, capping the worst monthly and quarterly performance in U.S. stocks since the 2008 financial crisis.
 

Data as of 4/3/20
1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor's 500 (Domestic Stocks) -2.1% -23.0% -13.4% 1.8% 3.7% 7.7%
Dow Jones Global ex-U.S. -3.1 -27.1 -22.9 -5.8 -4.0 -0.8
10-year Treasury Note (Yield Only) 0.6 NA 2.5 2.4 1.9 4.0
Gold (per ounce) -0.3 5.9 25.0 9.0 5.9 3.6
Bloomberg Commodity Index -0.8 -23.1 -24.3 -10.6 -9.2 -7.5
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance, MarketWatch, djindexes.com, London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
 
Humor for trying times. In her article, Yes, this business still has your email! Here's how we're responding to covid-19!, Alexandra Petri of The Washington Post skewered tone-deaf communications. Here is an excerpt:
 
"We hear that last week's email saying we would for the first time be sanitizing all the shared equipment was not what people wanted right now, exactly! Message received loud and clear! So we put our heads together to think of a way to come together and serve this cherished community...You may be thinking, 'I am not part of the Sam's Kayak Family, and to be completely honest, I did not know you had my information!' To that we say: We hear you, we see you, and we are so proud to have you in the Sam's Kayak Family."
 
Weekly Focus - Think About It
 
"Fate is like a strange, unpopular restaurant filled with odd little waiters who bring you things you never asked for and don't always like."--Lemony Snicket, Author
 
Best regards,
Lee Barczak
President
 
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.  However, the value of fund shares is not guaranteed and will fluctuate. *Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features. * The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index. * The Standard & Poor's 500 (S&P 500) is an unmanaged index. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. * The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index. * The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market. * Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce. * The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998. * The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones. * Yahoo! Finance is the source for any reference to the performance of an index between two specific periods. * Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. * Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful. * Past performance does not guarantee future results. Investing involves risk, including loss of principal. * You cannot invest directly in an index. * Consult your financial professional before making any investment decision.
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Weekly Market Commentary (April 2, 2020)

Weekly Market Commentary (April 2, 2020)
 
The Markets
 
The United States set some records last week.
 
First, we became the epicenter of the COVID-19 pandemic. Popular Science explained:
 
"An increase of 15,000 known cases in just one day pushed the United States past Italy and China, making it the new epicenter of the pandemic...Experts suspect the actual number of U.S. cases is much higher than currently reported...the United States has tested a far lower percentage of its large population than other hard-hit countries."
 
On Friday, March 27, the Centers for Disease Control (CDC) reported there were 103,321 confirmed cases and 1,668 deaths in the United States.
 
Second, as businesses across the country closed, leaving many workers without income, first-time claims for unemployment benefits hit an all-time high of 3.3 million. The previous record of 695,000 was set in 1982, during one of the deepest recessions the United States had experienced to date.
 
Third, Congress passed the biggest aid package in history. The $2.2 trillion Coronavirus Aid, Relief, and Economic Security Act (CARES) was signed into law last week. The CARES Act authorizes financial support for workers and businesses, including:
 
Relief checks. If you earn less than $75,000, and file taxes singly, you can expect a one-time payment of $1,200. If you're married, you and your spouse will each receive a check. Children will receive $500 each. Social Security benefit recipients will receive checks, too.
 
Higher unemployment benefits. CARES raised unemployment benefits by $600 a week for four months.
 
Tax credits for businesses that keep paying employees. Businesses of all sizes are eligible for a tax credit intended to keep workers on the payroll. The credit is up "to 50 percent of payroll on the first $10,000 of compensation, including health benefits, for each employee," reported NPR.
 
U.S. stock markets rallied on the news. Some speculated the shortest bear market in history had ended, but Randall Forsyth of Barron's cautioned, "To anybody who has been around for a market cycle or more, that pop was the very essence of a bear-market rally, and such rallies are the most violent."
 
Major U.S. indices moved higher during the week.
 

Data as of 3/27/20
1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor's 500 (Domestic Stocks) 10.3% -21.3% -9.4% 2.8% 4.3% 8.0%
Dow Jones Global ex-U.S. 9.5 -24.8 -18.5 -4.9 -3.2 -0.2
10-year Treasury Note (Yield Only) 0.8 NA 2.4 2.4 2.0 3.0
Gold (per ounce) 8.2 6.2 23.5 8.8 6.2 3.9
Bloomberg Commodity Index 2.6 -22.5 -23.1 -9.4 -8.8 -7.2
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance, MarketWatch, djindexes.com, London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
 
Practical advice for handling packages and groceries. The Washington Post published an article written by Joseph G. Allen, an assistant professor of exposure and assessment science at Harvard's School of Public Health. Allen explained precautions to take to prevent disease transfer from packages and groceries. (Yes, coronavirus can live on a surface, but the risk of disease transmission is low.)
 
Here are some of Allen's suggestions for handling delivery packages:
 
  • Leave packages outside or bring them inside and leave them by the door for several hours.
  • Wipe down package exteriors with disinfectant.
  • Unwrap packages and leave the packaging in the recycling can.
  • Wash your hands after touching a package.
 
Allen also offered suggestions for grocery shopping:
 
  • Stay six feet from other shoppers.
  • Don't touch your face while shopping.
  • Put your groceries away.
  • Wipe anything you are using immediately with disinfectant. (Clean all grocery packages before you put them away, if it makes you more comfortable.)
  • Wash your hands after putting groceries away.
  • Wash fruits and vegetables before using.
 
So, how many hours is enough hours to wait? Allen explained the findings of an article in the New England Journal of Medicine. "...the virus's half-life on stainless steel and plastic was 5.6 hours and 6.8 hours, respectively. (Half-life is how long it takes the viral concentration to decrease by half, then half of that half, and so on until it's gone.)"
 
Finding humor in a time of stress. In Time's article, 'Laughter Helps the Brain Relax. How Humor Can Combat Coronavirus Anxiety,' William Kole offered some insights to the importance of humor:
 
"Neil Diamond posts a fireside rendition of 'Sweet Caroline' with its familiar lyrics tweaked to say, 'Hands ... washing hands.' A news anchor asks when social distancing will end because 'my husband keeps trying to get into the house.' And, a sign outside a neighborhood church reads: 'Had not planned on giving up quite this much for Lent.' Are we allowed to chuckle yet? We'd better, psychologists and humorists say. Laughter can be the best medicine, they argue, so long as it's within the bounds of good taste."
 
When you're feeling overwhelmed, it can help to spend some time with the work of your favorite comedian, satirist, or cartoonist.
 
Weekly Focus - Think About It
 
"Apparently there is nothing that cannot happen today."
--Mark Twain, Humorist
 
Best regards,
Lee Barczak
President
 
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.  However, the value of fund shares is not guaranteed and will fluctuate. *Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features. * The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index. * The Standard & Poor's 500 (S&P 500) is an unmanaged index. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. * The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index. * The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market. * Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce. * The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998. * The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones. * Yahoo! Finance is the source for any reference to the performance of an index between two specific periods. * Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. * Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful. * Past performance does not guarantee future results. Investing involves risk, including loss of principal. * You cannot invest directly in an index. * Consult your financial professional before making any investment decision.
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Weekly Market Commentary (March 23, 2020)

 
The Markets
 
The coronavirus (COVID-19) continued to spread across the United States last week.
 
On Friday, March 13, the Centers for Disease Control (CDC) reported there were 1,629 confirmed and presumptive cases and 41 deaths. Last Friday, March 20, the numbers had increased to 15,219 cases and 201 deaths.
 
Governments in several states - including California, Colorado, Connecticut, Florida, Georgia, Idaho, Illinois, Louisiana, Maine, New Jersey, and New York - have issued shelter-in-place orders that apply to the entire state or one or more counties within the state. The intent is to enforce social distancing and slow the spread of COVID-19, reported Wired.
 
Mandates varied by region. Many included closing non-essential businesses and required residents to stay home unless they were buying groceries or gasoline, filling prescriptions, seeking medical care, or exercising outdoors (while practicing social distancing).
 
The shape of many Americans' daily lives has changed significantly. Last week, Barron's reported initial claims for unemployment benefits in the United States increased sharply, while U.S. manufacturing productivity dropped significantly.
 
The impact of measures taken to fight the spread of COVID-19 on companies, financial markets, and the economy is difficult to quantify at this point. However, there is reason to hope it will be relatively brief. The Economist reported:
 
"Despite stomach-churning declines in GDP [gross domestic product, which is the value of goods and services produced in a nation or region] in the first half of this year, and especially the second quarter, most forecasters assume that the situation will return to normal in the second half of the year, with growth accelerating in 2021 as people make up for lost time."
 
Monetary stimulus will have a significant impact on outcomes around the globe. Central banks have been implementing supportive monetary policies. Last week, the Federal Reserve lowered its benchmark rate to near zero, announced a new round of quantitative easing, and took additional steps to inject liquidity into markets.
 
Fiscal stimulus - the measures implemented by governments - will also be critical. To date, the United States has passed two stimulus measures. The first provided $8.3 billion in emergency funding for federal agencies to fight COVID-19. The second is estimated to deliver about $100 billion for testing, paid family and sick leave (two weeks), funds for Medicaid and food security programs, and increases in unemployment benefits. The third stimulus is currently being negotiated in Congress and may provide more than $1 trillion dollars in relief to individuals and companies, reported Axios. On Sunday, Reuters reported the Senate planned to vote on the bill on Monday, March 23, 2020.
 
Major U.S. stock indices finished last week lower, reported CNBC.
 
We hope you and your family are well and remain so. Please take the precautions advised by your city, state, and federal governments to limit the advance of COVID-19.
 

Data as of 3/20/20
1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor's 500 (Domestic Stocks) -15.0% -28.7% -18.4% -1.0% 1.8% 7.0%
Dow Jones Global ex-U.S. -8.0 -31.3 -26.5 -7.8 -5.1 -1.1
10-year Treasury Note (Yield Only) 0.9 NA 2.5 2.5 1.9 3.7
Gold (per ounce) -4.4 -1.9 14.6 6.6 4.8 3.1
Bloomberg Commodity Index -6.5 -24.5 -25.8 -10.5 -9.3 -7.4
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance, MarketWatch, djindexes.com, London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
 
Financial help during COVID-19 crisisThe temporary closing of non-essential businesses, shelter-in-place orders, and other changes that have come with efforts to keep COVID-19 from overwhelming hospital and healthcare facilities are creating economic challenges for many families. Here are four support and stimulus measures that may help.
 
  1. Financial support from banks and financial companies. Americans who find themselves without work or working fewer hours may want to contact their banks. CNBC reported some banks and financial companies are willing to provide support during this difficult time, including:
 
  • Deferring payments on mortgage, auto, and other personal loans
  • Deferring payments on small business loans
  • Waiving customer overdraft, expedited check, and debit card fees
  • Waiving customer fees on excessive savings account withdrawals
  • Waiving penalties for early withdrawals from certificates of deposit
  • Refunding overdraft, insufficient funds, and monthly maintenance fees for bank and small business customers
  • Pausing foreclosures, evictions, and repossessions
  • Offering economic disaster loans
 
Customers must contact their banks to request support.
 

2. Tax Day postponement to July 15. The Internal Revenue Service pushed the 2019 tax filing deadline from April 15, 2020 to July 15, 2020. The three-month delay is intended to help Americans cope with the financial effects of COVID-19, reported CNBC. If you expect a refund, you may want to file sooner.

 
It is unclear whether 2019 contributions to IRAs must be made by April 15, 2020. Also, the deadline for filing taxes in your state may remain unchanged. Check with your state's treasury office.
 

3.Stimulus checks from the government. The details are not yet available, but it appears the bill currently being debated in Congress may include stimulus checks for Americans. The proposals vary so it is impossible to provide specifics right now, according to Kiplinger.

 

4. Paid and family sick leave. On March 18, the Families First Coronavirus Response Act was passed. The new law requires employers with fewer than 500 workers to provide up to 80 hours of paid sick leave to employees affected by COVID-19. You qualify to receive your full wages (up to $511 per day) while on paid leave if you are sick or quarantined.

 
If you are caring for someone who is ill with coronavirus, or you are home caring for children, then you qualify to receive two-thirds of wages (up to $200 a day).
 
Go to Kiplinger.com to see if any other assistance may apply to you.
           
Weekly Focus - Think About It
 
"In the midst of every crisis, lies great opportunity."
--Albert Einstein, Physicist
 
Lee Barczak
President
 
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.  However, the value of fund shares is not guaranteed and will fluctuate. *Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features. * The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index. * The Standard & Poor's 500 (S&P 500) is an unmanaged index. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. * The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index. * The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market. * Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce. * The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998. * The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones. * Yahoo! Finance is the source for any reference to the performance of an index between two specific periods. * Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. * Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful. * Past performance does not guarantee future results. Investing involves risk, including loss of principal. * You cannot invest directly in an index. * Consult your financial professional before making any investment decision.
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Weekly Market Commentary (February 25, 2020)

 
The Markets
 
Risk on or risk off?
 
The coronavirus appears to have inspired two distinct schools of thought among investors. Some investors currently favor opportunities that are considered lower risk, like Treasury bonds and gold, because they're concerned about the potential impact of the coronavirus on the global economy. Others are piling into higher risk assets, like stocks, that could benefit if central banks (like the United States Federal Reserve) take steps to stimulate economic growth, reported Randall Forsyth of Barron's.
 
Currently, the Federal Reserve (Fed) is holding interest rates steady. The minutes of the January Federal Open Market Committee meeting indicated the Fed, "...generally saw the distribution of risks to the outlook for economic activity as somewhat more favorable than at the previous meeting," reported Lindsay Dunsmuir of Reuters.
 
Last week, Fed Chair Jerome Powell said it was too soon to know whether the economic effects of the coronavirus on the U.S. economy would warrant a change in monetary policy.
 
Last week, major U.S. stock indices moved lower. Al Root of Barron's reported, "The Dow Jones Industrial Average dropped 1.4 percent this past week, snapping two weeks of solid gains...The S&P 500 index dropped 1.2 percent for the week...The Nasdaq Composite dropped 1.6 percent on the week..."
 
The CBOE Volatility Index (VIX), known as Wall Street's fear gauge, moved higher. This signifies that investors are more fearful than greedy.
 

Data as of 2/21/20
1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor's 500 (Domestic Stocks) -1.3% 3.3% 20.3% 12.2% 9.6% 11.7%
Dow Jones Global ex-U.S. -1.4 -1.8 6.6 4.6 2.0 3.0
10-year Treasury Note (Yield Only) 1.5 NA 2.7 2.4 2.1 3.8
Gold (per ounce) 3.9 7.9 23.4 10.0 6.4 4.0
Bloomberg Commodity Index 1.2 -5.7 -6.8 -4.6 -5.6 -5.5
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance, MarketWatch, djindexes.com, London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
 
some people must still take required minimum distributions at 70½. The Setting Every Community Up for Retirement Enhancement (SECURE) Act was signed into law late in 2019. One of its provisions changed the rules for required minimum distributions (RMDs).
 
RMDs are the amounts owners of IRAs, 401(k)s, and other tax-advantaged retirement plan accounts must withdraw from those accounts every year to avoid tax penalties. In some cases, retirees take more than the required minimum amount, especially when they are using the funds for income.
 
Prior to passage of the SECURE Act, Americans were required to take RMDs in the year they reached age 70½. This rule continues to apply to anyone who reached age 70½ prior to 2020. The Internal Revenue Service (IRS) defines age 70½ this way: The date that is six calendar months after your 70th birthday.
 
Beginning in 2020, owners of tax-advantaged retirement accounts do not have to begin taking RMDs until the year in which they reach age 72.
 
While the SECURE Act changed the age for RMDs, Qualified Charitable Distributions (QCDs) from IRAs were not affected by the new law. QCDs still can begin at age 70½.
 
RMDs can be complex, especially for households that have several IRA and retirement plan accounts. It's a good idea to consult with a financial or tax professional before making any RMD decision. If you would like to discuss the finer points of RMDs, or receive some assistance calculating RMDs, get in touch. We're happy to help.
           
Weekly Focus - Think About It
 
"Friendship...is born at the moment when one [person] says to another "What! You too? I thought that no one but myself..."
--C.S. Lewis, writer and theologian
 
Best regards,
 
Lee Barczak
President
 
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.  However, the value of fund shares is not guaranteed and will fluctuate. *Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features. * The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index. * The Standard & Poor's 500 (S&P 500) is an unmanaged index. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. * The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index. * The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market. * Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce. * The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998. * The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones. * Yahoo! Finance is the source for any reference to the performance of an index between two specific periods. * Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. * Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful. * Past performance does not guarantee future results. Investing involves risk, including loss of principal. * You cannot invest directly in an index. * Consult your financial professional before making any investment decision.
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Weekly Market Commentary (February 11, 2020)

Weekly Market Commentary (February 11, 2020)
 
The Markets
  
Last week, major U.S. indices posted strong gains. That's welcome news, but the drivers behind share price appreciation appear to have little to do with company fundamentals.
 
Fourth quarter earnings season is underway. During earnings season, companies let investors know how profitable they were during the previous quarter. With 45 percent of companies in the Standard & Poor's 500 (S&P 500) Index reporting, earnings are slightly down. If the trend continues, this will be the fourth consecutive quarter of year-over-year earnings declines, according to FactSet.
 
Falling company profits, in tandem with rising share prices, have made U.S. stocks very expensive. The price-to-earnings ratio of the S&P 500 Index was 25.04 on Friday. That's significantly higher than its long-term average of 15.78.
 
Expectations for economic growth may have been behind last week's gains. Axios reported, "U.S. economic data had been strengthening ahead of the [coronavirus] outbreak - last month the all-important services sector notched its best reading since September, a private payrolls survey showed the highest job growth in five years, and consumer confidence held at historically high levels."
 
The Economist Intelligence Unit (EIU) estimates U.S. economic growth will be 1.7 percent in 2020, although the coronavirus could create issues that slow growth.
 
Economic growth also could be inhibited by the national debt. The Federal Reserve Bank of St. Louis showed U.S. debt at about 105 percent of gross domestic product (GDP) at the end of the third quarter of 2019 (GDP is the value of all goods and services produced by the United States). According to the Council on Foreign Relations, high levels of debt can slow economic growth and divert investment from infrastructure, education, and research.
 
Ben Levisohn of Barron's suggested last week's gains might have been the result of limited supply and high demand for U.S. stocks, "...because the world's problems might actually make U.S. markets more attractive." Stock market gains may also owe something to supportive central bank policies.
 
During the next few weeks, stay calm and expect some volatility.
 

Data as of 2/7/20
1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor's 500 (Domestic Stocks) 3.2% 3.0% 23.0% 13.2% 10.2% 12.2%
Dow Jones Global ex-U.S. 1.9 -0.9 9.8 5.6 2.8 3.5
10-year Treasury Note (Yield Only) 1.6 NA 2.7 2.4 2.0 3.6
Gold (per ounce) -0.7 3.3 20.1 8.5 4.9 4.0
Bloomberg Commodity Index -0.1 -7.6 -6.6 -5.2 -6.3 -5.2
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance, MarketWatch, djindexes.com, London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
 
DO YOU KNOW A FINANCIAL TWO-TIMER? In an online poll conducted by YouGov, CreditCards.com asked people how open and honest they are with their spouses and partners about money. The survey discovered financial infidelity is not uncommon. Respondents cheat financially in a variety of ways, including:
 
34 percent have spent more than their spouse/partner would approve
12 percent have secret debt
10 percent have secret credit card accounts
  9 percent have secret savings accounts
  8 percent have secret checking accounts
           
Respondents had a variety of reasons for secretive financial dealings:
 
36 percent said privacy and control were important
27 percent said they never felt the need to share
26 percent were embarrassed by the way they handle money (frequently cited by wealthiest respondents.)
 
Janice Wood of PsychCentral wrote, "Financial infidelity can take as big a toll on relationships as sexual infidelity and emotional dishonesty...A few things that couples can do to prevent financial infidelity is to talk more, get on the same page regarding both joint and individual goals they might have, and also budget for some occasional indulgences along the way of achieving their long-term financial goals..."
 
If you're looking for a great Valentine's Day gift, talking with your spouse or partner about money is a choice that could deliver long-term rewards.
 
Weekly Focus - Think About It
 
"It is better to be hated for what you are than to be loved for what you are not."
--Andre Gide, Author and Nobel Prize winner
 
Best regards,
 
Lee Barczak
President
 
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.  However, the value of fund shares is not guaranteed and will fluctuate. *Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features. * The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index. * The Standard & Poor's 500 (S&P 500) is an unmanaged index. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. * The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index. * The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market. * Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce. * The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998. * The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones. * Yahoo! Finance is the source for any reference to the performance of an index between two specific periods. * Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. * Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful. * Past performance does not guarantee future results. Investing involves risk, including loss of principal. * You cannot invest directly in an index. * Consult your financial professional before making any investment decision.
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