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8Oct

WHAT IS HAPPENING WITH U.S. AND CHINESE TARIFFS?

The U.S. buys a lot from China. That may be the understatement of the year. The number is actually a half a trillion dollars annually. That is a very big number, even by Washington’s standards. It may seem like just about everything that we buy as American consumers is made in China and that isn’t far off base. Cell phones, computers, toys and furniture are some of the leading imports and the first two make up the biggest percentage of imports. The problem is that the Chinese government does not want to reciprocate. China imports about $15 billion annually of U.S. farm crops such as soy beans and $10.5 billion of transportation equipment such as airplanes. They also import about $7 billion annually of oil and gas products. While much of the attention in talk of a “trade war” has centered on steel and aluminum, those two products represent a

13Aug

OIL PRICES; WILL THERE BE CONTINUED DREAD AT THE GAS STATION?

The pain at the pump has really hit home for many Americans during the recent holidays with prices that have averaged 73 cents more than a year ago. The average price of regular gas nationwide was $2.26 a year ago. The price of gas on Independence Day was the highest in four years. A barrel of Brent crude increased by five dollars from April to May. More than one variable has been at play creating a surge in the price of oil. The OPEC member countries voted to cut back on oil production in 2016. With demand staying high, and even higher in China, the price of oil, and by extension gasoline, was impacted by the falling supply. The U.S. supplies Saudi Arabia with military weapons, including a $350 billion deal last year. The president has asked the Saudi King to increase oil production. The head of OPEC said that

26Mar

RISING INTEREST RATES; IMPACT ON BONDS

After lots of speculation the last couple of years, interest rates have begun a slow climb out of the cellar, thanks to a more robust economy. It is a double-edged sword in many ways, with borrowing costs going up as economic stimulus simultaneously accelerates. The Federal Reserve, under its new chairman Jerome Powell, has its eye keenly focused on the low unemployment rate and the threat of encroaching inflation. After near zero interest rates for years, these factors are forcing their hand. Chairman Powell’s recent remarks before the House Financial Services Committee were encouraging in terms of the economy and its direction, but that is where that double-edged sword can be found. This good news means that the Fed can see the prospect of increasing inflation and their answer is to raise interest rates. An overheated economy, means that the pace of rate increases has to increase, and that increases

8Jan

NEW HOME SALES HIT 10-YEAR HIGH

It’s the American dream; to own a home, and maybe some property and make it your own. The past decade and a half has borne witness to a rollercoaster ride in the values of homes in many parts of the country. New home sales sank to a 6-year low by February of 2007, falling to an annualized pace of 848,000 units. That was down four percent from January of that year. That number also represented an 18.3 percent drop from the year earlier figure. Problems had also showed up in the sub-prime mortgage sector that month with tightening credit. These figures helped to push the broad stock market indexes lower. Ironically, it had been new home sales in 2004 and 2005 that had helped contribute to a more robust economy those years. This year has been a real departure from 2007. September saw an annually-adjusted rate of 645,000 units in

31Jul

THE FAANG STOCKS MAY STILL HAVE FANGS

The Internet hasn’t only changed the way people communicate, check on financial accounts or study for school projects; it has brought great wealth to certain companies and their stockholders. Whether they are in the social media realm, in entertainment, online product sales or make the devices we use to access the Internet, most have reflected the explosion in this new technology. FAANG stocks, a term presumably coined by well-known stock promoter Jim Cramer, describes five tech stocks that have had tremendous growth in recent years — Facebook, Apple, Amazon, Netflix and Google (Alphabet). These five stocks account for 11.9 percent of the S&P 500’s market capitalization. The stocks had all had great success since their initial offerings and continued that trajectory during the rally after the inauguration through March. Then; something happened. First, during the week of  June 5th to 9th, 2017, several of the stocks hit new highs. Call it

17Jul

FALLING OIL PRICES

Watch the bouncing ball; that may describe oil prices in recent years. With incremental changes, Americans are at the point where we might not even pay attention anymore. It’s only those trends that move the ball substantially, either up or down, that seem to catch our attention. With that in mind, oil prices have mostly trended downward in recent months, reaching a 7-month low in mid-June. The reasons are many with catalysts in various parts of the world. In May, it was partially due to increased production in Libya and an oversupply in the U.S. That last reason may be a curiosity to many compared with the status quo only five or ten years ago. But, more recently, the U.S. stockpiles have remained resilient. OPEC had cut production to bolster prices, but the move had not made a big dent in the global supply, which has kept prices in check.

19Jun

THE RECENT FRENCH ELECTION

Preventing future terrorist attacks was apparently not on the minds of the French people as they went to the polls and voted for Emmanuel Macron as the country’s next president. Macron had run on a pro-Europe, pro-EU platform, but it was his opponent who ran on the need for stricter vetting of refugees. At 39, Macron is the youngest person to hold the position since Napoleon. The French presidential election occurs in two phases and Emmanuel Macron and Marine Le Pen were the top two finalists who survived the first round two weeks before and sought political victory in a second round that happened two weeks later. Election result projects in France gave Macron two thirds of the vote. Instead of leading another country to exit the European Union, Macron embraces the EU and campaigned on his commitment to the union. Macron’s competitor’s campaign for the presidency never had a

22May

FRENCH ELECTIONS; WHAT DOES IT MEAN?

France has had more than its share of terrorist events and that fact has crept into the country’s politics. It has propelled one of two parties competing for the presidency into prominence for the post. Emmanuel Macron and Marine Le Pen made it through round one to fight it out in a run-off election. The first round of voting occurred on April 23, 2017 and the second round run-off will happen on May 7, 2017. Neither finalist comes from either of the country’s two leading parties. News sources characterize them both as outsiders, although Macron had worked as the Deputy Secretary General and Economy Minister for French president Hollande. The candidates from the country’s two major parties only accounted for less than 27 percent of the total vote. The voters have spoken. If this sounds like it bears a resemblance to the last U.S. presidential election, you would be right. There

9May

GEO-POLITICAL INSTABILITY; WHAT DOES IT MEAN FOR MARKETS?

Investors can be nervous people. That goes double for institutional investors; the people who manage big pension funds, mutual funds, foundations or the funds in insurance companies. When you are responsible for managing billions of dollars, in some cases, you worry about a hiccup of any geopolitical nature. It can mean volatility in the market and that can mean a loss. Unfortunately for those money managers, there is always some concerns on the world stage. Whether those concerns have to do with Iran, North Korea, Russia, terrorism, the French election or Syria, it can impact the oil markets or the stock market. Uncertainty about anything is not welcome in the equity or futures markets and it can wreck havoc with many forms of investments. In times of uncertainty, many investors seek out safe havens such as gold or government bonds, as lower risk alternatives. Yet, employing a knee-jerk reaction isn’t

24Apr

TAX PREPARATION AND WHY IT’S IMPORTANT FOR RETIREMENT

Taxes are much like rust; once they are allowed to erode, they just keep on eroding. As a saver or investor, both fees and taxes can erode the potential future balance of a savings or retirement account. For this reason, strategies should always include tax considerations, especially for those in higher marginal tax brackets. During a person’s working years, if they used a defined contribution plan like a 401k, they realized a tax decrease as their contributions were not currently taxed. The effect this has was generally to reduce a workers taxes. With the exception of Roth accounts, a retiree must start tapping those retirement savings, and when they do, they will pay taxes at their current tax rate. Their marginal tax rate will be higher in most cases than if they were simply paying long-term capital gains on investments. One thing that holders of a 401k plan should avoid