Weekly Market Update
May 9, 2017
Presented By:  Todd Day, Portfolio Manager

           


In This Issue
The Markets
Recipe
Tax Tip
Golf Tip
Health Tip
Green Fact
   Never Short a Dull Market

It was another winning week for Wall Street even as investors are lightening up on U.S. stocks and betting on Europe,  as net inflows into European stocks hit a 5-year high.  The NASDAQ and the S&P 500 are sitting in record territory and the Dow is just shy.  

These new highs are not a result of a buying frenzy.  For 8 out of the last 9 days, the Dow and S&P haven't moved as much as 0.2% - the dullest stretch in decades.  As the old adage goes, never short a dull market.  

The Russell 2000 is trading in such a tight range that one technical indicator is saying that it's going to explode one way or the other; we just don't know which direction.  The rear view mirror is clearer than the windshield....

The FED held their May meeting last week, and as expected, they held interest rates unchanged as they are shrugging off the recent weak data, saying that it is transitory and signaled that more rate hikes are on the way.  June rate hike odds soared on this hawkish commentary.  

         
STOCKS

It was another busy week of earnings and was highlighted by Apple, Netflix and Facebook.  Apple was the first to report and it wasn't a great quarter. Apple missed on the iPhone shipments by about 2 million.  They still sold almost 51 million phones.  CEO, Tim Cook, said he felt like sales were light due to rumors of a new iPhone 8, which is expected in the next quarter.  China also seems to be a big issue.  They did increase their dividend by over 10% and announced they would buy back 50 billion dollars of their stock which they think is undervalued. 
Get this - they now have a cash hoard of more than a quarter-trillion, yep I said it, a quarter-trillion.  Apple's cash hoard "exceeds foreign-currency reserves held by the U.K. and Canada combined." 

Facebook and Netflix did not disappoint Wall Street.  Facebook continues to grow revenues at a pretty fast clip thanks to monetizing increased ad sales.  Netflix, on the other hand did offer weak guidance, yet they had a solid quarter. 

In other stock news, Aetna is losing interest and money in Obama Care  - they announced they would be pulling out of most states in 2018.  Apparently, people are sicker than they thought.


ECONOMY

Last week's data paints a mixed picture on the state of the economy.  The highlight of the week was the jobs report which showed we added 211,000 jobs in April.  This was much better than expected. 

Next was the data on personal income and spending.  While personal income rose, it rose less than economists forecast and consumer spending came in flat.  Even though the consumer is more confident about the state of the economy than they have been in many-many years, they're not spending. This is evidenced by Challenger job cut report which showed the retail sector lost the most jobs among all industries in April.  So the retail sector is going through a tough time - not only are we not spending like economists expect and retailers are getting "Amazoned". 

Other data last week included a weak picture for manufacturing - factory orders fell by much more than expected and productivity decline sharply in the first quarter - there must be a lot of people playing with those fidget spinners instead of working.  


INTERNATIONAL

Across the pond, the elections in France offered no surprises, earnings are improving and the economic data has firmed up.  This has helped push Euro stocks to 20-month highs.  France's major index, the CAC 40 is sitting at its highest level in 9 years.

Across the other pond, Japan's Nikkei index is riding a high while shares in China's Shanghai index are riding a multi-month low.   


THIS WEEK

Earnings continue this week but the pace slows. 

On the economic front, retail sales will highlight this week's data.  We will also get the latest read on the labor market, inflation and consumer sentiment.  We will also hear from 8 FED speakers out making a case for more rate hikes. 

So, we've got the French elections behind us and that was a big concern on the wall of worry, we got some progress on a health care bill and the Trump administration will turn now to tax reform. Investors will be looking for what could be next to rattle the markets - OR - send them higher.  At the time of this writing, we do not have an answer for that question, but stay tuned and we'll keep you posted.


         
"Things don't just happen; they are made."
- John F. Kennedy
Cherry Nut Granola

   
Boost your breakfast with this easy, homemade cereal!
 
 
Ingredients:

1/4 cup apple juice

3 tablespoons honey

2 tablespoons light brown sugar, packed

1 tablespoon canola oil or other preferred cooking oil

1 teaspoon pure vanilla extract

1 teaspoon ground cinnamon

1/4 teaspoon salt

3 cups rolled oats

1/2 cup almonds, chopped coarsely

1/2 cup pecans, chopped coarsely

1/2 dried cherries*

1/4 cup dried currants*

 
Directions:

1. Set oven to preheat at 350°F.


 

2. Combine the apple juice, honey, brown sugar, oil, vanilla, cinnamon, and salt in a large bowl.

 

3. Whisk ingredients together.


 

4. Add oats, almonds, and pecans to mixture.



 

5. Toss all ingredients until they combine well and become thoroughly moistened.


 

6. Take out 2 baking sheets and divide mixture between them.


 

7. Place sheets in oven and bake until granola turns a light golden brown (roughly 15 - 18 minutes). Shake the pans occasionally as they bake.


 

8. Remove baked granola from oven and pour into a large bowl.


 

9. Add cherries and currants.


 

10.  Cool granola completely and store in airtight container for up to 1 week.

 
Recipe adapted from Martha Stewart.com
 
 
Claiming Employee Business Expenses
 
As an employee, you may end up making out-of-pocket purchases to support your workplace responsibilities. When you do so, you may be able to deduct some expenses. Here is further guidance to help you manage employee business-expense claims.
 
Is there any limit on how much you can claim?
Typically, yes. You're able to deduct employee business expenses that total more than 2% of your adjusted gross income.
 
Are all expenses deductible?
No. The IRS has rules for the type of employee business expenses you can claim. The expenses must meet two criteria for your workplace responsibilities: be ordinary and necessary.
 

*    Ordinary: an expense that your industry identifies as common and accepted

*    Necessary: an appropriate expense that also helps the business

 
What are common expense examples?
The below list represents a sample of expenses that you can typically deduct and meet the "ordinary" and "necessary" requirements:

*    Any clothes or uniforms you must wear at work and not for everyday use.

*    Any tools or supplies you need to do your job.

*    Education that supports your role at work.

*    Travel for work that takes you away from your home.

 
To claim your expenses, you will need to file Form 2106 , Form 2106-EZ , or IRS Schedule A .  You can find further information on the IRS website .
 
Tip courtesy of IRS.gov
 


Miss the Box and Stop Pop-Ups
 
When you're driving the ball, is your angle of attack too steep? If so, you may be sacrificing distance and creating those awful pop-ups everyone wants to avoid.
 
Unlike other clubs that require shallower angles of attack as the shaft gets longer, with a driver, hitting up on the ball is a good idea. But, often, players let the driver head get too far in front of the ball before making contact. You can beat this bad habit with a surprisingly simple tool: a ball sleeve.
 
To do so:

*    Place a ball sleeve 12 inches in front of your ball.

*    Aim to create an upward angle of attack as you swing - while completely missing the ball sleeve.

*    Angle your head so it leans backward behind the ball, which enables you to create a shallower attack and ascend into the ball.

 
After trying this technique, you should find that you hit the ball farther and harder - and avoid those annoying pop-ups.
 


Tip courtesy of Golf Tips Magazine

Manage and Prevent Migraines

Migraines can make life challenging, as the debilitating pain keeps you from being able to do simple things, like even opening your eyes. For those who suffer from migraines, a variety of medications are available to help control the problem. But, you can take your care a step further by making some life changes that may help you lessen their frequency and intensity.
 

*    Create a Regular Sleep Schedule: Going to bed at different times each night and for different lengths can trigger headaches. You can help avoid this effect by creating and sticking to a consistent sleep schedule, even during weekends and holidays.

 

*    Get Frequent Exercise: Studies suggests that those who get regular, moderate aerobic exercise can decrease their migraines' frequency, length, and intensity.

 

*    Don't Skip Meals: Regularly eating will help avoid drops in your blood sugar, which can trigger headaches. You'll also want to stay hydrated.

 

*    Get Complementary Care: Treatments such as massage, acupuncture, and talk therapy can deepen your care and work alongside your lifestyle changes and medications.

 
Tip courtesy of Mayo Clinic
 
Ways to Minimize Waste at Home
 
Minimizing the waste you produce starts with minimizing your consumption. While some people choose to go all the way to a near "zero waste home" - where they live in a manner that doesn't produce any extra waste - you don't have to take such extreme measures in order to go green. Here are a few ways you can reduce waste in your home and create happier families (and landfills).
 

*  Eliminate Disposables: Products like plastic sandwich bags and paper towels may be convenient, but they add to the waste you produce. You can swap your disposable items for durable alternatives, such as stainless containers for sandwich bags and washable rags for paper ones.

 

*  Give Life to Leftovers: Food waste is a big problem, and you can decrease this in your home by choosing to reinvent your leftovers into new meals, instead of tossing them.

 

*  Buy in Bulk: Rather than purchasing small quantities - and taking home new containers each time - start buying household items in bulk. At certain stores you can find bulk options for everything from food items like nuts and beans to household products like shampoo and conditioner.

 

Tip courtesy of Zero Waste Home
 

Share the Wealth of Knowledge!

Please share this market update with family, friends, or colleagues. If you would like us to add them to our list, simply click on the "Forward email" link below. We love being introduced!



Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

 

Diversification does not guarantee profit nor is it guaranteed to protect assets

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

 

The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ. The DJIA was invented by Charles Dow back in 1896.

 

The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indexes from Europe, Australia and Southeast Asia.

 

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.

 

The Housing Market Index (HMI) is a weighted average of separate diffusion indices based on a monthly survey of NAHB members designed to take the pulse of the single-family housing market. Each resulting index is then seasonally adjusted and weighted to produce the HMI.

 

The Pending Home Sales Index, a leading indicator of housing activity,  measures housing contract activity, and is based on signed real estate contracts for existing single-family homes, condos and co-ops.  The PHSI looks at the monthly relationship between existing-home sale contracts and transaction closings over the last four years. The results are weighted to produce the index.

 

The Chicago Board Options Exchange Market Volatility Index (VIX) is a weighted measure of the implied S&P 500 volatility. VIX is quoted in percentage points and translates, roughly, to the expected movement in the S&P 500 index over the upcoming 30-day period, which is then annualized.

 

The BLS Consumer Price Indexes (CPI) produces monthly data on changes in the prices paid by urban consumers for a representative basket of goods and services. Survey responses are seasonally adjusted and weighted to produce a composite index.

 

The Conference Board Leading Economic Index (LEI) is a composite economic index formed by averages of several individual leading economic indicators, which are weighted to produce the complete index.

 

Google 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.

 

Past performance does not guarantee future results.

 

You cannot invest directly in an index.

 

Consult your financial professional before making any investment decision.

Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.

  

These are the views of Horizon Financial Services, LLC, and should not be construed as investment advice. Neither Horizon Financial Services, LLC nor its Investment Advisor Representatives or Associates gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information. 


John Brais, Owner & Founder
Investment Advisor Representative
Certified Retirement Financial Advisor
Horizon Financial Services, LLC
3880 Vest Mill Road, Suite 100
Winston Salem, NC 27103
(336) 659-7060


INSIGHT, INTEGRITY, INVESTED IN YOUR FUTURE

Investment advisory services are offered through Horizon Financial Services, LLC, a North Carolina State Registered Investment Advisor.  Insurance products are offered through 

New Horizon Financial Services, Inc.