Market Update News
October 16, 2017
Presented By:  Todd Day, Portfolio Manager


October - The Bear Killer

There are plenty of superstitious folks out there, but apparently the majority of stock traders don't fall under that umbrella.  U.S. equities again rose on Friday with the Dow Jones, S&P 500 and NASDAQ all climbing to all-time intraday highs.  

Only the NASDAQ, however, was able to finish with a record high close.  The small cap Russell 2000 failed to join its larger cap counterparts in record territory as this index battles extremely overbought conditions and its tendency to struggle during the first half of October. 

The Dow and S&P 500 have risen five straight weeks and the NASDAQ is up three straight weeks. 
Other regions have also reported strong gains: European equities are up more than 20% this year, as are emerging markets.  The Nikkei index is trading at a 21-year high.  Basically every country-as gauged by the most popular single-country exchange-traded funds-is positive on the year.


Well - here we go - as the big banks kick off earning season.  While most reported better than expected earnings and revenue, there were some clouds lurking.  

JPMorgan Chase  posted better-than-expected earnings, but also reported a decline in bond trading revenue, which sent the stock lower.  Net income was DOWN and credit provisions UP and net revenue FLAT.  Their credit card charge-offs are just shy of four year highs. 

Citigroup also posted better than expected - one of the biggest disappointments to both JP Morgan and Citigroup was the revenues from fixed income trading.  JPMorgan's debt-trading revenue fell 27% in Q3, while Citi's declined by 16%.

Bank of America shares rose after reporting stronger-than-expected quarterly results.  Their fixed-income trading revenue fell 22% on a year-over-year basis, however.

Wells Fargo beat on earnings, but revenues were down.  I guess when you don't have all those fake accounts to charge....

So, many of these banks are experiencing the same problem - fixed income trading.  What is fixed income trading?  Fixed Income means that whatever you traded had a "fixed" income stream - think bonds, loans, or anything else based on bonds or loans (derivatives). If it paid a certain interest rate and was redeemed at the end of a specified period, it was fixed income. 


Last week's economic calendar may have been light, but with a lot of impact. 

Firstly, the latest minutes from the FOMC's September meeting show a Federal Reserve that is starting to fear low inflation, but determined to forge ahead with rate increases.  I don't know about you but I like it when my cost of living doesn't rise sharply. 

Speaking of inflation, the latest wholesale level reading on inflation, the PPI rose .4% MoM, verse last month it only grew .1%.  Now at the consumer level, CPI, it rose less than expected, so inflation is not living up to expectations, but when the dust settles, we are going to realize the FED is still determined to keep raising rates.

Retail sales - the latest read on retail sales rose less than expected and analyst are quick to blame the hurricanes.  

Consumer sentiment - The last time we had a triple-digit handle on University of Michigan consumer sentiment was Nov. 2000.  U.S. consumers haven't been this optimistic about the economy since the start of 2004.  The surge in optimism "reflects an unmistakable sense among consumers that economic prospects are now about as good as could be expected

Finally, those of you getting monthly checks for social security are getting a raise, 2% in fact. 
This is the biggest increase since 2012 - enjoy...


So, on this day in history (Black Monday October 19th, 1987) the Dow lost 22.5% in 6 1/2 hours - 508 points on the day and the S&P 500 lost 20.5%.

It doesn't look like we'll repeat that today  - it is risk-on everywhere despite the growing geopolitical tensions from North Korea to clashes between Iraqi's and Kurdish forces, which is pushing oil prices higher.   I think it is only prudent to exercise some caution, especially with nearly everything at an all-time high.  But, the fundamentals of the economy and the earnings growth that we are seeing, not just here but around the globe, do make a case for markets to go higher.  And, also, the fear of missing out may overshadow any anxiety about the fears of the next crash.  We'll see...

We will hear from a few other big banks this week and also hear from a few tech names - 50 names out of the S&P 500 will be reporting. 

The economic calendar heats up this week with several regional FED reports, which have mostly been good.  We will also get some housing data, industrial production and the index of leading economic indicators.

Stay tuned and we'll keep you posted. 

"I believe every human has a finite number of heartbeats.
I don't intend to waste any of mine."
-Neil Armstrong

Grilled Halibut and Fresh Mango Salsa

Serves 4
2 cups plum tomatoes, seeded and diced
1-½ cups diced peeled ripe mango
½ cup diced onion
½ cup chopped fresh cilantro
2 TBSP fresh lime juice
1 TBSP cider vinegar
1 tsp sugar
1 tsp salt, divided
1 tsp black pepper, divided
2 cloves garlic, minced
4 (6-ounce) halibut fillets
1 TBSP olive oil

1. Prepare grill.

2. Combine first 7 ingredients. Stir in ½ tsp salt, ½ tsp pepper, and garlic.

3. Rub halibut with oil; sprinkle with ½ tsp salt and ½ tsp pepper. Place fish on grill rack; grill 3 minutes on each side or until fish flakes easily when tested with a fork. Serve with mango salsa.

Recipe adapted from My Recipes

File Form 1040X to Amend a Tax Return
Mistakes happen-they even happen on tax returns. You can correct information by filing an amended tax return. This includes making changes to filing status and dependents, or correcting income credits or deductions. Do not worry about filing an amended return to correct mistakes in math; the IRS will correct those.
Here are some tips the IRS offers on how to amend a tax return:
File using paper form. 
Use Form 1040X, Amended U.S. Individual Income Tax Return, to correct errors on an original tax return the taxpayer has 
already filed.




2. Use separate forms for each tax year. 

Taxpayers amending tax returns for more than one year will need a separate 1040X for each tax year.


3. Wait to file your corrected refund for tax year 2016. 

Taxpayers should wait for the refund from their original tax return before filing an amended return.


4. Pay additional tax

Taxpayers filing an amended return because they owe more in taxes should file Form 1040X and pay the tax as soon as possible. This will limit interest and penalty charges.



5. Track your amended return. 

Taxpayers can track the status of an amended return three weeks after filing.

Get all the tips on filing an amended return on the IRS website.
* This information is not intended to be a substitute for specific individualized tax advice. We suggest you discuss your specific tax issues with a qualified tax advisor.
Tip courtesy of

How to Use a Lob Wedge
Golfers sometimes face a situation in which they have little turf to work with to get their ball onto the green. Or they must chip the ball over a bunker with little landing area. The lob wedge is a perfect tool for these difficult shots. Its 60-degree loft is ideal for a 60-yard distance or less.
  • Position the ball close to your feet and not far back in your stance.
  • Open your stance so your feet and body are aligned slightly left of the target.
  • Grip down on the club for more control.
  • Make your backswing steeper than you would for a normal chip or pitch shot. Keep your wrists cocked just before impact and pull the club down to the ball with your arms and body weight.
  • Follow through with your right shoulder lower than your left. Your head should naturally turn to face the target. Stay balanced in the completion of your follow-through.
Tip courtesy of Golf Week Magazine

Flu Season is Around the Corner
Flu is a contagious respiratory disease that infects the nose, throat, and lungs. People often confuse the common cold for flu because the symptoms are similar. But colds are usually milder than flu. Flu can lead to serious complications, hospitalization, or even death. Pneumonia and bronchitis are examples of serious flu-related complications.
The Centers for Disease Control, along with the American Academy of Pediatrics, the American Medical Association, the National Foundation of Infectious Diseases, and other organizations, recommend getting a flu vaccine each year because new vaccines are developed to protect against flu viruses that research shows will be most common that year.
While how well the flu vaccine works can vary, the CDC says there are plenty of good reasons to get a flu vaccination every year. Flu vaccines can:
  • keep you from getting sick from flu.
  • help protect people who are at greater risk of getting seriously ill from flu, like pregnant women, older adults, people with chronic health conditions and young children (especially infants younger than 6 months old who are too young to get vaccinated).
  • possibly make your illness milder if you do get sick.
  • reduce the risk of more serious flu outcomes, like hospitalizations.
Tips courtesy of CDC

5 Green Tips for Fall
As the leaves are turning color and dropping from the trees, keep the green alive - with this year's fall cleaning, that is. Follow our eco-friendly and energy saving tips to have your home ready for when the wintry weather comes upon us while shrinking your carbon footprint at the same time.
Check your thermostat.
When the weather starts to get cooler, we all tend to reach for the thermostat. Instead reach for a sweater, use draft stoppers in doorways and invest in a programmable thermostat - just don't turn the heat up. If your furnace is more than 15 years old, consider replacing it with an energy-efficient model.
Autumn is the perfect time to start a compost pile or bin in your backyard (or inside, with a special composting bin). Even if you don't have a large garden or yard, you can still benefit from composting - it enriches soil and reduces the need for water, fertilizers, and pesticides. And if you keep a small garden or containers, those plants will love the extra nutrients, too.
Conserve with your water heater.
Most water heaters operate efficiently at 120-degrees Fahrenheit (49 degrees Celsius). Keeping the lower temperature could help increase the lifespan of the heater. For every 10 degrees you lower the water temperature, can save between 3% and 5% in utility costs. Additionally, wrapping an insulating blanket around your water heater will help save energy this winter, possibly as much as 4% to 9% in water heating costs.
Conduct an energy audit . Do it yourself or hire a professional service to do it for you. According to the U.S. Department of Energy, sealing leaks around the house could potentially save you anywhere from 5% to 30% in energy costs. Check in places big and small-from electrical outlets to window frames, from baseboards to gaps around pipes. Check your basement and attic, too. Caulk and seal around plumbing and wiring leaks and gaps, and anywhere you feel a draft coming in around windows and doors.

Tip courtesy of How Stuff Works

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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


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.  Horizon Financial Services, LLC and New Horizon Financial Services Inc. are affiliated companies.