Market Update News
October 23, 2017
Presented By:  Todd Day, Portfolio Manager


Day after Day - Record New Highs!!

There is one thing for surewe have climbed over the "Wall of Worry" in 2017 and the markets just keep chugging ahead. The Dow and the S&P 500 have posted a positive return for the past six weeks helping push the Dow up 4% for the month, making it the best month for the year. 

The Dow Jones sliced through 23,000 like a hot knife through butter.  Many times, these round numbers represent a psychological challenge for traders and investors, but that was not an issue for this bull market.  Instead, the Dow Jones soared 160 points to yet another all-time closing high.  The S&P 500 and NASDAQ followed suit, posting fresh new highs of their own.  

Leadership returned to financials and technology as the 10 year treasury yield turned higher and broke its recent downtrend.  The S&P closed at record high each day last week -- first time it's accomplished a 'perfect week' since March '98.  


Last week brought more on the big financials as Goldman Sachs and Morgan Stanley handily beat estimates.  They both also experienced declines in their fixed income trading we spoke of last week. 

Netflix hit an all-time high after reporting blowout earnings.  Subscriber growth exploded higher. 

Harley Davidson, Phillip Morris and EBay turned in disappointing results and forward guidance failed to impress analysts.  


Improving economic data and the expectations of a hotter growing economy have been responsible for some of the stock gains we've seen this year, so how did we do last week?

On a regional basis, the Empire State manufacturing index and the Philly FED came in much better that expected, but U.S. Industrial Production data dashed 'Survey-Driven' hopes of a manufacturing renaissance.

And, housing starts and new permits both came in below expectations, yet home builder confidence was on the rise.  Housing has been generally slowing and looks to end 2017 no better than flat. Still, permits and completions for single-family homes were solid pluses.  Existing home sales eked out a small gain for September, but realtors are still saying  "lack of supply" - which is really starting to dry up. 

U.S. initial jobless claims dropped to 222k,  a multi-decade low and continuing claims followed suit. 

Finally, the index of leading U.S. economic indicators fell 0.2% in September, marking the first drop in 12 months.  The decline stemmed partly from the "temporary impact of the recent hurricanes - slower construction in the South and a temporary spike in people being unable to work were the biggest sources of weakness.


This week, we will hear over 180 companies in the S&P 500 report their quarterly results, the biggest week of earnings season, and one that's sure to move the markets.  One thing we have seen is that companies that miss profit estimates are being punished more than companies that beat projections are being rewarded.  This suggests, to me, that if stocks aren't fully valued, then they sure are fairly valued. 

Another thing we are seeing from this earnings season is that while earnings so far look pretty good, profit growth has been somewhat weak - we'll keep an eye on this as it is what investors want to see to help keep pushing stock prices higher. 

On the economic front, we will get the first read on Q3 GDP, a measure of all goods & services the economy produces.  This all matters because stocks have risen on two assumptions, one - the economy is going to grow faster and two - tax reform. 

So, a lot for investors to digest this week and we'll see if they continue to push stocks higher because always remember, there is nothing stronger than a market that changes its mind.  

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

Lobster Mac and Cheese
Serves 8
16 oz corkscrew pasta
6 TBSP melted butter, divided
2 large garlic cloves, minced
½ cup finely chopped red onion
¼ cup all-purpose flour
3 cups whole milk, at room temperature
1½ cups (6 oz) grated sharp Cheddar cheese
1½ cups (6 oz) grated Gruyere cheese
1 TBSP Dijon mustard
½ cup minced fresh chives
⅛ tsp cayenne pepper 
½ tsp salt, divided
½ tsp freshly ground black pepper, divided
1 oz coarsely chopped cooked lobster meat
2 cups oyster crackers, crushed

1. Cook pasta until al dente according to package directions. Drain, rinse with cold water, and drain again.
2. Place 4 TBSP melted butter in a saucepot over medium-low heat. Add garlic and onion; cook 5 minutes or until onion is softened. Whisk in flour; cook 1 minute. Pour in milk; bring mixture to a boil over medium-high heat, whisking often. Reduce heat to medium-low, and simmer 3 minutes or until sauce is smooth and thickened.
3. Remove from heat, and whisk in cheeses and next 3 ingredients. Stir in ¼ tsp salt and ¼ tsp pepper. Fold in pasta and lobster. Pour into a greased 3-quart baking dish.
4. Combine crushed crackers and remaining 2 TBSP melted butter. Stir in remaining ¼ tsp salt and ¼ tsp pepper. Sprinkle over casserole. Bake at 375° for 30 minutes or until crust is crisp and sauce bubbles. Let stand 5 minutes before serving.

Recipe adapted from My Recipes

Tax Benefits for Education
Students are heading off to or back to college and it's a good time for a reminder of the tax benefits for education. These benefits can help offset qualifying education costs. Here is information about two tax credits available to those who pay higher education costs for themselves, a spouse, or a dependent.
The American Opportunity Tax Credit (AOTC) is:
  • Worth a maximum benefit up to $2,500 per eligible student.
  • Only available for the first four years at an eligible educational or vocational school.
  • For students pursuing a degree or other recognized education credential.
  •  Partially refundable. Eligible taxpayers can get up to $1,000 of the credit as a refund, even if they do not owe any tax.
The Lifetime Learning Credit (LLC) is:
  • Worth up to $2,000 per tax return, per year, no matter how many students qualify.
  • Available for all years of postsecondary education and for courses to acquire or improve job skills.
  • Available for an unlimited number of tax years
  • Taxpayers should use Form 8863, Education Credits, to claim these education credits.
Be sure to visit the IRS website for additional requirements and information. You can also see IRS Publication 970, Tax Benefits for Education, for details, rules, examples and a complete explanation of benefits.
* 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 Hit 'Knuckle Ball' Flop Shots
Flop shots are useful when you've got just a little green to work with. For example, if you're just off the side of a green with a tucked pin, you need a shot that sticks as soon as it lands-it doesn't spin and is "dead" when it hits the green. This shot not only adds diversity in shot-making for the golfer, but is impressive to watch when you pull it off.
This tip shows you the technique for gripping the club, selecting the right club, and executing the shot so the ball lands on the green and does not roll out.
The Setup
Use the most lofted club in your bag, like a 60-degree wedge. Open the face and the stance just as you would a bunker shot. Weaken your grip (for a right hander, turn both hands counterclockwise on the grip). Try to feel that the "v" that is created between the thumb and first finger points to your lead shoulder. The weak grip prevents the face from rotating close during the shot.
The Shot
In the backswing, make sure to hinge the wrists quickly, which sets up a downswing that allows the club face to slide underneath the ball. The face will continue pointing to the sky beyond impact, and the ball will hardly spin off the face so when it lands on the green it won't roll out. Think of a knuckleball in baseball and how little it spins.
Tip courtesy of Alison Curdt, GolfTips Magazine 

Fruits & Veggies-More Matters
More than 90% of adults and children do not eat the recommended amount of fruits and vegetables. Just remember two things to help get what you need: 1) fill half your plate with fruits and veggies at every eating occasion (including snacks); 2) All forms of fruits and vegetables-fresh, frozen, canned, dried or 100% juice-count toward your daily intake.

Here are some good reasons to eat fruits and veggies:

  • May help reduce the risk of many diseases, including heart disease, high blood pressure, and some cancers.
  •  Add texture and color to your plate; remember, we eat first with our eyes.
  • Are nutritious in almost any form-fresh, frozen, dried-so they are ready when you are.
  • Provide fiber to help fill you up and keep your digestive system happy.
  • Are naturally low in calories.
  • Often contain a lot of water, so they can help keep you hydrated.
  • Have an abundance of vitamins and minerals that help you feel healthy and energized.
  • Can be grown in containers and in your own backyard.
  • Are available in almost infinite varieties-there is always something new to try.
  • Are nature's treat and easy to grab for a snack.
  • Can be crunchy, juicy, sweet, and tart; there is a flavor for every taste bud.
Tips courtesy of Fruits and Veggies More Matters 

Design an Eco-Friendly Kitchen Makeover
If you are going to remodel your kitchen, consider these ideas for making an environmentally friendly redesign. Here are six ways you incorporate green building materials into your new kitchen.
Bamboo . The latest in green kitchens is fast-growing bamboo. You can use this material for cutting boards, backsplashes, and flooring.
Lighting . You can cut down on lighting costs by using fluorescents. They cut energy use by 50%. Whenever possible, use natural light to brighten up your kitchen and bring down your electrical bill.
Cork . This renewable resource is made from the bark off a tree. It is also sound-absorbing and hypoallergenic. Cork is also resistant to mold and mildew, which makes it doubly great for kitchens.
Top and bottom freezer/refrigerator units . These are more energy-efficient than side-by-side models because not as much frigid air escapes. Not sure if your fridge can pass the eco-friendly test? Shut the door on a dollar bill-if it slides out easily then it's a sign the seal needs to be replaced.
Convection ovens . This type of oven uses a fan to drive heat rapidly from source to food so it cooks it 25% faster than a conventional oven.
Natural fabrics . Choose cotton or wool for dining chairs and window dressings because manufactured and synthetic fabrics are made with chemicals that harm the environment.

  Tip courtesy of HGTV 

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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. 

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


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