Monthly Market Update
October 2, 2017
Presented By:  Todd Day, Portfolio Manager

Click on the Arrow Below
Hear Todd's Recap of September 


A September to Remember

The major averages were good to investors in September for the first time since 2013 - we wrapped up the month with new highs showing up everywhere - Dow, S&P 500, NASDAQ, S&P mid-caps, Russell 2000, Japan's Nikkei, China's Shanghai and Hong Kong, to name a few. 

And, for yet another quarter, riskier asset classes rallied, with the international equity markets leading the U.S.  Emerging market equities performed the best, up 8% for the quarter - the biggest contributor, Latin America.  U.S. small cap stocks (Russell 2000 +5.7%) beat large caps (S&P 500 +4.5%) but the tech-heavy NASDAQ (6.06%) led the way. 

While improving economic data and earnings expectations helped lift international equities, a firmer dollar also helped increase investor returns.
Multiple hurricanes, missile launches, a hydrogen bomb and rhetoric between the U.S. and North Korea, unlike any in memorable history couldn't even ding the markets for more than a few hours, as the "buy the dip" crowd just kept pouring it on. 

In the U.S., weak inflation data caused investors to doubt the FED's desire to hike interest rates; as a result, the Barclay's Aggregate Bond index only returned .08%, though the 10-year yields did close at the highs for the quarter.  

On the economic front, the economic data began to feel the effects of Harvey and Irma. 

Houston-area auto dealers sold 15,473 vehicles in August '17, a 45.5% decrease from the 28,399 vehicles sold in Aug '16.  The Dallas FED manufacturing survey showed an increase to near 10-year highs despite every respondent complaining about hurricane damage.  We also saw a 26% spike in jobless claims, the largest since 2005.  Not to mention industrial production.  The consumer confidence numbers showed some impact from the storms and likely the political and geopolitical noise also dented confidence. 

The housing horrors continue  - new home sales for August were the worst of the year.  Also, existing home sales and pending home sales - DOWN!  There most likely are some hurricane impacts here, too.  According to the Case-Shiller Home Price index, we saw home prices rise the fastest pace in 3 years to hit a new record high.  High prices and low inventory are having a big impact on the housing market. 

On the bright side, we did see several other regional FED surveys come in much stronger than expected, Chicago, Philly along with Dallas.  We also got the final revision to Q2 GDP and it was revised up to 3.1% from 3% - we'll take that. 

As we already know, the FED did not raise rates at their September meeting, but did vow to forge ahead with the balance sheet unwind or QT (Quantitative Tightening) beginning this month, and FED Chair Yellen all but promised a December rate hike with 3 to come in 2018.  We'll see about that.... 

Looking ahead - October tends to be a volatile month and also known for some "healthy" crashes. 

How should you prepare for a volatile October?  Probably the best way is to resolve not to panic if and when there is a spike in volatility.  Despite the month's dubious honor at the top of the volatility rankings, its performance is no worse than average.   Since 2000, October is in third place in a ranking of monthly performance, with an average gain of 1.84%. 

Another factoid that may help you stay the course in the face of a spike in volatility:  far more bull markets have begun in October than have ended.  This, by the way, is the source of October's reputation as a "bear killer."  And, Q4 during the first year of a Presidency is historically strong - we'll be paying close attention.

So, Stay tuned and we will keep you posted....

"Life shrinks or expands in proportion to one's courage."
 - Anais Nin
Cheddar-Chive Biscuits


          • 6 cups all-purpose flour
          • ¼ cup baking powder
          • ¾ tsp salt
          • 8 oz white cheddar cheese, grated
          • 1/3 cup sliced chives (or green onions)
          • 1½ cup cold salted butter, cut into small pieces, plus more for brushing
          • 2½ cups buttermilk


1. Preheat oven to 425 F.

2. Combine flour, baking powder, salt, cheese, and chives in a food processor. Pulse until everything is mixed together. Add butter and pulse until mostly incorporated, but with a few remaining chunks of butter. Pour in buttermilk while pulsing, stopping just when the dough comes together. (Add a little more buttermilk if 
dough is overly dry.)

3. Drop dough onto a baking sheet in ¼ cup portions (bigger if you'd like) and bake for 12-15 minutes, or until golden brown.
4. Brush with melted butter and sprinkle with more chives.
5. If you do not have a food processor, cut together the dry ingredients with the butter, then stir in the other ingredients.

Recipe adapted from Pioneer Woman

Tips to Keep in Mind for Taxpayers Traveling for Charity*
During the summer, some taxpayers may travel because of their involvement with a qualified charity. These traveling taxpayers may be able to lower their taxes.
Here are some tax tips for taxpayers to use when deducting charity-related travel expenses:
Qualified Charities . For a taxpayer to deduct costs, they must volunteer for a qualified charity.
Out-of-Pocket Expenses . A taxpayer may be able to deduct some of their costs including travel. These out-of-pocket expenses must be necessary while the taxpayer is away from home.
Genuine and Substantial Duty . The charity work the taxpayer is involved with must be real and substantial throughout the trip. The taxpayer can't deduct expenses if they only have nominal duties or do not have any duties for significant parts of the trip.
Value of Time or Service . A taxpayer can't deduct the value of their time or services that they give to charity. This includes income lost while the taxpayer serves as an unpaid volunteer for a qualified charity.
Other details may apply, and you can find more information on the IRS website .
* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

Tip courtesy of
Unleash Your Inner Lag
Just what is "lag," anyway? Lag comes from proper sequencing on the downswing - not from trying to artificially hold onto the angle. Proper force generation and sequencing comes from the ground up and winds "out" into the club.
Try the following drill to see if you can get the feel for the proper downswing sequence.
1. Set up to the ground, no ball, with a 6 or 7-iron. Bend both arms and place the shaft on the outer part of your right upper arm. You may have to let go slightly with your right hand.
2. Turn your shoulders 90 degrees as if you had made a backswing but keep the club shaft against your right arm.
3. Make your downswing and see how long you can keep the shaft touching your right arm-at least until your hands get even with your right leg.
Feel the delayed release and then whipping of the club head through impact. You should feel your forearms and club turn over naturally.
Delaying the club release through proper sequencing will help you maximize your distance.

Tip courtesy of Stan Moore | Golf Tips Magazine

Physical Activity for a Healthy Weight

Regular physical activity is important for good health, and it's especially important if you're trying to lose weight or to maintain a healthy weight, which can reduce high blood pressure, reduce risk for type 2 diabetes, heart attack, stroke, and several forms of cancer. It also can reduce risk for osteoporosis and falls, as well as reduce symptoms of depression and anxiety.

Always consult your own physician before starting any exercise regimen, but the Centers for Disease Control says that strong scientific evidence shows physical activity can help you maintain your weight over time. However, the exact amount of physical activity needed to do this is not clear since it varies greatly from person to person.
Talk with your doctor about what is right for you.
Find more information on the CDC website .
Tips courtesy of CDC

Benefits of Reducing Wasted Food
We may not realize how much food we throw away every day-from spoiled produce and expired meat to uneaten leftovers. In 2014, we threw out 38 million tons of food waste. About 95% of the food we throw away winds up in landfills or combustion facilities. Managing food sustainability and reducing waste can help businesses and consumers save money, as well as provide for those who do not have enough to eat, and conserve resources for future generations.
Here are other ways reducing wasted food contributes to greener living:
* Saves money from buying less food.
* Reduces methane emissions from landfills and lowers our carbon footprint.
* Conserves energy and resources, preventing pollution involved in the growing, manufacturing, transporting, and selling food.
* Supports your community by providing donated, untouched food that would have otherwise gone to waste to those who might not have a steady food supply.
For more tips on reducing food waste, visit the EPA website .
Tips courtesy of the U.S. Environmental Protection Agency

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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.


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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.


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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.


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