Weekly Market Update
July 17, 2017
Presented By:  Todd Day, Portfolio Manager


What Could Derail the Rally?

Stocks, once again, finished higher last week as investors were encouraged by a dovish tone from FED Chair Yellen, as she stated that the economy was doing quite well and that they were going to assume "gradual" rate hikes going forward.  Odds on a September or December rate hike fell sharply following her comments to the Senate and Congress.  And Treasury yields fell following those comments sending bond prices higher.  I have never seen rates fall so fast in a rising rate environment - this bears watching. 

Investors have just shrugged off what is going on inside the beltway in DC, as healthcare and tax reform seem to keep getting pushed out farther and farther. 

But, the Dow, S&P 500 and Russell 2000 closed the week at new all-time highs despite what was supposed to be a robust earnings season starting off a little less robust than traders and investors had hoped for after we heard from the big banks (JP Morgan, Citi, PNC and Wells Fargo).  It really didn't matter, as it seems nothing can stop this market.  Perhaps - just perhaps - a little caution is in order.


JPM and Citi beat on the top and bottom lines, but Wells revenues fell short of expectations.  BlackRock, the largest asset manager in the world, posted second-quarter earnings and revenue that missed expectations.  The biggest concern among analysts was the weak loan growth which has continued to deteriorate and even trading revenues were slack.  Despite growing net interest margins, thanks to the FED raising rates, investors voted with their feet on Friday, sending financial stocks lower.


Markets also shrugged off weaker economic data last week. 

The small business optimism index fell in June, posting the lowest level of the year in a continuation of the mild decline from the 12-year high set in January. The June setback, which put the index within the range but near the bottom of analysts' expectations, reflected disappointment over the gridlock in the Senate on the healthcare reform bill.

Although Americans feel plenty confident in the U.S. economy right now, they are less optimistic the good times will roll on amid disappointment with Washington, according to a closely watched consumer-sentiment index.  The University of Michigan's sentiment index slipped to 93.1 in July from 95.1 in June. The index has fallen from a 13-year high of 98.5 in January, when President Trump took office.

June retail sales - it was all minus signs, definitely not good here.  Sporting Goods, Hobbies, Books, & Music fell 0.6% m/m, and 8.9% y/y.  Basically, fun is down 9% year over year. Let that sink in.  Shelter and medical necessities are all sporting plus signs. Oh joy.

U.S. core CPI inflation rate decelerated for a fifth straight month in June - No inflation here. 

Fed Chair Janet Yellen's prepared remarks confirm her previous stance that the FED will keep normalizing their policy stance (no matter what), bringing forward the timeline for unwinding the balance sheet, and adding that "rates won't have to rise much further to get to neutral." This was a 'dovish' tilt, and judging by the reaction in stocks (higher) and the dollar (lower) they agree.


Across the pond, European stocks had their best week in two months, helped by the dovish tone from FED Chair Yellen. 

Across the other pond, most Asian markets pushed higher ahead of China's once in five year government work meeting where most expect for them to announce tighter controls over the economy and reducing risks in the markets.  Also, they announced that their economy grew at 6.9%, which was better than expected.  Whether you believe them or not is a different conversation.


Here is what we'll be watching this week:

Earnings - we will hear from the likes of Bank of America, Goldman Sachs, Morgan Stanley, Microsoft, Visa and eBay.  Analysts will be closely watching the remaining banks reporting to see if they too are experiencing the same woes as the others. 

Washington - This was supposed to be the week for the Senate Republican health care bill, but it looks like Senate leaders will delay the vote until Senator McCain can return from surgery.  We wish him a speedy recovery.

Around the globe, we will be listening to the European Central Bank and the Bank of Japan on their latest stance on interest rates and their respective economies.

Geopolitics - Take your pick, North Korea, Middle East, Russia - all bear watching.  
So, even though it is the lazy days of summer, there will be a lot happening, so stay tuned and we'll keep you posted.   

"Only those who will risk going too far can possibly find out how far one can go."

- T.S. Eliot
No-Churn Black Forest Ripple Ice Cream

Easy homemade ice cream

*    12 ounces cherries, pitted

*    1/4 cup sugar

*    2 cups heavy cream, very cold

*    1 can sweetened condensed milk

*    2 tablespoons water

*    1 teaspoon pure vanilla extract

*    4 ounces chocolate chunks, bittersweet

*    Ice cream cones


1.  Combine sugar, cherries, and 2 tablespoons of water in a large saucepan.


2.  Bring mixture to a rolling boil then reduce heat. Simmer until cherries break down and liquid thickens into a syrup, stirring frequently for about 

10 - 12 minutes.


3.  Place cooked cherries in a bowl and cool in refrigerator for roughly 

15 minutes.


4.  Combine condensed milk, cream, and vanilla in a large bowl. Beat with electric mixer for roughly 3 - 4 minutes, until you form stiff peaks.


5.  Fold the chocolate chunks gently into the milk mixture.


6.  Grab a 4.5" x 8.5" loaf pan or a 1.5-quart container that can go in the freezer, and add half the cream mixture.


7.  Spoon half of the cherry syrup on top of the cream mixture.


8.  Continue adding layers of the cream and cherry mixtures until used.


9.   Place pan in freezer until ice cream sets, usually takes up to 4 hours.


10.    Cover frozen ice cream with plastic wrap, and store in freezer for 

up to 2 weeks.


Recipe adapted from Good Housekeeping

Access the IRS Resources for Your Tax Help
The IRS has a variety of online tools available to help you streamline and clarify the tax-filing process. From apps to videos and more, you can access a variety of tools for free. Here is a list of helpful resources.

*    Use the IRS App: You can find a variety of helpful resources, such as paying your refund, by downloading the official IRS app, IRS2Go.


*  Ask Tax Questions: Find the answers you need by using Interactive Tax Assistant and the IRS Tax Map.


*   Track Refund Status: You can check your refund status by using the tool, "Where's My Refund?".


*   Check Earned Income Credit Eligibility: The IRS tool, EITC Assistant, can help you identify if you're eligible to receive earned income credits.


Pay Account Online: You can pay any money you owe to the IRS by checking out its payment options.

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 IRS.gov

Tap Into Your Imagination to Improve Your Putt
The ability to imagine the path your ball will take is a powerful trick. By envisioning the effect the terrain has on your ball, you can better anticipate the best path to the pin. If predicting your path on the green is challenging, here are some tips that will help tap into the power of your imagination. To do this practice, you'll want to be within feet of the hole.
Focus on Distance
Step 1: Look at the hoIe, and imagine the place your ball will be right before it lands there.
Step 2:
Place a ball 6 inches away from where you imagine the first landing. Next, place another ball a foot away from where you imagine the first landing. Repeat in consecutive intervals at a foot and a half and then two feet. Continue doing this until you land at the place from where you're practicing.
Focus on Speed
Step 3: Envision the speed the ball will need to travel your imagined path and sink the putt. You also need to analyze how speed can work against you.
Step 4: Square yourself to the imagined line.
Step 5: Practice putting and using the right speed, by aiming for a coin or tee at the fall line. Putt in such a way that your ball arrives at your identified spot on the high side.

Tip courtesy of GolfTips Magazine

Self Management Tips for Managing Varicose Veins
Completely controlling or eliminating varicose veins on your own isn't possible. But with some self care, you can help minimize their intensity and even potentially reduce how many you develop. To do so, start following these self-care tips:

*  Start walking: If you don't already walk regularly for exercise, consider doing so. The movement encourages proper blood circulation in your legs, which can help you manage varicose veins.


*   Be mindful of your attire: Shoes with low heels will work your calf muscles more than high heels, which is better for your veins. Opting to not wear tight clothing around your groin, waist, and legs can also help you improve your blood flow.


*  Avoid sitting with crossed legs: This position can potentially decrease circulation, a direct factor in varicose veins.


*   Add variety to long standing or sitting positions: You can increase your blood flow by changing your position from time to time when sitting or standing for long durations.

Tip courtesy of Mayo Clinic

Alternative Mulch Ideas for Your Garden

Mulching your garden beds is a great way to manage a healthy yard. Mulch can control weeds, regulate moisture, and even keep bugs at bay. While mulch made from wood chips and shredded bark is common, it can really reference anything that covers your garden. Here are some alternative mulch ideas to help you keep your garden healthy and growing.

*  Wine cork mulch: Americans go through nearly 13 billion wine corks each year, many of them being thrown away. But, you can give your corks new life by using them as mulch in your garden. Corks are usually a natural material made from the Mediterranean cork oat tree, meaning the natural properties will do fine as mulch. You can either buy pre-made wine cork mulch or make your own.


* Newspaper: Give your newspaper new life by turning it into mulch. Newspaper blocks out light, which stops weeds from growing. Only use newspapers printed in black and white, as color ink can contain some harmful chemicals. You can follow these tips to make your own newspaper mulch.


*  Yard debris: You can re-purpose all your lawn clippings and plant scraps - like flowering plants - into a mulch for your gardens. And your fall leaves can also spread as mulch. Combine all this debris into an organic compost or simply spread directly onto your garden.

Tip courtesy of Care2.com

Share the Wealth of Knowledge!

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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.