Highlights of this Week’s Update:
- U.S. stock markets ended the week stable and the major indices saw small gains overall in the midst of global turmoil.
- Events in Ukraine and Gaza had only a short term impact on U.S. financial markets (so far).
- We are pleased with the general stability of client portfolios and 2014 performance across all risk levels to date.
- Our general outlook remains unchanged: We feel the stock markets are overvalued and some type of correction could occur at any time so we are still underweight in overall stock/equity exposure.
The overall U.S. financial markets held up relatively well last week given the global turmoil in both the Ukraine and Gaza. For the week, the Dow Jones Industrial Average was up .9% and the Standard & Poor’s 500 stock index gained .5%. The rate for U. S Treasury bonds fell, (prices rose), with the 10 year U.S. Treasury yielding 2.50% at the end of the week. Oil prices rose by $2.53 per barrel, closing the week at $103.02 per barrel on Friday. (MarketWatch, U.S. Treasury, Energy Information Admin.)
Last week’s downing of a Malaysian jet took nearly 300 innocent lives and can only be described as senseless and tragic. Sadly, it’s a vivid reminder that events can take unexpected and unwanted turns.
Taken together with the Israel’s military incursion into the Gaza Strip, stocks did react negatively on Thursday but bounced back on Friday.
The biggest risk from the latest twist in the Ukrainian crisis would probably be a significant tightening of the economic sanctions on Russia, which in turn could retaliate against Europe with its own set of sanctions. How this will play out in the political arena is uncertain, but early reaction in the market suggests investors aren’t overly concerned at this point in time.
Over the weekend, however, new U.S. intelligence assessments suggest that Moscow likely provided sophisticated antiaircraft systems to pro-Russia separatists in eastern Ukraine, bolstering charges that Russia was the source of the weapon that shot down the airplane (Wall Street Journal). On Sunday, the Wall Street Journal reported European leaders are threatening to implement harsher sanctions, departing from the more muted toned taken in the wake of the downed jet.
Ultimately, the critical question that must be asked: will events overseas have any effect on the buying decisions of U.S. consumers and businesses.
We have remained well diversified across all risk levels and our client portfolios have been relatively stable given the recent global uncertainties. Our stock weightings are still under the “normal” allocation percentage for all risk categories, as we continue to feel that some type of stock correction could occur at any time. In the meantime, we are pleased with the overall results in each risk level so far in 2014. We will keep you posted.
We hope you are all having a great summer and if we can be of further service in any way, please don’t hesitate to call. We appreciate the privilege to serve each and every one of you.
Your TEAM at F.I.G. Financial Advisory Services, Inc.
It is important that you do not use this e-mail to request or authorize the purchase or sale of any security or commodity, or to request any other transactions. Any such request, orders or instructions will not be accepted and will not be processed.
All items discussed in this report are for informational purposes only, are not advice of any kind, and are not intended as a solicitation to buy, hold, or sell any securities. Nothing contained herein constitutes tax, legal, insurance, or investment advice.
Stocks and bonds and commodities are not FDIC insured and can fall in value, and any investment information, securities and commodities mentioned in this report may not be suitable for everyone.
U.S. Treasury bonds and Treasury bills are guaranteed by the U.S. government and, if held to maturity, offer a fixed rate of return and guaranteed principal value. U.S. government bonds are issued and guaranteed as to the timely payment of principal and interest by the federal government. Treasury bills are certificates reflecting short-term (less than one year) obligations of the U.S. government.
Past performance is not a guarantee of future performance. Different investments involve different degrees of risk, and there can be no assurance that the future performance of any investment, security, commodity or investment strategy that is referenced will be profitable or be suitable for your portfolio.
The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation.
Before making any investments or making any type of investment decision, please consult with your financial advisor and determine how a security may fit into your investment portfolio, how a decision may affect your financial position and how it may impact your financial goals.
All opinions are subject to change without notice in response to changing market and/or economic conditions.
1 The Dow Jones Industrials Average is an unmanaged index of 30 major companies which cannot be invested into directly. Past performance does not guarantee future results.
3 The S&P 500 Index is an unmanaged index of 500 larger companies which cannot be invested into directly. Past performance does not guarantee future results.