Interest Rates Continue Lower

Highlights of this Week’s Update:

1. Stock market volatility continues with major U.S. stock indices still negative so far in 2015.
2. Interest rates continue to fall. It may be time to refinance-call us if we can help you analyze your current situation.
3. Oil prices flatten out last week ending at $48.21 per barrel.
4. Retail sales disappoint in December, but Consumer Confidence rises.
5. Portfolios rebalanced at the beginning of 2015 with a goal of greater diversification to better weather market volatility.

READ ON FOR MORE DETAILS……………………………………………………………

The Markets:

Ten sessions that mark the first two weeks of 2015 are behind us, and we’ve witnessed eight triple-digit moves in the Dow Jones Industrials. First, let us caution that a 100-point change amounts to about 0.60%. With the best known of the market averages hovering above 17,000, a 100-point move isn’t as relevant as when the Dow was near, say, 6,000.  Last week the Dow did end 1.27% lower and for the year, it is now down 1.75% year-to-date.  The Standard & Poor’s 500 stock index gave up 1.24% for the week, leaving it off 1.92% so far in 2015.  (MarketWatch)

However, modest declines in the major stock market averages are being partially offset by rising bond prices, at least among most classes (Bloomberg-bond prices and bond yields move in opposite directions). As interest rates have continued to fall, mortgage rates have moved lower.  The average rate for a 30 year fixed mortgage hovers around 3.75%, and 2.88% for a 15 year fixed mortgage.  (Bankrate.com)  If your circumstances warrant, it may be a very good time within the next few months to look at refinancing your mortgage.  We would be happy to assist you in analyzing your specific situation.  Just give us a call as we are here to help!

Oil settled in last week at $48.21 per barrel Friday, ending the week .27 higher.  Gold also rose, up $59.75 per ounce to end at $1,277.50 compared with $1,206.50 per ounce to start the New Year. (CNBC, Energy Information Admin.)

With the exception of the pain being felt in the energy patch, falling oil and commodity prices are a plus for most U.S. businesses and consumers, if the decline springs from growing supply, not falling demand for oil.

The Economy:

Last week’s unexpectedly weak retail sales report from the U.S. Commerce Dept led to the biggest decline in the Dow for the week. According to preliminary data, retail sales fell 0.9% in December. Ex-autos, sales were down 1.0%, and core sales, which excludes autos and sales at gasoline stations (helps to filter out the change in plunging gasoline prices), fell 0.3%, the first drop since January 2014.

December’s disappointment comes in spite of generally upbeat numbers from individual retailers in December (Thomson Reuters), rising small business confidence (National Association of Small Businesses), faster job creation (BLS), and the highest level of job openings since early 2001 (U.S. Bureau of Labor Statistics). Note the sharp improvement in consumer confidence in the chart below.

The jump in consumer sentiment that began in the middle of 2014 puts the current reading at levels consistent with most economic expansions.

Many investors will be looking for signs that U.S. economic activity isn’t being affected by events overseas. The stronger dollar will also be in focus, as strength in the currency creates headwinds for revenues when overseas sales are converted back into dollars.  We will keep you posted.

Portfolios:

After making adjustments in our allocations the first of the year for all risk levels, we feel we are now better positioned for what 2015 may bring looking forward.  All three stock models now have an additional number of individual stock issues to provide greater diversification given the recent volatility we have seen in the overall stock market.  We will continue to monitor the markets and make adjustments if warranted.

We hope all of you are having a great start to 2015!  Please be sure to call today to schedule your personal financial planning review if you have not yet done so.  We have the tools for you to make 2015 the year to get your personal financial plan in place and implemented.

God Bless,

Your TEAM at F.I.G. Financial Advisory Services, Inc.

 

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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.

⁴ New York Mercantile Exchange front-month contract; Prices can and do vary; past performance does not guarantee future results.

⁵ London Bullion Market Association; gold fixing pricing at 3 p.m. London time; Prices can and do vary; past performance does not guarantee future results.