Stocks Rise for Third Week

Highlights of this Week’s Update:

1. We will all be in Denver for Trust Company’s annual conference this coming Wednesday through Friday, and will be working remotely.
2. Be sure to call and reserve your spot today at one of the upcoming Social Security workshops.
3. The major U.S. stock indices rise for the third week in a row.
4. Interest rates dip, gold gains, oil falls.
5. Interest rate hike now expected in 2016 instead of this year.
6. Consumer spending slows, but still modestly moving higher.
7. Debt ceiling showdown looms again by November 3^rd.

READ ON FOR FURTHER DETAILS………………………………………..

IMPORTANT-PLEASE NOTE:

We will all be working remotely this Wednesday through Friday while we attend the Trust Company’s Annual Conference in Denver.  We will have full access to our office phones and email as usual, so if you need anything during this time, don’t hesitate to contact us.  We will be able to work remotely from Denver and process your requests as usual.

Upcoming Social Security Workshops

There are still seats available at the following Social Security Workshops:

Wednesday, October 28^th:                  10:00-11:00am

Thursday, October 29^th:                        1:00-2:00pm

Friday, November 6^th:                         11:00am-12:00noon

Questions that will be addressed and answered include:

• Will Social Security be there for me?
• How much can I expect to receive?
• When should I apply for Social Security?
• How can I maximize my benefits?
• Will Social Security be enough to live on in retirement?

To help you better understand the Social Security system, this workshop will cover

• 5 factors to consider when deciding when to apply for benefits
• When it makes sense to delay benefits — and when it does not
• Why you should always check your earnings record for accuracy
• How to estimate your benefits
• How to coordinate benefits with your spouse
• How to minimize taxes on Social Security benefits
• How to coordinate Social Security with your other sources of retirement income

Call us today at 844-9826 to reserve your spot at one of these informative sessions.  The workshops will be held in our corporate conference room, so seating is limited.

The Markets:

The major market indexes ended in the win column for the third-straight week last Friday, the longest such winning streak since February (MarketWatch data). Since hitting a bottom on August 25, the S&P 500 Index has rallied nearly 9% as of October 16 (St. Louis Federal Reserve). The Dow Jones Industrial Average gained .77% for the week, to end at 17,215.97.  The broader based Standard & Poor’s 500 stock index rose .90%, finishing at 2,033.11. (MarketWatch)

Interest rates fell from the previous week, with the yield for the 10 year U.S. Treasury ending Friday at 2.04%.  This compares with 2.17% at the start of this year. (U.S. Treasury)  The National average for a 30 year fixed rate mortgage closed out the week at 3.80%, and the 15 year fixed rate closed out the week at 2.86%. (Bankrate.com)

Gold rose $29.30 per ounce, ending last Friday at $1,180.85, while the price of West Texas Intermediate Crude declined to $47.26 per barrel, down $2.23. (CNBC)

So what has changed in recent weeks that might spark a modest rally? Not much since the market’s swoon in late August. China is still struggling and emerging market woes haven’t gone away. But odds of a Fed rate hike this year have receded, and that seems to be soothing investor anxieties.

The Economy

The latest report on spending highlights a cautious mood among consumers. According to the U.S. Commerce Department, retail sales rose just 0.1% in September following no change in August. If we remove the volatile auto sector, which has been a bright spot, and gasoline stations, which helps to filter out changes in gasoline prices, sales in September were unchanged following a 0.3% rise in August.

However, sluggish consumer spending doesn’t appear to be sending a more ominous signal. Hence, the nascent optimism among investors.

Take a look at Figure 1 . Annualized core sales, which exclude autos and gas stations, have slowed, but are still rising at a modest pace.

There are probably several reasons to account for the lukewarm response among consumers, including weak wage growth and general worries about the economy. It’s not that consumer confidence is waning (Conference Board, University of Michigan survey of consumer confidence), but nagging worries remain.

What’s it all mean? Gradual economic growth is a support, albeit a weak one, for corporate earnings. And the current mood has shifted away from expectations the Fed will pull the rate-hike trigger this year.

Debt ceiling standoff

Late last week, U.S. Treasury Secretary Jack Lew warned the U.S. will bump up against the debt ceiling by November 3 unless Congress raises the debt limit (Wall Street Journal).

Without delving into the politics of the debt ceiling, the government will default if the ceiling isn’t raised. A breach of the debt ceiling is unlikely, but it could create uncertainty if we approach the November 3 deadline without a vote to boost the Treasury’s limit to borrow funds and sell new Treasury bonds and bills.  We will keep you posted.

We wish you all a great week ahead and appreciate the privilege to be of service.  Don’t forget, we will all be out of the office this Wednesday through Friday for the Trust Company of America’s annual conference, but will still be available by phone or email as usual.

God Bless,

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

 

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