Highlights of this Update:
- Seats still available for workshops covering fixed annuities and long term care this month.
- Major U.S. stock indices lower over the past week with increased uncertainties.
- Global interest rates drop to new 2016 lows.
- Oil prices dip off 2016 highs, gas prices set for seasonal adjustment.
READ FURTHER FOR ADDITONAL DETAILS……………………………………………..
Seats Still Available at Upcoming Workshops:
Fixed Annuities: Thursday, June 23rd: 3:00pm
Friday, June 24th: 1:00pm
We will discuss and compare all types of fixed annuities-deferred, immediate, equity index and multi-year guarantee-and the pros/cons and differences of each as well as what to look for and what to avoid. See how the proper use of fixed annuities can help reduce the overall risk of a personal investment plan.
Long Term Care: Wednesday, June 29th: 10:30am
Thursday, June 30th: 2:00pm
We will address the recent trend of companies across the country raising rates on existing policies, coverages available, and new types of products today to address the growing need and costs of long term care. This is probably one of the biggest, if not THE biggest threat to the success of our personal financial plan and long term financial security.
Call us today-844-9826- to reserve your seats and feel free to bring a guest to these informative sessions. Seating is limited, so call today! All sessions will be conducted in our conference room at our corporate offices.
The Markets:
Over the past week, the major U.S. stock indices have come off their recent levels ending lower for the past week. For 2016 year-to-date as of June 13th, the Dow Jones Industrial Average is up 1.76%, while the Standard & Poor’s 500 stock index is 1.7% higher than on December 31, 2015. (Google Finance)
Interest rates have continued to fall as we had expected, with the yield on the 10 year U.S. Treasury dropping to 1.60% compared with 2.27% as of the end of 2015. The yield for the German 10 year Bund went negative today for the first time, while the Japanese 10 year bond continues to produce negative yields. (MarketWatch) The average rate for a 30 year fixed mortgage is now at 3.69%, and the 15 year rate stands at 2.75%. (Bankrate.com) Mortgage rates can vary based on local lenders as well as credit scores.
We will continue to monitor the markets and rates, and at some point, we will move the majority of our fixed income positions into short-term maturity/duration funds to protect positons from ultimately rising interest rates. This could still take some time, especially given current rates and slow global economic growth. We also just completed a rebalance for our portfolios across all risk levels over the past few days. With a flurry of current events, from the tragic terrorist shooting in Orlando, to the FED Meeting this week, to the British vote next week whether or not to exit the European Union, the markets have had more uncertainty to deal with than normal. This often makes for increased volatility in the short term until some of the uncertainty becomes clear. After next week, the focus should be back on economic data and corporate earnings.
Summer Driving Season and Gas Prices:
Memorial Day weekend marks the unofficial start of summer. Now that we’re heading into the summer driving season, it is a good time to review one contributor to our love of the automobile – gasoline prices. The average price of regular gasoline across the U.S. bottomed at $1.73 per gallon in mid-February (Energy Information Administration-EIA). While the price has risen from the low, EIA data reveal the average price over Memorial Day weekend was at a still-palatable $2.34. It was much lower than this in many parts of the Country.
If you’ve noticed that gasoline prices typically rise during the spring, the following chart – see Figure 1, illustrates this trend.
Oil prices have nearly doubled since bottoming in mid-February (EIA), briefly touching $50 per barrel last week, and now dropping back to the $48.49 range. (CNBC)
So what’s pushing up oil prices? According to John Kemp, a well-respected senior energy analyst for Reuters, there are several factors. Global oil consumption was up 1.8 million barrels per day (bpd) in 2015 and is predicted to rise by well over 1.0 million bpd next year. U.S. gasoline consumption is up versus a year ago, according to EIA data. We’re also seeing increased demand in key emerging markets: India and China (Wall Street Journal).
Meanwhile, U.S. oil production is expected to fall by 700,000 barrels per day this year (Reuters) as lower prices curb drilling in shale fields. Finally there’s the U.S. Dollar. Oil is priced in dollars when sold around the globe. The recent dip in the dollar has correlated with rising oil prices (St. Louis Federal Reserve).
On the Flip Side:
Supply disruptions may ease, and with oil near $50/barrel, we could see shale production stabilize and even rise, both of which could put a lid on prices. Baker Hughes reported last Friday that the oil rig count in the U.S. is up by 12 in the last two weeks to 328, as higher prices encourage a slight uptick in drilling. Still, it’s well off the peak of 1,609 reached in the week ended October 10, 2014.
We appreciate the privilege to serve you and look forward to working together in the years to come. We hope you are having a great start to summer!
God Bless,
Your TEAM at F.I.G. Financial Advisory Services, Inc.
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5 New York Mercantile Exchange front-month contract; Prices can and do vary; past performance does not guarantee future results.