October, 2016 Mid-Month Update

Highlights of this Update:

1. Time is running out! Call today to schedule your personal 2016 end of year review.
2. Major stock indices close lower last week, while interest rates inched higher.
3. Oil closes above $50.00 per barrel.
4. Economic data remains positive, no near-term recession imminent.
5. Market volatility probably continues until after elections.

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

Schedule Your Year-End Review Now:

Please be sure to call us today to reserve a time for your 2016 year-end review.  This is a great time of year to review your current financial plan, make any adjustments before the end of this year, and look ahead to 2017.  Call now to schedule your private review session, either in person or by phone.  Call us today!

The Markets:

The major U.S. stock indices closed lower last week, with the Dow Jones Industrial Average dipping .56% and finishing last Friday at 18,138.38.  The Dow is now up 4.09% so far this year through October 14^th.  The broader based Standard & Poor’s 500 stock index gave up .96% for the week, ending Friday at the 2,132.98 level.  The S&P 500 remains 4.36% higher than the first of this year. (Google Finance) 

Interest rates inched higher, with the yield for the 10 year U.S. Treasury at 1.80% Friday, but still lower than the 2.27% to start 2016. (U.S. Treasury) Mortgage rates have remained low, with the 30 year fixed mortgage at an average of 3.49% and the 15 year fixed rate at 2.69% as of last Friday.  (Bankrate.com)

Oil prices firmed last week, with the price for a barrel of West Texas Intermediate Crude oil finishing the week above $50.00, up .77 for the week. Gold fell $7.00 per ounce, ending at $1,251.75. (CNBC)

The Economy:

The government has compiled numerous surveys that measure the temperature of the job market. A few suggest the labor market is quite healthy, others advocate the idea that we’ve witnessed solid improvement over the last six years, while others would say more progress is needed.

One that has been particularly encouraging is the Department of Labor’s (DOL) release of weekly initial jobless claims for unemployment insurance.  You can’t file for weekly benefits unless you’re laid off by your employer.

Last Thursday, the DOL’s weekly release showed that first-time jobless claims fell to a 43-year low for the week ended October 8 (the most current available).   It’s even more impressive given that the population and labor force are much larger today than they were back in the early 1970s.

Here’s a quick review of the numbers from the St. Louis Federal Reserve—

• The second week in a row below 250,000 (current reading of 246,000)
• 84 weeks below 300,000, the longest streak on record
• 106 of 109 weeks below 300,000
• Compares to 108 out of 110 weeks below 300,000 in 1971 – 1973

It’s important because a low level of layoffs signals businesses are reluctant to lose employees amid improving business conditions.

It’s also important because this leading economic indicator typically bottoms well before a recession ensues. With the exception of the very short expansion sandwiched in between the 1980 and 1982 recessions, we typically see claims bottom at least one year prior to the onset of a recession.  No two economic expansions are exactly alike, but the very low level of layoffs highlights an economy that continues to expand, albeit at a less-than-impressive pace.  It also suggests a recession is unlikely in the near term.

As we have been saying, we don’t see a recession anytime soon based on the indicators we follow.  Remember, the two major long term influences for the stock market are corporate earnings and the economy.  At this point, both of these appear to provide a stable to reasonably positive environment for stocks.  Not that we won’t see volatility in the short term.  We do anticipate additional volatility ahead between now and the elections, but still look to finish 2016 on a positive note overall.  We will keep you posted.

We wish all of you a great week ahead and encourage you to call or email us if we can ever be of further service in any way.  We appreciate the privilege to serve all of you now and in the years to come.

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.

⁵ New York Mercantile Exchange front-month contract; Prices can and do vary; past performance does not guarantee future results.

⁶ 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.