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The Markets:
The S&P 500 Index racked up its first weekly loss of the year, snapping a seven-week winning streak. The Dow Jones Industrials, however, eked out a 0.1% advance and finished the week at 14,000.57.
Stocks weakened today with concerns over the election in Italy and the “sequester” looming in Washington, D.C. The Dow broke below the 14,000 mark closing at 13,784.17. Gold and silver prices rose.
We are still of the opinion that stocks could move sideways with movements both up and down in the short term at this point moving forward over next few months. We continue to feel commodity prices could outperform stocks in general over the next 12-18 months ahead. We have lessened our exposure to stocks/stock funds for all risk levels since last November, and are now somewhat “underweighted” in stocks for each of our risk levels compared to normal allocation amounts. We will keep you advised.
Sequester or Not?
What is the “sequester”? It refers to the automatic budget cuts for Government spending that are set to take place on Friday with some delayed until March 27th unless Congress and the White House can come to some agreement before the deadline. The result of the automatic cuts probably won’t be a disaster as many would have you believe, as they are less than 3% of overall Government spending, a very small change given the magnitude of total spending. The problem is that the cuts are across the board without consideration of specific services/categories. It appears entitlement programs will feel very little affect, if any, should this occur. The following graph from the Heritage Foundation illustrates the projected cuts over the next 10 years:
Inflation?
The Chicago Federal Reserve reported two weeks ago that farmland prices in the Midwest are up 16% from a year ago, the third largest increase since the late 1970s, including a 20% rise in Iowa and an 18% rise in Michigan. Is inflation really under 2% per year? If depends on who you ask and how you calculate it!
Italian Elections:
Italy’s presidential election that was held yesterday and today is initially showing a possible indication that the results may move Italy back towards more Government spending again and away from austerity. The future of Italian financial reforms are in question after former Prime Minister Silvio Berlusconi’s alliance had a strong showing in projections from Italy’s bitterly contested general election. Final results are still not available, but this uncertainty helped push stocks lower in Europe and the U.S. today. (MarketWatch) Investors would like to see an outcome that does not endanger reforms put in place by the last prime minster. These reforms have helped calm credit markets and removed one headwind for stocks.
Please Note:
We may be having some inclement weather locally overnight, and there is a possibility that our offices could be closed tomorrow, Tuesday the 26th. We will keep you informed via email and will have our phones forwarded as to not miss your calls. We appreciate the privilege to serve each of you and wish you all a great week ahead as we finish out the month of February!
God Bless,
Your TEAM at F.I.G. Financial Advisory Services, Inc.
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.
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News
1099s Available: 1099s are now available online! Please access your account now to view them online with the Trust Company of America.
Did you know?
For your convenience a CSV (Excell) file is available online to provide you or your tax preparer the ability for downloading all your transactions in a simple format. The Trust Company of America has collaborated with TurboTax to provide you with a one-step process for downloading transactions as well. Please call if you or your tax preparer have any questions.
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