"Nothing Important Happened today" Diary entry by King George III on July 4, 1776

Transcription

1 David J. Klein Senior Vice President Financial Advisor The Auctus Group RBC Wealth Management Phone: Fax: Toll Free: website: June 27, 2016 "Nothing Important Happened today" Diary entry by King George III on July 4, 1776 An Independence Day Memory: (Edward Klink, Horsesmouth) While Thomas Jefferson has received the lion s share of accolades for the Declaration of Independence, he referred to John Adams as the Colossus of that Congress, the great pillar of support to the Declaration. Both gentlemen lived 50 more years after the signing. On July 3, 1826, Jefferson lay on his deathbed and uttered to his attendant, This is the Fourth? To comfort him, the man replied that it was, whereupon Jefferson smiled and fell into a sleep from which he would never awaken. John Adams had resolved to live until the 50th anniversary of the Declaration. When his servant asked him that morning if he knew the date, the 90-year-old said, Oh, yes, it is the glorious fourth of July. God bless it. God bless you all. Adams would die later that afternoon, with the final words Jefferson still survives. He did not know that Jefferson had died just a few hours earlier at Monticello.

2 My Website: Have you looked at the RBC report, Global Insight Monthly in the middle of the front page of the website? Cybersecurity is a new and growing area for long-term growth potential. Reminders Call us about discussing and preparing a retirement plan for you Insurance policies should be reviewed Are they still meeting your primary goals? Let us review your older annuities and your long-term care insurance Ask us about our privately managed securities accounts Is your investment asset allocation properly diversified? Talk to us about your estate-planning and gifting concerns Your beneficiaries: are they properly updated on all your accounts? Key Statistics Year-to-date a/o 6/24/2016 Dow: (-0.14%) S&P 500: (-0.32%) Nasdaq: (-5.98%) Treasury Bond Yields: Current weekly yields a/o 6/24/ year Treasury: 0.48% 2-year Treasury: 0.64% 5-year Treasury: 1.08% 10-year Treasury: 1.57% 30-year Treasury: 2.42% --Treasury yields fell again last week as bond prices strengthened --Germany is the eurozone s strongest economy, yet its 10-year bond fell below zero

3 Municipal Bonds: As yields have been falling around the world, there has been an influx of money into the US and particularly into US municipal bonds. This has caused US muni prices to go up and yields to come down. Supply and demand! Brexit Italeave, Finish, Czechout, Oustria, Byegium, Departugal You have undoubtedly heard much about Brexit, so we will cite just a few observations from several articles in Barron s: In France, Marine Le Pen, head of the right-wing National Front party, called for the same vote there Popular parties in Denmark, Sweden, and Italy also favor similar referendums. the disintegration process of the EU is beginning (Felix Zulauf, Zulauf Asset Management, Zug, Switzerland)

4 The divorce of the UK from the EU will take at least two years US stocks remain more insulated from global development than any other major equity market Once the emotion of this event fades, investors may get back to the fundamentals, which, at least in the US, are looking better (Jim Paulsen, Wells Capital Mgmnt.) American companies generate about 70% of revenues at home. That could partially insulate them from Europe s woes (Andrew Barry, Barron s) It may take the US stocks some time to settle down, but the underpinnings of the US market still look solid (Barron s) The vote also means the Federal Reserve will most likely hold off raising interest rates Notice in the following chart that the UK was the 3 rd largest contributor to the European Union budget. Only Germany and France contributed more while many countries were recipients.

5 Global Forecast: The following tepid forecast for global growth, made by the World Bank, was published before the Brexit vote. As we have mentioned many times before, let s not put too much faith in forecasts. Markets (Barron s, IBD, WSJ) For the week: Dow fell (-1.55%), S&P 500 fell (-1.63%), Nasdaq fell (-1.92%) Brexit rocked stocks around the world Major US stock indices fell nearly 4% on Friday to finish down over 1% for the week Question of the Week: When, and under which President, did the United States go through a period of stagflation (stagnant economy and hyper inflation)? Question and Answer From Last Week With interest rates, inflation and unemployment rates at low levels today, what were the peak rates we faced in these areas 35 years ago from ? Answer: 35 years ago, from , the fed funds rate was at 20%, inflation was at 15%, and the unemployment rate was at 11%. Did You Know: Government outlays for Medicare have increased +9.8% annually over the last 40 fiscal years, rising from $13 billion in 1975 to $546 billion in Inflation, as measured by the Consumer Price Index, has increased +3.7% annually over the same 40-year period (Department of Labor, OMB)

6 64% of 4,000 people surveyed said that if given the choice they would select having more money as opposed to having more time (Social Psychological and Personality Science) Sports Trivia: During the last 10 years ( ) only 16 ballplayers that were top 10 picks in Major League Baseball s First Year Draft, i.e., 16 of 100 draft choices over the decade, have been selected to play in professional baseball s mid-season All-Star Game. (Major League Baseball) Your Referrals: Many sincere thanks for your referrals of family, friends, and associates. I am deeply appreciative. Sincerely, David J. Klein Senior Vice-President Financial Advisor The Weekly Market Update Will Not be Published The Week Of July 4 th The views presented here are solely the views and opinions of David Klein and do not reflect the views of RBC Wealth Management, or its officers and directors. Data is believed to be from reliable sources, but we make no representation as to its accuracy or completeness. The Dow Jones Industrial Average covers 30 blue chip U.S. companies selected by the editors of the Wall Street Journal. The Dow represents about 25% of the NYSE market capitalization and less than 2% of NYSE issues. The Nasdaq Composite is a market-value weighted index that measures all NASDAQ domestic and foreign common stocks. The Standard and Poor s 500 is an unmanaged, capitalization weighted benchmark that tracks broad-based changes in the U.S. stock market. This index of 500 common stocks is comprised of 400 industrial, 20 transportation, 40 utility, and 40 financial companies representing major U.S. industry sectors. The index is calculated on a total return basis with dividends reinvested and is not available for direct investment. This material is based on data obtained from sources considered to be reliable. However, it is not guaranteed to accuracy and does not purport to be complete. The illustrations are for informational use only. RBC Wealth Management does not provide tax or legal advice. All decisions regarding the tax or legal implications of your investments should be made in conjunction with your independent tax or legal advisor RBC Wealth Management, a division of RBC Capital Markets Corporation, Member NYSE/FINRA/SIPC