The Markets
Like
a host at a dinner party, the International Monetary Fund (IMF) put the
performance of the U.S. economy on the table last week to be gnawed over by
world markets. When the IMF presented its annual review of the world’s largest
economy, it stated that:
“Despite
some improvements in economic indicators, particularly in the housing market,
the very rapid pace of deficit reduction… is slowing growth significantly… U.S.
growth is expected to slow to 1.9 percent in 2013, from 2.2 percent in 2012.
This projection reflects the impact of the sequester ($85 billion of automatic
U.S. government spending cuts), and the expiration of the payroll tax cut and
the increase in tax rates for high-income taxpayers…Growth could pick up to 2.7
percent next year with a more moderate fiscal adjustment and a further
strengthening of the housing market.”
The
IMF also said the Federal Reserve should continue quantitative easing through
2013.
It
was not the only one pondering the Fed’s quantitative easing program. The major
U.S. stock market indices finished the week lower. The Dow Jones Industrials
Average fell 1.2 percent last week, the Standard & Poor’s 500 Index was off
by 1 percent, and the NASDAQ dropped 1.3 percent. Remarkably, the Dow experienced
four straight days of triple-digit swings.
The
next Federal Open Market Committee Meeting is on June 18 and 19. While few
people expect the Fed to announce it will reduce the pace of bond buying
immediately, the majority of economists surveyed by USA TODAY predict the
Federal Reserve will begin to reduce bond purchases by early fall.
Data as of 6/14/13
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
Standard
& Poor's 500 (Domestic Stocks)
|
-1.0%
|
14.1%
|
22.4%
|
14.3%
|
3.7%
|
4.9%
|
10-year
Treasury Note (Yield Only)
|
2.1
|
N/A
|
1.6
|
3.3
|
4.2
|
3.2
|
Gold
(per ounce)
|
0.4
|
-17.9
|
-13.8
|
4.4
|
9.4
|
14.5
|
DJ-UBS
Commodity Index
|
-0.7
|
-6.3
|
1.2
|
0.8
|
-10.6
|
1.1
|
DJ
Equity All REIT TR Index
|
-0.8
|
7.0
|
16.1
|
15.6
|
5.8
|
11.0
|
Notes: S&P
500, Gold, DJ-UBS Commodity Index returns exclude reinvested dividends (gold
does not pay a dividend) and the three-, five-, and 10-year returns are
annualized; the DJ Equity All REIT TR Index does include reinvested dividends
and the three-, five-, and 10-year returns are annualized; and the 10-year
Treasury Note is simply the yield at the close of the day on each of the
historical time periods.
Sources:
Yahoo! Finance, Barron’s, djindexes.com, London Bullion Market Association.
Past performance
is no guarantee of future results. Indices are unmanaged and cannot be invested
into directly. N/A means not applicable.
Are emerging
countries leading the way in renewable energy? It seems that way
sometimes. According to UNEP’s report, Global Trends in Renewable Energy Investment
2013, “Renewables are picking up speed across Asia, Latin America, the Middle
East, and Africa, with new investment in all technologies… Markets,
manufacturing, and investment shifted increasingly towards developing countries
during 2012.” For instance, after running even with the United States during
2011, China became the dominant country for renewable energy investment in 2012,
according to the report.
This doesn’t mean
the United States isn’t in the race. According to The Economist, an analysis by Bloomberg New Energy Finance found
the U.S. and China traded about $6.5 billion in solar, wind, and smart-grid
technology and services during 2011. America sold about $1.5 billion more to
China than it imported. The Economist
concluded, “American ingenuity is required to supply Chinese factories with
such things as polysilicon and wafers for photovoltaic cells, and the
fiberglass and control systems used in wind turbines.”
So, what does the
future hold? Kiplinger’s Letters said solar power production will double in
2013 and move ahead of geothermal power as a source of clean energy. They
believe wind energy will soon rival hydroelectric power, as well. The United
States added more wind power capacity last year than any other type of power
generation. Currently, wind comprises about 5 percent of power generated in the
United States.
Global investment
in renewable energy may have fallen during 2012, but that doesn’t mean the
industry has lost momentum. Renewable energy is gaining share in a growing number
of countries and regions, including the European Union where renewable energy –
primarily solar and wind power – accounted for about 21 percent of electricity
consumption in 2011, and almost 70 percent of new electric capacity in 2012.
Renewables just may
prove to be the tortoise in the energy race.
Weekly Focus – Think
About It
“It
is not in the stars to hold our destiny, but in ourselves.”
--William Shakespeare, English poet and playwright
Value
vs. Growth Investing (6/14/13)
-0.93
|
15.30
|
-1.36
|
4.31
|
25.95
|
16.96
|
6.35
|
|
-1.01
|
14.91
|
-1.21
|
4.78
|
24.28
|
16.88
|
5.74
|
|
-0.91
|
19.41
|
-0.86
|
6.85
|
30.75
|
18.40
|
7.76
|
|
-1.30
|
9.91
|
-2.78
|
2.95
|
17.39
|
16.33
|
5.22
|
|
-0.82
|
16.11
|
0.09
|
4.73
|
25.69
|
16.12
|
4.15
|
|
-0.72
|
16.51
|
-1.95
|
3.33
|
30.86
|
17.19
|
7.36
|
|
-0.65
|
14.93
|
-2.82
|
2.04
|
28.59
|
18.82
|
8.04
|
|
-1.09
|
13.73
|
-2.53
|
2.40
|
26.15
|
16.11
|
4.83
|
|
-0.42
|
21.00
|
-0.54
|
5.53
|
38.28
|
16.50
|
9.27
|
|
-0.66
|
15.78
|
-1.20
|
2.37
|
30.19
|
16.76
|
8.96
|
|
-1.02
|
15.87
|
-1.58
|
2.54
|
30.90
|
15.62
|
7.83
|
|
-0.22
|
15.36
|
-0.55
|
2.90
|
27.84
|
18.12
|
7.97
|
|
-0.69
|
16.09
|
-1.40
|
1.68
|
31.86
|
16.55
|
11.11
|
|
-0.86
|
18.20
|
-1.32
|
5.49
|
30.26
|
18.33
|
7.96
|
|
-1.19
|
11.00
|
-2.59
|
2.83
|
19.73
|
16.46
|
5.37
|
|
-0.73
|
17.09
|
-0.14
|
4.68
|
28.56
|
16.22
|
5.66
|
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warranted to be accurate, complete or timely. Morningstar is not responsible
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Act of 1933. Past performance is no guarantee of future results. Indices are unmanaged and while these indices
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Office Notes:
Does the
3.8% investment surtax apply to retirement funds?
Q: Does the 3.8% investment
surtax apply to retirement funds? For example, if I take a lump-sum
distribution of my 401(k) plan, which holds employer stock, will the basis be
taxed at 3.8% on top of income tax?
A: The investment surtax of
3.8% does not apply to MOST retirement payments. It could apply to certain
non-qualified annuity payments. However, the retirement payment will increase
your income and COULD put you over the threshold to where the surtax will
apply. For example, the surtax will apply if modified adjusted gross income
(MAGI) is over $250,000 (married/joint). If a couple's MAGI is $235,000 and
they take a $25,000 IRA distribution, it increases the MAGI to $260,000, making
some of their investment income subject to the surtax.
Regards,
,
Michael L. Schwartz, RFC®, CWS®, CFS
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Allied Advisory Services, A Registered Investment Advisor.
Schwartz Financial
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This
information is provided for informational purposes only and is not a
solicitation or recommendation that any particular investor should purchase or
sell any security. The information contained herein is obtained from sources
believed to be reliable but its accuracy or completeness is not
guaranteed. Any opinions expressed
herein are subject to change without notice.
An Index is a composite of securities that provides a performance
benchmark. Returns are presented for
illustrative purposes only and are not intended to project the performance of
any specific investment. Indexes are
unmanaged, do not incur management fees, costs and expenses and cannot be
invested in directly. Past
performance is not a guarantee of
future results.
* The Standard &
Poor's 500 (S&P 500) is an unmanaged group of securities considered to be
representative of the stock market in general.
* The DJ Global ex US
is an unmanaged group of non-U.S. securities designed to reflect the
performance of the global equity securities that have readily available
prices.
* The 10-year Treasury
Note represents debt owed by the United States Treasury to the public. Since
the U.S. Government is seen as a risk-free borrower, investors use the 10-year
Treasury Note as a benchmark for the long-term bond market.
* Gold represents the
London afternoon gold price fix as reported by the London Bullion Market
Association.
* The DJ Commodity
Index is designed to be a highly liquid and diversified benchmark for the
commodity futures market. The Index is composed of futures contracts on 19
physical commodities and was launched on July 14, 1998.
* The DJ Equity All
REIT TR Index measures the total return performance of the equity subcategory
of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
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source for any reference to the performance of an index between two specific
periods.
* Opinions expressed
are subject to change without notice and are not intended as investment advice
or to predict future performance.
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