The Markets
You could have set
the events of last week to music.
Should they stay or should they go?
Last week, the Bank
of England (BOE), Britain’s central bank, inadvertently sent a memo describing
how staffers should handle press inquiries about its confidential research into
the possibility of a British exit (Brexit) from the European Union, to the media.
Oops.
The
possibility of a Brexit is top-of-mind after the re-election of British Prime
Minister David Cameron who promised voters a referendum on the issue by the end
of 2017. Reuters reported, “Many British
business leaders are worried about the possibility of losing access to their
main export markets and there are also concerns about the impact on Britain's
financial services industry.”
There is no job too immense when you’ve got confidence.
Just before the
long holiday weekend, while confirming the Federal Reserve still expects to
begin raising its benchmark interest rate during 2015, Chairwoman Janet
Yellen’s comments took a philosophical turn:
“Of course, the outlook for the economy, as always, is
highly uncertain. I am describing the outlook that I see as most likely, but
based on many years of making economic projections, I can assure you that any
specific projection I write down will turn out to be wrong, perhaps markedly
so. For many reasons, output and job growth over the next few years could prove
to be stronger, and inflation higher, than I expect; correspondingly,
employment could grow more slowly, and inflation could remain undesirably low.”
Money, it’s a gas.
When oil prices
fell, many people assumed consumers would spend the windfall. For the most
part, they didn’t. Barron’s reported earnings
for several retailers were lower than expected last week.
All in all, it
wasn’t a very exciting week for U.S. stock markets.
Data as
of 5/22/15
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
|
Standard & Poor's 500
(Domestic Stocks)
|
0.2%
|
3.3%
|
12.3%
|
17.3%
|
14.6%
|
5.9%
|
|
Dow Jones Global ex-U.S.
|
-0.7
|
8.6
|
0.4
|
10.1
|
6.7
|
3.9
|
|
10-year Treasury Note (Yield Only)
|
2.2
|
NA
|
2.6
|
1.8
|
3.2
|
4.1
|
|
Gold (per ounce)
|
-1.3
|
0.4
|
-7.3
|
-8.7
|
0.3
|
11.2
|
|
Bloomberg
Commodity Index
|
-2.7
|
-1.8
|
-24.4
|
-8.7
|
-3.8
|
-3.6
|
|
DJ
Equity All REIT Total Return Index
|
-1.2
|
-0.6
|
12.5
|
12.9
|
15.1
|
7.9
|
S&P
500, Dow Jones Global ex-US, Gold, Bloomberg 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 Total Return 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.
changing
wages. The
federal minimum wage remains at $7.25. However, last week, the Los Angeles city
council voted to raise the city’s minimum wage from $9 to $15 an hour. The
increase will be implemented gradually between 2015 and 2020. It is hoped higher
wages for minimum wage workers will help address cost-of-living issues that
affect LA’s poorer residents, according to The
Economist.
Did the minimum wage really need to
increase by two-thirds? According to the Massachusetts
Institute of Technology (MIT) Living Wage Calculator, an individual living
in the Los Angeles-Long Beach-Santa Ana area, who was the sole provider for his
or her family (1 adult, 2 children) and worked 2,080 hours a year, would need
to earn about $29.84 an hour to earn a living wage and $9.00 an hour to live at
poverty level. The living wage is different in various parts of the country.
For example, the living wage for the same family if they lived in:
·
New
York-Northern New Jersey-Long Island area $35.84
·
Milwaukee-Waukesha-West
Allis, WI $29.39
·
Portland-Vancouver-Hillsboro,
OR $27.86
·
Dallas-Fort
Worth-Arlington, TX $25.02
·
Little
Rock-North Little Rock-Conway, AR $25.58
·
St.
Louis, MO $24.50
·
Fargo,
ND $24.33
·
Charleston-North
Charleston-Summerville, NC $24.28
Is a higher minimum wage good for business?
It depends on the business model employed. One Harvard Business Review blogger opined:
“The smart way to
deal with an increase in the minimum wage is to design work in a way that
improves employees’ productivity and increases their contribution to profits.
All this is possible even in low-wage settings. In fact, some companies are
already doing it… When
I examined these companies, I saw that they made four choices in how they
designed their work. They: (1) offer less, (2) combine standardization with
empowerment, (3) cross-train, and (4) operate with slack. These choices
transform their heavy investment in employees into great performance by
reducing costs, improving employee productivity, and leveraging a fully capable
and committed workforce.”
There is some food for thought.
Weekly Focus – Think About It
“Everyone thinks of
changing the world, but no one thinks of changing himself.
--Leo Tolstoy, Russian novelist
Value
vs. Growth Investing (5/22/15)
|
0.27
|
4.57
|
0.88
|
1.35
|
14.74
|
20.02
|
17.00
|
|
|
0.15
|
4.07
|
1.02
|
1.24
|
14.50
|
19.49
|
16.70
|
|
|
-0.31
|
1.71
|
1.10
|
0.77
|
14.78
|
21.17
|
17.33
|
|
|
0.61
|
7.94
|
0.65
|
1.48
|
20.31
|
20.46
|
18.60
|
|
|
0.11
|
2.41
|
1.36
|
1.48
|
8.34
|
16.89
|
14.21
|
|
|
0.62
|
6.36
|
0.76
|
1.73
|
16.05
|
21.89
|
18.12
|
|
|
0.71
|
6.43
|
1.58
|
1.72
|
17.84
|
22.11
|
19.53
|
|
|
0.42
|
8.70
|
-0.28
|
2.36
|
19.20
|
20.22
|
17.76
|
|
|
0.75
|
3.91
|
0.98
|
1.09
|
11.00
|
23.39
|
17.01
|
|
|
0.59
|
4.63
|
-0.25
|
1.47
|
13.30
|
20.03
|
16.52
|
|
|
0.65
|
5.38
|
1.10
|
2.52
|
13.54
|
20.31
|
15.90
|
|
|
0.82
|
7.24
|
-0.82
|
1.83
|
16.44
|
19.73
|
17.76
|
|
|
0.30
|
1.43
|
-1.06
|
0.08
|
10.11
|
20.02
|
15.91
|
|
|
-0.03
|
2.91
|
1.20
|
1.09
|
15.33
|
21.30
|
17.71
|
|
|
0.59
|
8.05
|
0.38
|
1.67
|
19.83
|
20.36
|
18.43
|
|
|
0.26
|
2.65
|
1.10
|
1.29
|
9.01
|
18.42
|
14.90
|
©2004 Morningstar, Inc. All Rights Reserved.
The information contained herein: (1) is proprietary to Morningstar; (2) is not
warranted to be accurate, complete or timely. Morningstar is not responsible
for any damages or losses arising from any use of this information and has not
granted its consent to be considered or deemed an “expert” under the Securities
Act of 1933. Past performance is no guarantee of future results. Indices are unmanaged and while these indices
can be invested in directly, this is neither a recommendation nor an offer to
purchase. This can only be done by
prospectus and should be on the recommendation of a licensed professional.
Office Happenings
A Quirk In The Social Security Rules
Q: A short time ago I taught
Social Security for women event. One of the women in the class gave me the
following scenario: She is 64. Her ex-husband is 66. Both plan to take the
spousal benefit off the other, and then their own at age 70. Her financial
advisor said it was okay. So a little over a year ago, her ex-husband began
taking his spousal benefit (without her filing). Her plan is to take her
spousal benefit when she turns 66. In doing so, they both will be taking
Spousal Benefits at the same time, until her ex-husband turns 70. Then he will
take his own benefit. When she turns 70, she plans to take her own benefit. As
I mentioned, they began this strategy, based upon her advisor’s advice. However
the slides state in the presentation state both spouses can’t receive spousal
benefits on each other’s record at the same time.’ Can she wait until she’s 68,
and he’s 70, and then begin taking a spousal benefit for 2 years? I was under
the impression that only one spouse can take the spousal benefit. Where does
this leave her? Is she stuck with taking her own benefit at 66? Or getting
nothing until she turns 70? She’s now worried that maybe they received some bad
advice.
A: It
turns out they got good advice. The difference is that they are divorced.
Two divorced spouses can each take spousal benefits off the other’s record at
the same time. Just a quirk in the rules, understanding that two divorced
spouses don’t combine finances or have control over each other’s actions.
Regards,
,
Michael L. Schwartz, RFC®, CWS®, CFS
P.S. Please feel
free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list,
please reply to this email with their email address and we will ask for their
permission to be added.
Michael
L. Schwartz, RFC, CWS, CFS, a registered principal offering securities and
advisory services through Independent Financial Group, LLC., a registered
broker-dealer and investment advisor.
Member FINRA-SIPC. Schwartz Financial and Independent Financial Group
are unaffiliated entities.
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.
* Yahoo! Finance is the
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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not guarantee future results.
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