Friday’s bond market sell-off was likely precipitated by a strong non-farm payroll report for January which showed 200k new jobs as well as a positive December report. Adding to inflation concerns was the report’s reading on wages, which grew at an annual 2.9% rate. The Fed left interest rates unchanged after last week’s FOMC meeting, but their statement pointed to inflation risk in 2018. They also noted that consumer spending was “solid” (versus their former description of “moderate”).
As everyone knows, stocks went into a dramatic spiral on Monday, February 5th, as the DJIA plummeted almost 1,600 points, which was the biggest point decline in history. But right before the market closed, buyers charged back into the market and limited the damage – but the DJIA still lost 1,175 points.
Home Prices Healthy
The S&P/Case-Shiller National Home Price Index for October 2017 showed home prices moving higher by an impressive 6.2% year-over-year. That’s the highest rate of growth since June 2014. Price hikes should moderate and settle in the 5.0%-5.5% growth range. This forecast is based on several leading industry supply and demand indicators; inventory levels and new home sales. According to the U.S. Census Bureau, new home sales are running at a solid 733,000 per year rate, up from 400k in 2012 but well below bubble territory just above 1,000,000.
There are risks to this moderately bullish outlook. Affordability could be a problem if employment trends stall. As well, borrowing costs may rise due to the Fed’s rate-hike campaign and fiscal stimulus. These factors will likely prevent house prices from soaring at a double-digit rate any time soon. White-hot conditions aren’t always conducive to sustainable long-term growth in the industry so some moderation in pricing is most likely a good thing. After all, real estate has been a long-time foundation for U.S. GDP growth.
IPO market activity picked up in the fourth quarter. Overall in 4Q17, 68 companies (including blank check and closed-end funds) went public, double the amount in the same quarter a year earlier. In the background, corporate earnings grew for the fifth quarter in a row and appear poised to expand at a double-digit pace into 2019. Looking ahead, we think the market for IPOs is likely to remain bullish in 2018. On the positive side: economic growth, led by the employment environment, appears to be accelerating; volatility remains low; and corporate earnings growth is expected to grow at double-digit rate, as the dollar stabilizes, oil prices continue to recover and tax rates decline. The IPO pipeline remains robust, with about 180 companies having filed with the SEC and a number of interesting recent filings, such as AXA Equitable Holdings, which owns the namesake insurance company as well as Alliance Bernstein; Workplace Property Trust, which is focused on office and flex real estate in U.S. suburbs; and VICI Properties, which owns real estate assets in the gaming industry. We look for more biotech, clean tech, medtech and transportation companies to file with the SEC in the weeks ahead.
Initial Public Offerings illuminate economic strength and provide evidence of how corporate America is feeling about its future.
Loans can be a convenient source of financing when you don’t have cash to spare. If you’re in your 20s or early 30s, odds are you may be juggling several different types of loans.
According to a 2016 Gallup poll:
35% of millennials have student loan debt
30% are paying down a car loan
23% have a personal loan
47% are carrying credit card debt
If you fall into any of these categories and are conflicted about whether you are managing your debt effectively, there’s no need to panic. Here are two practical ways to manage your debt so that you can build a brighter financial future.
Happy New Year and best wishes for a healthy and prosperous 2018. Many of our clients learned about Bitty & Beau’s Coffee during the holidays. This amazing story continues to draw attention. We recently learned that Subaru will be matching (dollar for dollar up to $50,000) all contributions through January 7,2018. Visit their website to learn more www.bittyandbeauscoffee.com
Market Review – The last trading day of 2017 began on a high note with stocks surging. The ascent was fleeting as stocks retreated for much of the day. The selling intensified late in the day and left major benchmarks at their lows. The Dow Jones Industrial Average and S&P 500 both ended down 0.5%, while the Nasdaq Composite fell 0.7%. Light trading for the holiday-shortened week left declines of 0.1% for the Dow, 0.4% for the S&P 500 and 0.8% for the Nasdaq. But the benchmarks all had solid performances for 2017, closing with price gains of 28.2% for the Nasdaq, 25.1% for the Dow and 19.4% for the S&P 500.
Waiting until just before April 15 to start thinking about your taxes may prove to be a costly mistake. Advance tax planning is especially important if your circumstances have changed over the past year due to events such as marriage, divorce, the birth of a child, or the death of a family member.
Deferring income into the next tax year and accelerating deductions into the current year can reduce your adjusted gross income (AGI). Lowering your AGI could make you eligible for certain tax breaks that phase out at higher income levels, such as personal exemptions and education credits. Now that the tax reform has passed, here are some strategies that may help you trim your tax bill:
It’s that time when we bid farewell to the current year and begin the banalities of resolutions. Whatever yours happens to be, we wish you great success. Perhaps more importantly, OmniStar wishes you a new year of happiness, success and good health. Enjoy the last Market Perspectives of 2017 and we look forward to sharing the next edition in February 2018.
Stocks continued their climb on Friday following strong earnings from the Technology sector. The Nasdaq (tech heavy index) climbed 0.7%, while the S&P 500 added 0.3% and the Dow Jones Industrial Average followed with a 0.1% gain. Another healthy earnings season is winding down and Q4 is underway. If we use history as our guide, November and December tend to be good months for investors. Nevertheless, 2017 has already provided noteworthy performance. Year-to-date gains are now 25.7% for the Nasdaq, 19.1% for the Dow and 15.6% for the S&P 500.
Saving for the future takes commitment and patience. The results are clear when you look at people who have been invested in their 401(k) for over a decade…