Global stock markets jumped last week, with the S&P 500 Index rising 4.5% for its biggest gain since late November 2018. Short positions were covered due to technicals that suggested stocks were oversold. This fueled some of the recent recovery, but much of the boost, in our opinion, came after hints of a more dovish turn in Federal Reserve policy. Click here to read more
Our Summer edition of Financial Edge 2019 is now available. This quarter we discuss the price you pay for ignoring fee adjustments, one of the great benefits of retirement plans for your employees, and a short version of our podcast that’s sure to peak your interest and encourage you to continue listening to our three part series on financial statements. Click here to read more.
Our winter edition of Financial Edge 2019 is now available. The latest on Walgreens/Aspen Dental, Practice Growth via Social Media and your new favorite recipe, Shrimp and Grits. Don’t forget to send us a photo of your creation to be featured on our website. Please share your feedback and requests on content for our next Financial Edge.
Tom Dean, owner of Coastal Carolina Cutting Boards located in Holly Ridge, is rising to fame with his signature cutting boards made from various different woods. Celebrity chefs Emeril Lagasse, Giada De Laurentiis and most recently, Guy Fieri were presented with their very own custom-designed cutting boards when visiting Wilmington for GLOW (Girls Leadership Academy of Wilmington) fundraisers.
Check out our latest Dentists Financial Edge newsletter for 2018. This newsletter includes updates you’ll want to know about the Tax Reform, some insight on how to better your success rate in setting appointments, and maybe even your new favorite weekend recipe. Don’t forget to send us a photo of your creation to be featured on our website. Please share your feedback and requests on content for our next Financial Edge.
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.
Three events were scheduled: a dinner for no more than fifteen couples in a private home, and public breakfast and lunch events which were held at the Country Club of Landfall. Chef Giada curated an italian inspired menu and worked with locally-sourced Wilmington chefs for breakfast and lunch. Chef Bobby Zimmerman, owner of True Blue Butcher and Table, sourced the ingredients and led the culinary team over several days.
Giada will share stories from behind the scenes of her celebrated career, memories of early years in Italy, and inspirations for travel and entertaining. The breakfast event was featured on Food Networks Facebook live broadcast. The lunch event concluded with a record setting live auction. Cutting boards by Coastal Carolina Cutting Boards were on hand with signature cutting boards for sale.
Phillip L. Clark of OmniStar Financial Group said the event was a huge success. He chaired the first event in 2016 which featured Emeril and chaired the culinary committee for Giada. “we set new records while educating the public about GLOW”. “We are already working on 2018” said Clark, which he says will be “over the top”.
Last Friday, stocks reached record highs (again) on a better-than-expected nonfarm payrolls report. The 10-year Treasury yield also rose for most of the week following reassurance by the Federal Reserve that it remains on pace with planned interest rate hikes. Friday’s employment report was expected to show 185,000 new jobs added in the month of April but, surprisingly, the numbers came in at 211,000 jobs for the period. This favorable outcome was enough to offset economic concerns prompted by a weaker than expected GDP report. Washington was in on the action with an agreement to fund the Federal Government through September, and a victory in the House to repeal-and-replace the Affordable Care Act. Other items on President Trump’s agenda seem to be gaining traction; market-friendly tax reform and infrastructure spending could bolster the economy and begin adding to the GDP.
No matter where you turn, everyone is predicting the next market top. So-called ‘experts’, CNBC, cab drivers and the list goes on. Particularly, when watching pundits who report on market conditions, you hear the banal repetition of “we’ve run too far, too fast” and “valuations are too high” or the ever popular, “rising interest rates will end the equity party”. When it comes to gaining listeners and selling advertising, the media knows that fear sells. As an investor, you must have a healthy skepticism, because occasionally, some good information can be gleaned from the media. Nevertheless, their job is making money for the networks at your expense. Suppose we remove the noise (media) and consider what the market is saying; interest rates relative to stock prices and what indications (if any) alert us to a market top.