Dear Clients:
June 30, 2017 Market Values Account Summary will be arriving in the mail within the next week. It has been a good six months for the market. The DJIA and the S&P 500 are up over 9%, the NASDAQ over 16%, and the MSCI World over 10%. Total returns on bonds are up between 1 and 5% depending on type of bond.
Important Notices: Please see attached notices.
Major Occurrences and Interesting Opinions Heard during First Half of 2017
President Trump takes office in January.
Business is positive about prospects for improved business climate.
A decline in the corporate tax rate from 35% to 15% is projected to increase S&P earnings by 20%.
The President campaigns to bring jobs back to the USA.
People are surprised that both stocks and bonds do well. Textbooks say one should go down if the other is up.
Individual investors are coming back into the stock market but most money goes into bonds. Stocks are considered cheaper than bonds but people can’t grasp the significance. They fear stocks and cling to bonds although negative real interest rates are bankrupting the saver.
Banks are unwinding “Quantitative Easing.” Did QE have a positive or negative effect?
People over 65 are staying in the work force. Some have 2 and 3 jobs.
The media quotes advisors recommending “buy international” but managed mutual funds are cautious. Earnings on international stocks are not increasing like earnings on US stocks and Europe’s population is declining.
Corporate earnings are growing—an important determinant of future stock price increases.
The news concentrates on Russia intervening in the presidential election. The bull market continues on. England’s Prime Minister risks an election but loses political ground and forms a coalition with a second party. Will this affect Brexit?
The Fed raises interest rates…twice. Banks pass “Stress Tests”. Alan Greenspan sees ‘no irrational exuberance in the market today’, instead he ‘expects prices will continue upward.’
Politicians wrangle, work on health care and income taxes, but no accomplishments yet.
It is generally believed that President Trump’s pro growth policies will eventually be passed.
And the markets shrug off the turmoil.
Louise Googins
Karl Kuelthau
Andy Yadro