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In Your Best Interest: Our Summer 2018 Newsletter

In Your Best Interest: Our Summer 2018 Newsletter

Click here to view the full newsletter, including recent news, important dates, financial tips & tools, and more.


Market Highlights Q2 2018

The second quarter of the year can be called a lot of things, but boring certainly isn’t one of them.

Long before the trade war between the United States and China began in earnest in early July, Trump’s threats of tariffs on Chinese imports began to rattle the world, and threats of retaliation from the Chinese added fuel to the fire. As the battle of words escalated, investors braced for a storm. But while there was certainly some significant volatility, favorable corporate earnings reports helped calm some of the global economic angst, and investors were able to maintain a steady ship and see higher-than-anticipated gains in Q2. Most of the major indexes ended the quarter ahead of their Q1 closing values. The tech-heavy Nasdaq gained over 6.0%, and the small caps of the Russell 2000 grew by almost 7.5%. The S&P 500 also closed the quarter ahead of its first-quarter closing values, and the Dow finished the quarter up by less than 1.0%. Prices for 10-year Treasuries rose by the end of the quarter, pulling yields down by 13 basis points. 

Interestingly, even as Trump’s trade war moved from threat to reality in the first week of July, the market has continued to maintain an upward trajectory, at least for the moment. Trade skirmishes between the United States, China, Canada, Mexico, and the European Union are likely to remain a reality for some time, but those tensions have so far been offset by a strong US jobs market, steady corporate earnings, and increased household spending. Global tensions may be here to stay, but consumers and investors appear to be confident in the economy—and confidence is always a plus when it comes to investor returns.

As we move into the second half of 2018, expect the tensions to continue. Business has accepted the trend towards open markets and reduced trade barriers. The US economy has been strengthened along with our global trading partners. Businesses will eventually adapt to whatever conditions prevail, but current events are disruptive and time and money will be spent to reposition production and sourcing of materials. Outcomes of trade wars are unpredictable, but if the extent of reactions in the past weeks is any indication, the impact will be complicated. Nations are big ships and don’t turn on a dime, but slowly, slowly, we will experience changes in geopolitics. Yet whatever occurs around the globe, our team is monitoring your plan and your investments closely. And if you have any questions or concerns along the way, we’re always here to help keep you on course. 

Click here to read the full newsletter.

 

 

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In Your Best Interest: Our Fall 2017 Newsletter

Click here to view the full newsletter, including recent news, important dates, financial tips & tools, and more.


MARKET HIGHLIGHTS: Q3 2017

Thinking back over the quarter— and the entire year to date—I feel… breathless. Amid the whirlwind of global events, at least the economic and market news remains a bright spot, so let’s start the quarter review with some good news: 

In Q3, equity markets experienced gains, fueled by a late-August rally that pushed security prices upward. As the quarter came to an end, the benchmark indexes continued to rise. The Nasdaq and the Russell 2000 posted gains of more than 5.0%, followed closely by the Global Dow and the Dow. The S&P 500 trailed the other indexes listed here, yet still managed to increase by almost 4.0% since the end of Q2.

In September, the Federal Open Market Committee (FOMC) decided to hold the benchmark interest rate between 1 and 1.25% while setting expectations for an increase next quarter. The Fed noted that the labor market is continuing to strengthen, economic activity has been rising, job gains have remained solid, and unemployment rates are low. At the same time, household spending has expanded moderately, growth in business fixed investment has picked up, and inflation is running below 2%. 

In the rest of the news, the world is a mess. Donald Trump remains in the White House amid an accelerating Russia investigation, a frightening standoff with North Korea, and another failed attempt by Republicans to repeal the ACA. The Equifax data breach and the company’s inadequate response had everyone scrambling to secure their personal information. Protesters clashed in Charlottesville, Colin Kaepernick triggered a national debate, terrorist attacks escalated across Europe, and the US witnessed another mass shooting. Nature, too, was ill-tempered, with hurricanes devastating the Southern US, Cuba, Puerto Rico, and other regions; earthquakes in Mexico killing hundreds, and flooding causing record deaths around the globe. It’s been a year for the record books, and not in a good way. 

As we enter the final three months of 2017, it’s important to stay focused on what truly matters: love, health, and happiness. Know that our team will be doing our part by continuing to monitor your plan and your portfolio closely. For your part, do what you can to focus on what you can control… and to finally, hopefully, catch your breath.

 
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In Your Best Interest: Our Spring 2017 Newsletter

Click here to view the full newsletter, including recent news, important dates, financial tips & tools, and more.


MARKET HIGHLIGHTS: Q1 2017

We’re living in interesting times. 
 

In the aftermath of the Brexit vote, last week the UK gave formal notice to the European Union that it would formally exit the EU in two years. The UK’s unprecedented decision will have unexpected consequences. On the home front, the Trump presidency continues to deliver unwelcome surprises. A key example: Trump’s baffling cabinet picks, which include Steve Mnuchin, a 17-year Goldman Sachs executive, as Secretary of the Treasury. So much for “draining the swamp.” Trump (fortunately) failed to deliver on another campaign promise: to repeal and replace the Affordable Care Act, which some attribute to the administration’s lack of political skill and experience. It seems business interests, not the wellbeing of our citizens, are the thrust of this administration’s agenda. On the flip side, the Democratic resistance learned some lessons from the Tea Party movement and rallied its base to participate actively in the budget and legislative processes. This new activism means the budget, as well as any pending tax reforms, will need bipartisan support to proceed. 

Beyond the political headlines, market indices continued to reach new levels. Buoyed by rising corporate profits and expectations of corporate tax cuts, the S&P climbed 5.5% for the quarter, and both the Dow and Nasdaq reached—and held—historic highs. The Dow hit the magic 20,000 mark in January, and consumer inflation topped the Fed’s 2% target rate for the first time in five years, which drove March’s interest rate increase of . percent (25 basis points). While rate hikes sometimes cause an unfavorable reaction in the market, this increase seems to have been priced in, and investors nodded their collective approval and moved on. 

All of these factors, combined with unfailing investor confidence, added up to deliver a solid quarter, with each of the indexes listed below posting impressive gains over their fourth-quarter closing values. 

One notable star in the market constellation was Apple (AAPL), which reported record Q1 revenue and earnings. It is counterintuitive, but Apple is now classified as a value stock rather than a growth stock. Based on its market cap, Apple has another claim to fame: the stock is the largest component in both the Dow and the S&P 500—an interesting indicator of the power of innovation and globalization, and the importance of technology moving forward. 

As we begin Q2, the fundamentals are certainly in place for continued economic growth. Employment, hourly earnings, disposable income, and consumer spending are all on the rise, and consumer prices are up 2.7% for the year—the highest rate of growth in almost five years, and solidly above the Fed’s 2.0% target for inflation. Even the core rate, which excludes energy, is holding steady at 2.2% since February 2016. As 2017 progresses, we look forward to continuing to leverage the power of investing to support your personal financial goals.

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Disclosure

All written content on this site is for information purposes only. Opinions expressed herein are solely those of Lauren S. Klein, President, Klein Financial Advisors, Inc. Material presented is believed to be from reliable sources and we make no representations as to its accuracy or completeness. Read More >