Financial Tech

European Unemployment and Moderate vs Modest – The Guide Rock Capital Weekly Market Commentary Aug 5 – FT037

You say to-may-to. I say to-mah-to. You have to be a careful reader to keep up with the Federal Reserve these days. Last week, the Fed re-characterized the pace of economic growth in the United States from ‘moderate’ to ‘modest.’ According to Wall Street Journal blog, Real Time Economics, “economic data show that ‘modest’ is a touch weaker than ‘moderate.’” No matter how you parse the difference, it was enough to prevent the Fed from beginning to normalize monetary policy by cutting back on bond buying. Listen Mobile: The Fed indicated that labor market concerns were a key reason for continuing quantitative easing (QE) at current levels. Investors at home and in emerging markets appeared to think that employment concerns and less robust economic growth in the United States were okay, as long as quantitative easing continued. Major stock markets finished the week higher, while stocks in commodity-driven emerging countries, and those with significant current account deficits, also moved higher, in general. Americans looking for good-paying jobs may be less enthusiastic about the reasons for the Fed’s constrained outlook. According to The Daily Ticker, a recent analysis found that almost two-thirds of the jobs created during the first half of 2013 were in the lowest paying sectors of the economy, and provide income of about $ an hour, on average. When you multiply that hourly rate by 2,080 (the number of hours in fifty-two 40-hour work weeks), it comes out to about $32,000 a year. That may help explain why the median household income in the United States has fallen from about $54,500 in June 2009 (the start of the current economic recovery) to about $52,098 in June 2013. Here’s another interesting difference to ponder as you think about the near future — a future in which many expect China to be an important growth engine. Last week, that country’s manufacturing purchasing indexes were released.  The official Purchasing Managers’ Index (PMI), which includes bigger firms, rose to in July from in June. Any reading above 50 indicates expansion. The unofficial index, compiled by Markit and HSBC index, which tracks smaller firms, fell to from for the same period. Any reading below 50 indicates contraction. Data as of 8/2/13 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year Standard & Poor’s 500 (Domestic Stocks) 10-year Treasury Note (Yield Only) N/A Gold (per ounce) DJ-UBS Commodity Index DJ Equity All REIT TR Index Notes: S&P 500, Gold, DJ-UBS 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 TR 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, , 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. YOU’VE SEEN ‘EM — TELEVISION MAKEOVER SHOWS LIKE WHAT NOT TO WEAR AND THE BIGGEST LOSER. By the end of the installment or the series, lives have been changed, presumably for the better. It remains to be seen whether Europe’s current makeover — a migratory one — will change lives for the better. Unemployment is a key issue behind Europe’s makeover. According to Eurostat, unemployment in the EU-27 was at almost 11 percent in June 2013. That was slightly lower than May of 2013, but higher than June of last year. When you delve deeper into Europe’s unemployment, it’s clear that the problem is more pronounced in periphery countries, which typically are southern European. In March, unemployment in Germany (a core country) was about 5 percent, while in Greece and Spain (periphery countries) it was almost 27 percent. Among younger populations, unemployment is even higher. In February 2013, 64 percent of young people in Greece were unemployed and 56 percent of those in Spain. This statistic is somewhat skewed because many younger people are in school. Seeking greener pastures, citizens of many periphery countries have begun to emigrate. According to The Economist, a study by Real Instituto Elcano found that almost three-fourths of Spaniards under the age of 30 have considered moving abroad. Two percent of Portugal’s population has departed during the past two years, and a record 3,000 people are leaving Ireland each month. The destination of choice for many has been Germany. According to The Economist, the exodus could exacerbate problems in high-debt countries: “Labor is one of the main inputs to growth, and a reduction in the size of the underlying labor force through migration will shrink potential output across the periphery, making existing debt loads harder to bear. This could be especially bad if young workers are the ones leaving. That would worsen the dependency ratio as well; there would be fewer potential taxpayers in Spain and Italy to pay for the benefits flowing to a rapidly growing population of pensioners. The greater these migratory flows, the worse the fiscal outlook for the periphery.” As with any makeover, it’s difficult to know whether the end result will be positive or lasting, but one thing is likely. The European Union is going to look different in the future. Weekly Focus – Think About It “When we are no longer able to change a situation — we are challenged to change ourselves.” — Viktor E. Frankl, Austrian neurologist and psychiatrist Best regards, ANDREW HUNT CFP® President of Guide Rock Capital Management, Inc. 1001 Gallup Drive Omaha, NE 68102 Communication | Woo | Achiever | Ideation | Relator   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 e-mail with their e-mail address and we will ask for their permission to be added. Securities offered through Shareholders Service Group, Member FINRA/SIPC. * This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named broker/dealer. * 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 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the 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. * Past performance does not guarantee future results. * You cannot invest directly in an index. * Consult your financial professional before making any investment decision. Jim’s Twitter: #!/jcollison Andrew’s Twitter: #!/AndrewDHunt Andrew’s Blog: Contact the show at Find this and other great Podcasts from the Average Guy Network at Visit the new Facebook page for the The Average Guy Network
Continue Reading »
Financial Tech

How to Handle Quarterly Earning Reports and Measuring Innovation – The Guide Rock Capital Weekly Market Commentary Jul 22 – FT036

Singing the earnings song… Each year, in January, April, July, and October, most publicly-traded companies announce their corporate earnings results. These announcements can have a dramatic effect on companies’ share prices – and markets – especially when companies don’t meet analysts’ expectations. Listen Mobile: Unfortunately, as The Wall Street Journal pointed out, financial companies have exceptionally easy year-to-year comparisons. When they were pulled out of the mix, earnings hit a low note: down by almost 3 percent from last year, according to FactSet. That’s worse than analysts expected at the start of the quarter. Earnings were weak relative to expectations, but the S&P 500 still finished higher for the week.  That may be because of the soothing refrain offered by Ben Bernanke (monetary policy will remain accommodative… monetary policy will remain accommodative). The important thing to remember is the Fed’s definition of accommodative monetary policy doesn’t necessarily mean maintaining its quantitative easing program. Data as of 7/12/13 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year Standard & Poor’s 500 (Domestic Stocks) 10-year Treasury Note (Yield Only) N/A Gold (per ounce) DJ-UBS Commodity Index DJ Equity All REIT TR Index Notes: S&P 500, Gold, DJ-UBS 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 TR 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, , 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. THERE’S BEEN AN INNOVATION IN MEASURING INNOVATION. Innovation is one of those things. It’s hard to fully describe, but it can be awfully important to countries and economies. In recent years, there have been some remarkable innovations, such as car sharing and the Oakland A’s use of sabermetrics; and some less remarkable ones, such as airline baggage fees and the detachable dog sack (which allowed Fido to ride in a cloth carrier attached to the outside of the car). In March, panelists at the Wharton Economic Summit 2013 discussed the concept of innovation. Although they didn’t all define it in the same way, they suggested innovation is using something new or known in a different way, different time, or a different place; essential for companies to grow; useful; transformative; an approach that addresses a major want or need; not always easy to spot. It’s clear innovation means different things to different people. Cornell University, INSEAD, and the World Intellectual Property Organization, which collaborate on the Global Innovation Index, said their benchmark, “recognizes the key role of innovation as a driver of economic growth and prosperity, and adopts an inclusive, horizontal vision of innovation applicable to both developed and emerging economies.” They refined the index for 2013. According to The Economist: “Instead of objectively counting the inputs and outputs, it relies on nuance. For example, rather than ranking overall education, it looks at the top three universities, since elite institutions may be more important than the average. Instead of counting each patent, it tracks only those filed in at least three countries, which suggests it is a more valuable technology. And, rather than look at scientific journal articles en masse, the index includes how often they are actually cited.” So, using these innovative metrics, which countries rank the highest in innovation? Among rich countries, the United States, Britain, and Germany are one, two, and three. In middle income countries, China, Brazil, and Russia take top honors. Weekly Focus – Think About It “Health is the greatest gift, contentment the greatest wealth, faithfulness the best relationship.” —Siddhartha Gautama, also known as Buddha Best regards, ANDREW HUNT CFP® President of Guide Rock Capital Management, Inc. 1001 Gallup Drive Omaha, NE 68102 Communication | Woo | Achiever | Ideation | Relator   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 e-mail with their e-mail address and we will ask for their permission to be added. Securities offered through Shareholders Service Group, Member FINRA/SIPC. * This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named broker/dealer. * 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 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the 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. * Past performance does not guarantee future results. * You cannot invest directly in an index. * Consult your financial professional before making any investment decision. Jim’s Twitter: #!/jcollison Andrew’s Twitter: #!/AndrewDHunt Andrew’s Blog: Contact the show at Find this and other great Podcasts from the Average Guy Network at Visit the new Facebook page for the The Average Guy Network
Continue Reading »
Financial Tech

The International Monetary Fund (IMF) Fiddles while the US Markets Rocket Forward – Guide Rock Weekly Market Commentary Jul 15 – FT035

One of these things is not like the other… If you find yourself humming that old Sesame Street standard when you think about financial markets and world economies, you’re probably not alone. To the consternation of many, the Dow Jones Industrials Average and the Standard & Poor’s 500 Index rocketed to new highs last week just as the International Monetary Fund (IMF) cut its global economic growth forecast for 2013 and 2014. Listen Mobile: Many in the media pointed fingers and announced, “That’s the problem right there!” Of course, the fingers were pointing at Ben Bernanke and the Federal Reserve which continued to dither about Quantitative Easing (QE) last week. While it may feel good to lay blame, the Fed is just one tree in the forest of market volatility and economic growth. Let’s take a look at another section of the forest: emerging markets. They are expected to power 60 percent of the world’s economic activity by 2030. Yet, just last week, China’s exports slumped, and Brazilian and Indonesian central banks raised interest rates (which generally slows growth). Turkey’s central bank may do the same next week. Is slowing growth in emerging markets the Fed’s fault? While higher rates in the may hurt emerging markets, many of those countries have problems of their own, including infrastructure bottlenecks and excessive credit expansion. Last March, the Financial Times quoted Deutsche Bank strategist John-Paul Smith who wrote: “We believe that 2013 will mark the year when economists and investors focus on the underlying imbalances within the Chinese economy and, accordingly, reduce their expectations of sustainable growth over the medium term. The deterioration in the perception of China is likely to have a very disruptive effect on (global emerging market) equities…” Smith’s forecast proved out. Early last week, the International Monetary Fund (IMF) lowered expectations for China’s growth to the high-seven percent range. Of course, it’s not easy to predict the future. Irrefutable evidence of that arrived a few days after the IMF’s report when Lou Jiwei, China’s Minister of Finance, said his country’s growth rate could fall to percent or even lower. Economists gasped. China’s official growth target (set by the National People’s Congress) is percent, not percent or lower. According to The Wall Street Journal, “Such a sharp downshift in China’s growth would send ripples around the world economy, hitting everything from iron-ore demand in Australia to sales of luxury handbags in Hong Kong stores.” Data as of 7/12/13 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year Standard & Poor’s 500 (Domestic Stocks) 10-year Treasury Note (Yield Only) N/A Gold (per ounce) DJ-UBS Commodity Index DJ Equity All REIT TR Index Notes: S&P 500, Gold, DJ-UBS 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 TR 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, , 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. IN AMERICA, PEOPLE ARE STILL PULLING THEMSELVES UP BY THEIR BOOT STRAPS. Three-fourths of the folks who participated in the2013 Trust Insights on Wealth and Worth (all of whom have $3 million or more in investable assets) made their money the old fashioned way. They worked, owned businesses, and/or invested. Most believe they’re financially secure and feel confident about the future. While that proved true for many aspects of financial planning, the study uncovered some unrecognized risks, many of which have been created by a volatile investment environment and changing tax laws. They include: Incomplete retirement planning. Although the vast majority of those surveyed are very confident about having the income they need during retirement, many have overlooked factors which affect income and assets such as lifestyle expectations, out-of-pocket healthcare expenses, long-term care costs, and others. Financial support for extended family. Almost one-half of those surveyed provide significant support to members of their extended families (including parents, in-laws, siblings, and grown children). However, the majority have not included that fact in their financial plans. Conflicted emotions about investing. The majority of survey participants said growing assets is more important than preserving them today; however, they also said lowering risk is a higher priority than pursuing higher returns. Tax law changes. A majority of wealthy people do not understand the ways in which tax law changes may affect their income, investments, or estates. Few understand the tax strategies which may be available to them. Weekly Focus – Think About It “Tell me and I forget. Teach me and I remember. Involve me and I learn.” —Benjamin Franklin, inventor and statesman Best regards, ANDREW HUNT CFP® President of Guide Rock Capital Management, Inc. 1001 Gallup Drive Omaha, NE 68102 Communication | Woo | Achiever | Ideation | Relator   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 e-mail with their e-mail address and we will ask for their permission to be added. Securities offered through Shareholders Service Group, Member FINRA/SIPC. * This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named broker/dealer. * 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 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the 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. * Past performance does not guarantee future results. * You cannot invest directly in an index. * Consult your financial professional before making any investment decision. Jim’s Twitter: #!/jcollison Andrew’s Twitter: #!/AndrewDHunt Andrew’s Blog: Contact the show at Find this and other great Podcasts from the Average Guy Network at Visit the new Facebook page for the The Average Guy Network
Continue Reading »
Financial Tech

Second Quarter Recap and Women in the Workforce – Guide Rock Weekly Market Commentary Jul 8 – FT034

The second quarter offered a level of drama often found in homes with teenagers. When investors realized their good friend, quantitative easing, might have an earlier-than-expected curfew, they threw a hissy fit that resounded through global markets. The outburst interrupted the trajectory of Standard & Poor’s 500 Index, which finished June lower after hitting record highs in May. As stocks fell, yields on the benchmark 10-year Treasury bond hit a 22-month high. Listen Mobile: Higher treasury yields and a strengthening greenback proved attractive to investors and capital flowed out of emerging markets during the quarter. As interest rates moved higher, the cost of borrowing rose sharply in many emerging countries. That may impede economic growth, which has slowed already, in many developing countries. Economies in emerging Asia, Latin America, and Europe grew by about 4 percent on average year-on-year during the first quarter as compared to percent on average during the past decade. When compared to growth rates in developed countries, such as the European Union (EU), that’s still a pretty attractive growth rate. The EU has suffered seven consecutive quarters of recession. It’s hard to say the recovery is going well, but experts are hopeful because the Spanish economy is contracting at a slower rate, Italian business activity isn’t declining as fast as it once did, the French downturn is moderating, and the German economic growth is in positive numbers. It’s a different story in the United States. By the end of second quarter, economists were predicting 2014 could prove to be the best year for economic growth since 2005. The Wall Street Journal’s monthly survey found that, “Economists… expect gross domestic product to expand at a percent annual pace this year and percent next year. The Federal Reserve edged up 2014 growth forecasts to between 3 and percent, from a March estimate of to percent.” Encouraging economic signs include: · Housing market vigor: Experts say housing market strength will be critical to economic performance in the second half of the year. · Employment gains: Unemployment has dropped from double-digits to percent, although there are still about million fewer jobs than there were before the recession. · Confident consumers: After years of paring spending and paying down debt, Americans are feeling optimistic. Consumer confidence now stands at a five-year high. While optimism about the American economy is good news, it’s important to remember world economies are like members of a family. What happens to one country or region often has a significant influence on what happens in the others. Data as of 7/5/13 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year Standard & Poor’s 500 (Domestic Stocks) 10-year Treasury Note (Yield Only) N/A Gold (per ounce) DJ-UBS Commodity Index DJ Equity All REIT TR Index Notes: S&P 500, Gold, DJ-UBS 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 TR 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, , 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. SHE CAN BRING HOME THE BACON AND FRY IT UP IN A PAN… From 1960 through 2011, the percentage of households with children under the age of 18 and mom as the primary or sole breadwinner increased from 11 to 40 percent. According to the Pew Research Center report, ‘Breadwinner Moms’ fall into two distinct groups: married moms who earn more than their husbands (37 percent) and single mothers (63 percent). The earnings gap between the two groups tends to be very large: “The median total family income of married mothers who earn more than their husbands was nearly $80,000 in 2011, well above the national median of $57,100 for all families with children, and nearly four times the $23,000 median for families led by a single mother.” It’s interesting to note an educational gap has been developing between husbands and wives, as well. A growing proportion of married women are better educated than their husbands. According to Pew Research, “the share of couples in which the mother has attained a higher education than her spouse has gone up from 7 percent in 1960 to 23 percent in 2011.” This probably shouldn’t be a surprise since more women than men have been receiving college degrees of all types – associates, bachelors, masters, and doctorates – every year since 1982. Perceptions about women’s roles in both the workplace and the family appear to be changing, too. According to another Pew report, almost three-fourths of American adults say having more women in the workforce has been a change for the better. About 60 percent say family life is more satisfying when both spouses work and they share responsibility for housework and child care. Weekly Focus – Think About It “If we become increasingly humble about how little we know, we may be more eager to #8221; —Sir John Templeton, Global investing pioneer Best regards, ANDREW HUNT CFP® President of Guide Rock Capital Management, Inc. 1001 Gallup Drive Omaha, NE 68102 Communication | Woo | Achiever | Ideation | Relator   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 e-mail with their e-mail address and we will ask for their permission to be added. Securities offered through Shareholders Service Group, Member FINRA/SIPC. * This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named broker/dealer. * 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 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the 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. * Past performance does not guarantee future results. * You cannot invest directly in an index. * Consult your financial professional before making any investment decision. Jim’s Twitter: #!/jcollison Andrew’s Twitter: #!/AndrewDHunt Andrew’s Blog: Contact the show at Find this and other great Podcasts from the Average Guy Network at Visit the new Facebook page for the The Average Guy Network
Continue Reading »
Financial Tech

Federal Open Market Committee Policy Meeting and Is There a Housing Bubble? – Guide Rock Weekly Market Commentary Jun 24 – FT033

It was like watching a game of telephone where one child speaks into another child’s ear and that child speaks into another child’s ear and, by the time the last child repeats the original statement, it has transformed into something completely different. Chairman Ben Bernanke stepped up to the microphone at the press conference after the Federal Open Market Committee’s policy meeting and said: Listen Mobile: “As I mentioned, the current level of the federal funds rate target is likely to remain appropriate for a considerable period after asset purchases are concluded. To return to the driving analogy, if the incoming data support the view that the economy is able to sustain a reasonable cruising speed, we will ease the pressure on the accelerator by gradually reducing the pace of (bond) purchases. However, any need to consider applying the brakes by raising short-term rates is still far in the future. In any case, no matter how conditions may evolve, the Federal Reserve remains committed to fostering substantial improvement in the outlook for the labor market in a context of price stability.” His statements filtered through analysts and managers, through blogs and media outlets and, by the time it reached investors, they heard this: SELL. The message rippled through stock, bond, and other markets around the world. As markets fell, interest rates rose, particularly in countries like Indonesia, Brazil, Mexico, Turkey, Russia, and Poland. A Bloomberg report cited in the Washington Post stated the People’s Bank of China injected about $ billion into China’s financial system in an effort to keep interest rates low. Investors’ fears were reflected in the CBOE Volatility Index (VIX), which is also known as the investor fear gauge. It measures the market’s expectations for volatility during the next 30-day period. It started the week at percent and finished the week at 19. According to a Citigroup equity strategist who was quoted in The Wall Street Journal, “…there are much higher probabilities for market gains when the VIX is sitting between 10 and 15 than when it is in the 20-25 range…” Will markets settle? Or, will volatility continue? Time will tell.   Data as of 6/21/13 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year Standard & Poor’s 500 (Domestic Stocks) 10-year Treasury Note (Yield Only) N/A Gold (per ounce) DJ-UBS Commodity Index DJ Equity All REIT TR Index Notes: S&P 500, Gold, DJ-UBS 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 TR 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, , 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.   THERE’S ANOTHER HOUSING BUBBLE? REALLY? The housing market in the United States isn’t just recovering – it’s RECOVERING. Tight inventories, fewer foreclosures, low mortgage rates, and rising demand have helped push home prices significantly higher. Year-over-year sales data shows home prices increased by about 15 percent through the end of May, according to the National Association of Realtors (NAR). That’s the strongest year-over-year improvement since October 2005, and it marks the 15th month of gains in a row. In many cases, cities that had experienced the biggest declines in prices during the housing crisis realized some of the biggest gains. Double digit price gains have some believing the housing market is getting frothy and a new housing bubble may be forming. Fitch, a ratings service, recently said home price gains in some markets are outpacing improvements in underlying fundamentals, which could cause prices to stagnate or fall again. So, is it a bubble? It depends on who you ask, but credible sources suggest otherwise. According to an article in an early June issue of The Economist: “To qualify as a bubble, an asset must not simply appreciate; it must decouple from its intrinsic value. For houses,The Economist each quarter compares the ratio of prices to household income and rents against their long-run average in 20 countries. We have now done the same for the 20 metropolitan areas in the Case-Shiller index. The verdict: in most markets, houses are at or near their long-run values, but none looks bubbly.” One thing that’s keeping home prices high is limited supply. The Chief Economist for the NAR recently said one way to moderate future price growth is to create additional supply by building more new homes. It seems clear from the markets’ response to the Fed Chairman’s comments during last week’s press conference and speculation about bubbles – investors are feeling a lot of fear and uncertainty. Weekly Focus – Think About It “It is evident that skepticism, while it makes no actual change in man, always makes him feel better.” —Ambrose Bierce, American Journalist Best regards, ANDREW HUNT CFP® President of Guide Rock Capital Management, Inc. 1001 Gallup Drive Omaha, NE 68102 Communication | Woo | Achiever | Ideation | Relator   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 e-mail with their e-mail address and we will ask for their permission to be added. Securities offered through Shareholders Service Group, Member FINRA/SIPC. * This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named broker/dealer. * 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 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the 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. * Past performance does not guarantee future results. * You cannot invest directly in an index. * Consult your financial professional before making any investment decision. Jim’s Twitter: #!/jcollison Andrew’s Twitter: #!/AndrewDHunt Andrew’s Blog: Contact the show at Find this and other great Podcasts from the Average Guy Network at Visit the new Facebook page for the The Average Guy Network Intro and Exit Music from “Motion” by Adelaide.  Hear more great tunes at 
Continue Reading »
Financial Tech

The Markets Hate the Slowing of Quantitative Easing and The Value of Renewable Energy in the US: Guide Rock Weekly Market Commentary Jun 17 – FT032

Like a host at a dinner party, the International Monetary Fund (IMF) put the performance of the economy on the table last week to be gnawed over by world markets. When the IMF presented its annual review of the world’s largest economy, it stated that: “Despite some improvements in economic indicators, particularly in the housing market, the very rapid pace of deficit reduction… is slowing growth significantly… growth is expected to slow to percent in 2013, from percent in 2012. This projection reflects the impact of the sequester ($85 billion of automatic government spending cuts), and the expiration of the payroll tax cut and the increase in tax rates for high-income taxpayers…Growth could pick up to percent next year with a more moderate fiscal adjustment and a further strengthening of the housing market.” Listen Mobile: The IMF also said the Federal Reserve should continue quantitative easing through 2013. It was not the only one pondering the Fed’s quantitative easing program. The major stock market indices finished the week lower. The Dow Jones Industrials Average fell percent last week, the Standard & Poor’s 500 Index was off by 1 percent, and the NASDAQ dropped percent. Remarkably, the Dow experienced four straight days of triple-digit swings. The next Federal Open Market Committee Meeting is on June 18 and 19. While few people expect the Fed to announce it will reduce the pace of bond buying immediately, the majority of economists surveyed by USA TODAY predict the Federal Reserve will begin to reduce bond purchases by early fall. Data as of 6/14/13 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year Standard & Poor’s 500 (Domestic Stocks) 10-year Treasury Note (Yield Only) N/A Gold (per ounce) DJ-UBS Commodity Index DJ Equity All REIT TR Index Notes: S&P 500, Gold, DJ-UBS 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 TR 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, , 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. ARE EMERGING COUNTRIES LEADING THE WAY IN RENEWABLE ENERGY? It seems that way sometimes. According to UNEP’s report, Global Trends in Renewable Energy Investment 2013, “Renewables are picking up speed across Asia, Latin America, the Middle East, and Africa, with new investment in all technologies… Markets, manufacturing, and investment shifted increasingly towards developing countries during 2012.” For instance, after running even with the United States during 2011, China became the dominant country for renewable energy investment in 2012, according to the report. This doesn’t mean the United States isn’t in the race. According to The Economist, an analysis by Bloomberg New Energy Finance found the and China traded about $ billion in solar, wind, and smart-grid technology and services during 2011. America sold about $ billion more to China than it imported. The Economist concluded, “American ingenuity is required to supply Chinese factories with such things as polysilicon and wafers for photovoltaic cells, and the fiberglass and control systems used in wind turbines.” So, what does the future hold? Kiplinger’s Letters said solar power production will double in 2013 and move ahead of geothermal power as a source of clean energy. They believe wind energy will soon rival hydroelectric power, as well. The United States added more wind power capacity last year than any other type of power generation. Currently, wind comprises about 5 percent of power generated in the United States. Global investment in renewable energy may have fallen during 2012, but that doesn’t mean the industry has lost momentum. Renewable energy is gaining share in a growing number of countries and regions, including the European Union where renewable energy – primarily solar and wind power – accounted for about 21 percent of electricity consumption in 2011, and almost 70 percent of new electric capacity in 2012. Renewables just may prove to be the tortoise in the energy race. Weekly Focus – Think About It “It is not in the stars to hold our destiny, but in ourselves.” —William Shakespeare, English poet and playwright Best regards, ANDREW HUNT CFP® President of Guide Rock Capital Management, Inc. 1001 Gallup Drive Omaha, NE 68102 Communication | Woo | Achiever | Ideation | Relator   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 e-mail with their e-mail address and we will ask for their permission to be added. Securities offered through Shareholders Service Group, Member FINRA/SIPC. * This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named broker/dealer. * 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 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the 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. * Past performance does not guarantee future results. * You cannot invest directly in an index. * Consult your financial professional before making any investment decision. Jim’s Twitter: #!/jcollison Andrew’s Twitter: #!/AndrewDHunt Andrew’s Blog: Contact the show at Find this and other great Podcasts from the Average Guy Network at Visit the new Facebook page for the The Average Guy Network Intro and Exit Music from “Motion” by Adelaide.  Hear more great tunes at 
Continue Reading »
Financial Tech

Markets Wobble on Quantitative Easing, Are the Markets like Sports? Guide Rock Weekly Market Commentary Jun 10 – FT031

Like a funhouse mirror, investors’ concerns about whether and when the Federal Reserve will begin to end its quantitative easing program contorted market responses to economic news last week. Unexceptional economic reports were treated as good news and pushed stock markets higher; strong economic reports were treated as bad news and pushed stock markets lower. Listen Mobile: Markets headed south mid-week, but responded positively to the May jobs report. It was a Goldilocks report – neither too weak nor too strong – which showed the Labor Department added slightly more jobs than expected in May. Apparently, investors thought the increase was not large enough to spur the Federal Reserve to early action on quantitative easing, and stock markets finished the week higher. The Dow Jones Industrial Average was up percent, the Standard & Poor’s 500 Index gained percent, and the NASDAQ rose percent. Uncertainty about the future of quantitative easing has created volatility in bond markets during the past few weeks. Concerns the Fed could begin tapering sooner rather than later, triggered a sharp increase in bond yields during that period. In addition, several new offerings in the municipal bond market – issued by cities and states, municipal bonds typically are exempt from federal tax – have been scaled back or postponed because of market uncertainty. If concerns about the end of quantitative easing continue to dominate, it’s possible markets may continue to respond to economic news in unexpected ways. So, what’s on deck for next week? Economic news should include the May retail sales report, initial June consumer sentiment reading, and inflation data.   Data as of 6/7/13 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year Standard & Poor’s 500 (Domestic Stocks) 10-year Treasury Note (Yield Only) N/A Gold (per ounce) DJ-UBS Commodity Index DJ Equity All REIT TR Index Notes: S&P 500, Gold, DJ-UBS 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 TR 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, , 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.   Is Investing in the Stock Market More Like Golf or Tennis? Every sport has a certain way to measure performance. For example: · Running is based on time. · The high jump is based on feet and inches. · Football and basketball are based on points. · Baseball is based on runs. · The decathlon is based on the cumulative score from 10 different events. So, how do we measure success as an investor? A recent report from Invesco used golf and tennis as an analogy for how to win as an investor. The report pointed out tennis is scored using match play, meaning your performance is measured at intervals along the way.(1) You can win games, which leads to winning sets, which leads to winning the match. In effect, tennis players have to win along the way in order to win at the end of the match. By contrast, golf is scored using stroke play, meaning it doesn’t matter who wins any particular hole. Rather, the winner is determined by who has the lowest cumulative score at the end of the round or match. Despite their different scoring systems, people who win at golf and tennis still need to perform somewhat consistently throughout their performance. Tennis players can’t play great for 3 games and then poorly in 4 games and still win the set. Likewise, golfers who triple bogey 12 holes and birdie 6 holes probably won’t win the club championship. Now, before we can determine whether winning as an investor is more like golf or tennis, we have to define what “winning as an investor” means. Simply put, we can define winning as an investor to mean you’ve achieved your financial goals within the timeframe you’ve identified and at a risk level that was acceptable to you. Using that definition, winning as an investor is more like winning at golf than tennis. In golf, the winner is determined at the end of the round or match and who won each individual hole does not matter. Likewise, a winning investor “wins” when they’ve achieved their goals by the end of the specified period. Of course, real life investing is not so neat and tidy. Just like golfers sometimes take a triple bogey, the stock market sometimes takes a big drop. And, while nobody likes to see these declines, it’s important to understand they will happen. In addition, golfers are sometimes tied at the end of a tournament so they have to play extra holes. Similarly, the financial markets occasionally experience extended declines which may mean it will take investors longer to reach their goals than originally planned. Consider this, too: golfers have numerous clubs in their bag they can use depending on how far they are from the hole, their lie, and any obstacles that may be in their way (, a tree). On the tee at a par 5 hole, for example, a golfer might take out a driver because they have a long way to go. Likewise, for clients who are a long way from retirement, we might more heavily weigh equities in an effort to pursue a greater return. Conversely, a golfer on the green facing a 3-foot putt would pull out a putter instead of a driver while accepting more risk. Likewise, if you’re in retirement, there are certain asset classes with risk and return characteristics that may be more suited to your portfolio than a heavy allocation to equities. Golf, tennis, and investing have a lot in common. They can all be played competitively and competitive people like to keep score and win. As a “competitive” advisor, we do our best to “win” the investment game on your behalf so you can spend more of your time doing what you enjoy the most… which might include golf or tennis! (Investing in securities is subject to market fluctuation and possible loss of principal.  No strategy assures success or protects against loss.) Weekly Focus – Think About It “I’ve learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel.” —Maya Angelou, American author and poet Best regards, ANDREW HUNT CFP® President of Guide Rock Capital Management, Inc. 1001 Gallup Drive Omaha, NE 68102 Communication | Woo | Achiever | Ideation | Relator   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 e-mail with their e-mail address and we will ask for their permission to be added. Securities offered through Shareholders Service Group, Member FINRA/SIPC. * This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named broker/dealer. * 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 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the 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. * Past performance does not guarantee future results. * You cannot invest directly in an index. * Consult your financial professional before making any investment decision. Jim’s Twitter: #!/jcollison Andrew’s Twitter: #!/AndrewDHunt Andrew’s Blog: Contact the show at Find this and other great Podcasts from the Average Guy Network at Visit the new Facebook page for the The Average Guy Network Intro and Exit Music from “Motion” by Adelaide.  Hear more great tunes at 
Continue Reading »