iWealth Weekly Market Update: A Difficult Week

A Difficult Week
Weekly Update – April 22, 2013

Even as we share this update with you, the events that unfolded last week in Massachusetts and Texas are still fresh in our minds. Our hearts will remain with the victims and their families, as well as the residents of Boston and West Texas, as they rebuild their lives from these tragedies. In times like these, we are reminded of the things that are truly important in life. If there is anything we can do for you or someone you know who was affected by any of last week’s events, please don’t hesitate to ask for our help.

It was also a difficult week for equity markets, as major indices experienced their biggest drop so far this year, pummeled by earnings reports and global concerns. For the week, the S&P 500 lost 2.11%, the Dow fell 2.14%, and the Nasdaq trimmed 2.70%.[1]

Earnings drove much of the selloff last week. Although the earnings reported thus far have largely beat estimates, disappointing reports from a handful of companies had an oversized effect on markets.[2] While 70% of the reports have beaten earnings estimates, only 44% have beat revenue expectations. This indicates that earnings results have largely been achieved by cost-cutting measures rather than organic growth. One factor that appears to be driving the weakness in revenue growth is soft demand overseas.[3]

Markets reacted poorly to China’s unexpectedly poor first-quarter GDP report, which showed a weak 7.7% growth instead of the 8%+ growth analysts had been expecting.[4] This indicates that China’s recovery may still be fragile. Coupled with concerns about Europe, it’s clear that global economies still have a long way to go.

On the positive side, investors responded well to Tuesday’s upbeat economic data, which shows that the news isn’t all bad. On the housing front, the Commerce Department reported that March housing starts increased by 7.0% from February’s estimate, while building permits declined slightly (though they are still 12% above March 2012 numbers).[5] A key measure of inflation also declined, supporting Fed chairman Ben Bernanke’s position that inflation is not an issue for now. Manufacturing also appears to be on the upswing; the Fed’s report shows that industrial production increased by 0.4% in March, beating expectations.[6]

In recent weeks, disappointing jobs numbers, slumping consumer confidence, and other weak data has indicated that the economy could be slowing down. However, the Fed’s most recent Beige Book survey shows no sign of such a slowdown. The report shows that despite prevailing concerns, the economy continued to grow at a moderate pace, bolstered by a vibrant housing sector and auto sales.[7] With so much conflicting data to review, many people struggle to make sound investment decisions. If you have any questions about how certain factors could affect you or your portfolio, please don’t hesitate to reach out to us. We pride ourselves on helping our clients cut through the clutter to develop strategies that are suitable for them and their goals.

As mentioned earlier, our thoughts are with the victims of Monday’s Boston bombing and those affected by the Texas plant explosion. It can be hard to think positively during such times, but we are proud of the swift work of first responders and investigators, and the way Americans have reached out in support of those in need.

 

ECONOMIC CALENDAR:

Monday: Existing Home Sales

Tuesday: PMI Manufacturing Index Flash, New Home Sales

Wednesday: Durable Goods Orders, EIA Petroleum Status Report

Thursday: Jobless Claims

Friday: GDP, Consumer Sentiment

 

Data as of  4/19/2013

1-Week

Since  1/1/2013

1-Year

5-Year

10-Year

Standard &  Poor’s 500

-2.11%

9.05%

12.95%

2.37%

7.40%

DOW

-2.14%

11.01%

12.21%

2.64%

7.45%

NASDAQ

-2.70%

6.18%

6.60%

6.68%

12.49%

International

-2.56%

4.19%

11.24%

-4.61%

6.07%

Data as of  4/19/2013

1 mo.

6 mo.

1 yr.

5 yr.

10 yr.

Treasury Yields (CMT)

0.04%

0.09%

0.12%

0.72%

1.73%

Notes: All index returns exclude reinvested dividends, and the 5-year and 10-year returns are annualized. Sources: Yahoo! Finance and Treasury.gov. International performance is represented by the MSCI EAFE Index. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly.

HEADLINES:

Initial unemployment claims rise slightly. Unemployment claims jumped last week to 352,000, higher than the estimate of 347,000; the jump brings the 4-week moving average (a less-volatile measure) back in line with February numbers. Despite appearing to be stuck in neutral, unemployment claims are still significantly lower than the same time last year.[8]

Earthquake rocks Sichuan Province China. A magnitude-7 earthquake struck the southwestern province early Saturday morning, killing over 150 and injuring thousands. The earthquake triggered power outages and landslides in the same region that experienced a 2008 earthquake that left nearly 70,000 confirmed dead.[9]

Italy’s current president re-elected for a second term. Amid squabbling between party leaders, Giorgio Napolitano became the first Italian president to be asked to serve a second term. While European leaders reacted with relief, many view the election result as a sign of political stagnation.[10]

Gold retreats further in massive selloff. The precious metal’s biggest drop in 30 years came as investors rushed for the exits, and worries of margin calls have spooked goldbug investors. While gold is traditionally seen as a “safe haven” investment, it is also a historically volatile investment, falling an average of 31.6% in bear markets.[11]

QUOTE OF THE WEEK:

“You miss 100% of the shots you don’t take.” – Wayne Gretzky

 

RECIPE OF THE WEEK:

Morning Glory Muffins

Muffins studded with carrots, apples, raisins, and pineapple make for a healthy breakfast. From Better Homes and Gardens.

 

Ingredients: 2 cups all-purpose flour

2 teaspoons baking soda

2 teaspoons ground cinnamon

1/2 teaspoon salt

1-1/4 cups packed brown sugar

2 medium apples, peeled, cored, and chopped (1-1/3 cups)

1-1/4 cups finely shredded carrots

1/2 cup raisins

1 8-ounce can crushed pineapple (juice pack), undrained

2/3 cup cooking oil

3 eggs

1/2 teaspoon vanilla

 

Directions:

  1. 1.    Line eighteen 2-1/2-inch muffin cups with paper bake cups; set aside.
  2. 2.    In a large bowl combine flour, baking soda, cinnamon, and salt; stir in brown sugar. Stir in apples, carrots, and raisins. In a medium bowl combine undrained pineapple, oil, eggs, and vanilla. Add pineapple mixture to flour mixture; stir just until moistened.
  3. 3.    Spoon batter into prepared muffin cups. Bake in a 375 degree F oven about 18 minutes or until a wooden toothpick inserted in centers comes out clean. Cool in muffin cups on wire rack for 5 minutes. Remove from muffin cups; serve warm. Makes 18 muffins.

 

GOLF TIP OF THE WEEK:

Don’t Change Your Stance

Many golfers believe that their stance needs to change depending on their club choice. Nothing could be farther from the truth. When it comes to full shots (not pitches, chips or putts), maintaining a consistent stance is critical to improving your strikes.

Minor adjustments in spine angle, ball position and stance width, are sometimes necessary, but generally, how you stand over an iron should not be substantially different from how you set up with a driver.

 

GREEN TIP OF THE WEEK:

Remove Pollutants With Houseplants

According to NASA research, many common houseplants do a great job of ridding homes of harmful air pollutants, such as: benzene (present on paints, plastic, and rubber), TCE (paints, varnishes, adhesives) formaldehyde (foam, carpets, etc.) and carbon monoxide (from car exhausts). The following plants have been shown to significantly improve indoor air quality: Aloe Vera, Chinese Evergreen, Bamboo Palm, Chrysanthemum, African Daisy, English Ivy, Common Ivy, Peace Lily, Golden Pothos, and Philodendrons.

 

HEALTH TIP OF THE WEEK:

Use It or Lose It

 

Research has shown that humans keep their minds sharp by learning new and challenging things. If you feel the need to replace the intellectual challenge found during your professional life, try learning a foreign language, playing a musical instrument, joining a book club, or even getting into the habit of playing brain teasers.

 

 

Securities, advisory services, and insurance products are offered through Investment Centers of America, Inc.® (ICA), member FINRA, SIPC, a Registered Investment Advisor, and affiliated insurance agencies. ICA and iWealth are separate companies. Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

Diversification does not guarantee profit nor is it guaranteed to protect assets 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 Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ. The DJIA was invented by Charles Dow back in 1896.

The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indexes from Europe, Australia and Southeast Asia.

The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.

Google 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.

Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.

These are the views of Platinum Advisor Marketing Strategies, LLC, and not necessarily those of the named representative or named Broker dealer, and should not be construed as investment advice. Neither the named representative nor the named Broker dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.

 

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