Archives For Todd Burkhalter

There has been so much discussion and rhetoric regarding The Fiscal Cliff. How does it impact you and your family? Its often hard to say or know if it will and if so how much? Principal Funds  provided an easy to follow infograph that I wanted to share with you. Follow the link to read more about The Fiscal Cliff and Where Do You Fall?


Feel free to contact me with any additional questions regarding how it may impact your personal planning.

Markets on Edge

December 3, 2012 — Leave a comment

Weekly Update – December 3, 2012

The combination of unease in Europe and political bickering in Congress set equity markets on edge last week. In spite of the turbulence, key indices still managed to close positive for the week, with the S&P 500 gaining 0.5%, the Dow gaining 0.12%, and the Nasdaq gaining 1.5%.[i]

Markets slid Friday after comments by House Speaker John Boehner indicate that fiscal cliff talks have stalled. While the Democrats are seeking $1.6 trillion in tax increases (aimed largely at wealthy taxpayers), as well as $50 billion in additional stimulus spending, Republicans are focused on reducing the deficit through closing tax loopholes and reducing entitlement programs.[ii] Since these are essentially the same issues that have been argued over the last year, it seems as though lawmakers are more interested in theatrics than in resolving the issue before the end of the year.

A Greek aid deal was finally reached Tuesday as European ministers convinced a skeptical International Monetary Fund (IMF) that their formula for getting Greece back on track had good odds of success. The deal will cut Greek interest rates and give the ailing nation additional time to pay back rescue loans while giving it a 34.4 billion-euro loan installment in December.[iii] As part of the agreement, Greece’s debt-to-GDP ratio is expected to decline from 190% in 2014 to 124% in 2020. We hope – rather than expect – that Greece will be able to meet the terms of its new deal. Markets appeared to share our skepticism and did not show much reaction to the news.[iv]

Next week will see the release of some key economic data, including November jobless claims, which we expect to come in lower as the effects of Superstorm Sandy continue to fade. Although Sandy hit in the latter days of October, the Labor department conducts its payroll survey on the 12th of each month, meaning that November data will capture the effects of the storm. We’ll also be able to take a peek at the preliminary consumer sentiment report, which analysts will pore over to get a sense of what holiday retail numbers might look like.[v] We’ll keep you posted. Have a great week!


Monday: ISM Mfg. Index, Construction Spending

Tuesday: Motor Vehicle Sales

Wednesday: ADP Employment Report, Productivity and Costs, Factory Orders, ISM Non-Mfg. Index, EIA Petroleum Status Report

Thursday: Jobless Claims

Friday: Employment Situation, Consumer Sentiment


Data as of 11/30/2012


Since 1/1/2012




Standard   & Poor’s 500
























10-year   Treasury Note (Yield Only)






Notes: All index returns exclude reinvested dividends, and the 5-year and 10-year returns are annualized.
Sources: Yahoo! Finance, MSCI Barra. Past performance is no guarantee of future results.
Indices are unmanaged and cannot be invested into directly. N/A means not available.


Chinese manufacturing expands in November. In a further sign that China may have turned the corner, the country’s official manufacturing index rose to the highest level in seven months. Economists believe that the country may experience additional growth in December due to Christmas.[vi]

European rescue funds downgraded. Moody’s Investors Service downgraded the Eurozone funds responsible for bailing out periphery nations to Aa1 from Aaa. The move was prompted by concerns about the high correlation in credit risk between the rescue funds and the countries funding them.[vii]

Investors flock to Treasuries. Despite the risks posed by the fiscal cliff, investors can’t get enough U.S. Treasuries. Reversing a 6-month trend, Treasury purchases topped corporate bonds as investors piled on, seeking asset protection rather than investment growth.[viii]

Corporations rush to issue debt in 2012. Record-low rates and potential tax law changes are driving a gusher of new corporate debt. The amount of investment-grade and high yield bonds issued this year is already at a record $1.2 trillion and is likely to increase before the new year when applicable tax laws may change.[ix]


You’re happiest while you’re making the greatest contribution.” – Robert F. Kennedy











Weekly Update – November 26, 2012

Equities ended the abbreviated week on a bullish note – with the S&P 500 having its second best week of the year – boosted by positive retail sales estimates and upbeat economic reports out of Europe. For the week, the S&P 500 gained 3.62%, the Dow gained 3.73%, and the Nasdaq gained 3.99%, erasing some of the losses we saw in previous weeks.[i]

Although the holiday shopping season is just beginning, early information suggests retailers can expect a good showing this year. A recent consumer survey by Deloitte suggested that shoppers would spend an average of $286 over the holiday weekend, which is a 28% increase over a similar survey last year. Additionally, the National Retail Federation forecasts holiday sales to grow 4.1% over last year. This is good news for retailers, who expect to make between 40-50% of their profits during the holiday shopping season. [ii]

Hoping to goose the start of the shopping season, some retailers began offering Black Friday deals on Thanksgiving Day. Interestingly, the promotional push may have stolen sales from Black Friday itself. However, if Thursday’s numbers are added to Black Friday, stores still saw a total increase in sales of almost 1% over 2011, and store visits increased 3.5%, indicating that consumers are feeling confident and want to spend money.[iii]

The fiscal cliff is still very much on everyone’s minds, and despite reassuring jawboning by lawmakers, we don’t know how likely it is that we will see a resolution by Christmas. Federal Reserve Chairman Ben Bernanke fanned the flames during a speech last week by commenting that if a resolution is not reached, the U.S. economy will slide into recession. If that were allowed to happen, he does not believe that the Fed has the tools needed to help and that the economy would be on its own.[iv] While this isn’t a happy thought, it’s clear that Bernanke is using his bully pulpit to push lawmakers into action. His message is clear: “Make it happen, or you’re on your own.”

Monday of this week is widely known as “Cyber Monday,” the largest online shopping day of the year. As workers return to their desks after the long holiday weekend, many are still in shopping mode, and retailers offer online specials to lure them away from brick and mortar stores. It will be interesting to see if Cyber Monday numbers are as encouraging as Black Friday’s. Also this week, analysts will be turning their attention to the state of economic reports being released, including GDP, employment data, and consumer confidence.


Monday: Dallas Fed Mfg Survey

Tuesday: Durable Goods Orders, Ben Bernanke Speaks at 8:30 AM ET, S&P Case-Shiller HPI, Consumer Confidence

Wednesday: New Home Sales, EIA Petroleum Status Report, Beige Book

Thursday: GDP, Jobless Claims, Pending Home Sales Index

Friday: Personal Income and Outlays, Chicago PMI






iPad and iPhone dominate Black Friday online shopping. IBM found that 24% of online shoppers used mobile devices, compared to 14.3% in 2011. The iPad was used by 88.3% of tablet shoppers.[i]


Greece closer to aid deal. After several days of bargaining and politicking, Europe’s leaders are moving closer to a new bailout deal for Greece. The IMF has agreed to relax its debt-cutting targets for Greece, meaning the country may not be forced to adopt additional austerity measures.[ii]

Chinese manufacturing numbers are up. After seven consecutive months of slowing, an important manufacturing index is up as factory orders pick up. Since manufacturing forms a large part of the Chinese economy, this could indicate that the world’s second-largest economy might be recovering from its slump.[iii]

Oil prices surge on Israel tensions. Oil prices rose above $88 a barrel, on increased tensions in the Middle East. A brewing fight between Israeli forces and Gaza separatists is causing supply worries, pushing up the price.[iv]