Archives For Todd Burkhalter

Weekly Update for August 13, 2012

After a very quiet summer week on Wall Street (half the traders must have been on vacation), markets closed up, consolidating the gains made since the June 4th low. Last week the S&P gained 1.07%, the Dow picked up 0.85%, and the Nasdaq gained 1.78%. Before getting into what transpired last week, let’s take a moment to reflect on how far we’ve come this year. The S&P has been positive eight weeks out of the last ten, has gained 11.79% for the year, and is up 25.44% since this time in 2011.[i] Despite a rocky second quarter and concerns about a double-dip recession, the markets are actually performing well. We know it can be hard to maintain composure when markets hit turbulence, but overall equity performance is getting better.[ii]

 

Federal Reserve Chairman Ben Bernanke started off Monday with reassurances that broad market measures are still pointing towards a recovery.[iii] While he didn’t discuss monetary policy, we can be sure he recognizes that the economy isn’t out of the woods yet and is still prepared to take action if needed. Though the week was light on economic news, jobless claims turned up lower than expected and our trade deficit narrowed, indicating that the economy is doing better, overall.[iv] Markets ticked up after his remarks, continuing their quiet rally.

 

Analysts have been surprised by the stealthy summer rally, as corporate revenues are down and economic fundamentals are still lukewarm. One explanation for why stocks are moving higher despite weak market internals is that traders expect Fed action next month. The downside to this is that if the Fed disappoints, equities could tumble. As we get closer to the end of the year, we can also expect additional media focus on the impending fiscal cliff, the expiration of tax cuts, and deep government spending cutbacks due to kick in January 1st; if the federal government doesn’t develop a plan, it could definitely rein in any market gains for the year.

 

In short, let’s remain cautious about our summer ‘sugar high’ rally, and understand that there will likely be additional turbulence ahead as election season heats up, the Fed announces its policy plans, and investors turn to our leaders for decisive action.

 

 

ECONOMIC CALENDAR:

 

Tuesday: Producer Price Index, Retail Sales, Business Inventories

Wednesday: Consumer Price Index, Empire State Mfg. Survey, Treasury International Capital, Industrial Production, Housing Market Index, EIA Petroleum Status Report

Thursday: Housing Starts, Jobless Claims, Philadelphia Fed Survey

Friday: Consumer Sentiment

 

 

 

 

 

 

 

HEADLINES:

 

USDA revises crop estimates lower because of historic drought. The USDA reduced its forecasts for corn and soybean crops due to the impact of the drought on the Corn Belt. Analysts were shocked at the dramatic reduction, which is down 13% since 2011 and will strongly affect food and commodities prices later this year. Some analysts believe that overall food prices could go up by as much as 5% next year.[v]

Mortgage rates remain above 3.5% for second week. Interest rates on fixed rate mortgages rose to 3.59% after dropping to an historic low of 3.49% two weeks ago. Interest rates tend to follow Treasury yields, and the increase in rates has followed positive economic announcements, which have reduced demand for Treasury securities. [vi]

U.S. trade deficit falls to lowest level in 18 months. The trade deficit fell in June, helped by a steep drop in oil imports and a modest increase in exports. Despite Europe’s troubles, exports to the Eurozone increased by 1.7%.[vii]

Unemployment claims fell to 361,000 last week, consistent with modest gains in hiring. Despite July numbers skewed by seasonal factors, the distortions seem to have stopped and the job market may have pulled out of its midyear slump. Although the job market is not healthy, the economy added 163,000 new jobs in July, the biggest increase since February.[viii]


Tips for Preventing
Identity Theft

Identity theft is prevalent in today’s society. It is time consuming, expensive and one of the more frustrating things to experience. Below are some tips to that could help in preventing this from happening to you.

Checks

– Use your initials and last name when ordering printed checks. A check forger won’t know how you sign your checks, but your bank will.

– Do not have your home phone number or Social Security number printed on your checks. Use your work phone number. Use a post office box or work address instead of your home address.

– Order new checks from your bank and pick them up at the bank, rather than having them sent to your home mailbox.

 

Credit Cards

– When paying credit card bills, write only the last four digits of the account number in the check memo line.

– Do not sign the back of your credit card. Instead write, “Photo ID required.”

– Photocopy both sides of your driver’s license, credit cards and other important contents of your wallet. In the event it is stolen, you’ll know exactly what is missing.

– Keep a list of your credit card numbers and their toll-free customer service numbers so you can cancel cards quickly if lost or stolen. Keep the list in a safe place in your home, not in your wallet.

 

Social Security Number

– Do not carry your Social Security card in your wallet. Memorize the number and put the original card in a safe place.

– If you believe your Social Security number has been compromised, contact the Social Security Administration fraud line 800-269-0271.

 

PINs and Passwords

– Use different PINs for each debit and credit card. If you have too many to remember, consider reducing the number of cards you carry in your wallet.

– Do not use easily available information, like your birth date, phone number or part of your Social Security number, for PINS and passwords.

– Do not write your PIN on the back of the card or on anything else in your wallet.

 

 

Mail and Trash

– Shred any trash that may contain personal information, including charge receipts, credit applications, insurance forms, medical statements, checks and bank statements, expired credit and debit cards and direct mail credit offers.

– You can opt not to receive direct mail credit offers by calling 888-567-8688.

– Use post office collection boxes for outgoing mail, rather than your home mail box.

 

If your wallet is stolen, you should immediately:

– File a police report to document the theft and the wallet contents.

– Contact one of the national credit reporting organizations (listed below) to have a fraud alert placed on your name and Social Security number. The organization you contact is required to contact the
other two. If the thief’s purchases initiate a credit check, the credit reporting organization can alert the merchant. Placing a fraud alert entitles you to free copies of your credit reports.

  • Equifax 800-525-6285
  • Experian 888-397-3742
  • Trans Union 800-680-7289

 

– Close all accounts for missing credit cards. Check your credit reports for accounts opened fraudulently.

– File a complaint with the Federal Trade Commission, which maintains a database of identity theft cases, online at www.consumer.gov/idtheft. This database assists law enforcement agencies and helps the FTC learn more about identity theft.

– Notify your bank if your wallet contained a checkbook or debit/ATM cards.

Have you ever experienced identity theft? Would you agree that it is a pain that should be avoided if possible? If so, please forward this article to a friend.

Thanks!

Weekly Update August 6, 2012

Although the week started off slowly, markets experienced a couple of volatile trading sessions on Thursday and Friday with the Dow dropping more than 180 points on Thursday before surging more than 200 points on Friday with the release of some upbeat domestic economic reports. Overall, markets finished
flat or slightly up with the S&P picking up 0.36%, the Dow edging just 0.16%, and the Nasdaq gaining 0.33%.[i]

Thursday’s downturn in equities was driven largely by Wall Street’s realization that European Central Bank emperor Mario Draghi has no clothes. Markets spun in reverse after Draghi failed to announce any measures to back up last week’s bold talk about saving the Euro at all costs. As we mentioned in the last update, there simply isn’t enough money in the European economy to bail out every periphery country. Until Eurozone leaders are willing to support EU-wide underwriting of bond purchases by the ECB, there isn’t much Draghi can do to back up his words.[ii]

Domestically, traders reacted very positively to Friday’s jobs report, which showed 163,000 new nonfarm jobs in July, beating expectations of 100,000 – meaning we’ve potentially avoided a double-dip recession so far. However, markets may be showing some irrational exuberance as the report held plenty of
bad news as well. The labor force participation rate shrank, and small businesses continued cutting jobs last month; two factors which led to the rise in unemployment. For July, the unemployment rate ticked upward a notch to 8.3% from 8.2%.[iii]

A mediocre jobs report combined with a struggling manufacturing sector and slow business revenues means that the U.S. economy still has a long way to go before we can call it healthy. Add in the tax and regulatory threats coming down the pike in the form of Bush tax cut expiration and mandatory
spending cuts, and we’ve got a recipe for trouble in the New Year. We hope Congress enjoys its five-week vacation and comes back refreshed and ready to deal with some serious issues before the November elections.

 

ECONOMIC CALENDAR:

 

Monday: Ben Bernanke Speaks 9:00 AM ET

Tuesday: Ben Bernanke Speaks 2:30 PM ET

Wednesday: Productivity and Costs, EIA Petroleum Status Report

Thursday: International Trade, Jobless Claims

Friday: Import and Export Prices, Treasury Budget

 

 

Data as of 8/3/2012 1-Week Since 1/1/2012 1-Year 5-Year 10-Year
Standard
& Poor’s 500
0.36% 10.61% 10.37% -0.59% 6.09%
DOW 0.16% 7.19% 7.85% -0.65% 5.75%
NASDAQ 0.33% 13.92% 10.21% 3.64% 13.78%
MSCI
EAFE
1.23% 5.35% -6.99% -4.77%  3.95%
10-year
Treasury Note (Yield Only)
1.55% N/A 2.60% 4.70% 4.26%

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.

HEADLINES:

 

Retailers report strong sales in July. A combination of hot weather and clearance sales drew in American
customers, giving retailers solid sales going into the back-to-school season. Retailers have been aggressive with promotions as the second-largest shopping season kicks off.[iv]

Long-term unemployed and discouraged workers numbers fell in July. Despite the increase in unemployment, the number of discouraged workers – those who have given up looking for work – dropped by 267,000 as compared to a year ago. The number of long-term unemployed workers – those out of work for 6 months or more – fell by 3.4% in July.[v]

Consumer confidence rose in July. Despite lingering unemployment, Americans were unexpectedly
optimistic about short-term business and employment prospects. Although respondents were concerned about rising prices, they expect to see more jobs in six months.[vi]

Wal-Marts stock surge means times are tough for low-income Americans. The retailer’s recent stock jump – to a record $74.80 on July 27 – and its strong earnings report could mean that low-income families are feeling the financial squeeze. Wal-Mart is planning to go after these consumers by lowering prices on food and consumables.[vii]