Archives For Todd Burkhalter

Weekly Update – September 17, 2012

Markets experienced a sharp rally last week as the Federal Reserve unleashed its long-expected quantitative easing. The major indices closed higher with The S&P gaining 1.94%, the Dow gaining 2.15%, and the Nasdaq picking up 1.52%.


Under the pressure of the previous week’s disappointing jobs report, the Fed finally let the genie out of the bottle. The report showed that the economy had added just 96,000 jobs in August, a number much lower than economists expected.[i] This was enough to get the Fed to finally launch long-awaited additional quantitative easing. Under QE3, the Fed has made an open-ended commitment to buy mortgage-backed securities to the tune of $40 billion per month. The move is designed to lower long-term interest rates and spur more lending to businesses and consumers. The Fed said it also will “closely monitor” the economy and continue these purchases and possibly expand them until it sees substantial improvement in the outlook for the labor market.[ii] This open-ended commitment means that QE3 will last as long as the Fed wants it to and we cannot be sure when it will end.


The Fed’s recent action sends a signal to businesses and investors that it fully intends to use its powers in a major (and unusual) way to spur economic growth. That is a powerful statement to make in a time of economic uncertainty. QE3 is designed to convince businesses to invest in the future by assuring them that the Fed stands ready to do whatever is necessary.


On the negative side, our concern is that QE3 will simply add to the already enormous national deficit without dealing with the underlying causes of our current economic weakness. We are also skeptical that the Fed’s actions will convince banks to lend aggressively; rates are already at historic lows, but businesses and homeowners are still having trouble borrowing from gun-shy lenders. In short, QE3 is not a magic bullet that will solve our economic issues. In fact, it may actually add to our problems when the Fed is forced to unload all the bonds it has purchased – not just the QE3 bonds, but the $2 trillion in Treasury bonds it bought during QE1 and QE2 as well. Selling all that debt will drive up interest rates and may stall the recovery just when it has finally taken off.


So, what can we expect next? It’s clear that markets are jubilant about finally seeing what the Fed had in store. However, once investors get over their reaction high, if the economic numbers don’t show improvement, markets will likely retreat. Although we hope that businesses respond positively to the Fed’s move by increasing hiring and capital investment, we really want to see Congress pull itself together enough to address the fiscal cliff and tighten its purse-strings. If you have any questions about how QE3 or any economic issue will affect your portfolio, please feel free to call or e-mail us. We are delighted to be of service.



Monday: Empire State Mfg. Survey

Tuesday: Treasury International Capital, Housing Market Index

Wednesday: Housing Starts, Existing Home Sales, EIA Petroleum Status Report

Thursday: Jobless Claims, Philadelphia Fed Survey

Why go? Should I go to this conference? Maybe I should just stay in the office and work…..Have you ever asked yourself these questions? 


Let’s face it within the financial industry there is no end to the amount of conferences that are available to attend. It is literally possible to be gone every month attending award trips, learning trips, study groups etc. if you aren’t careful you can learn, reward and travel yourself right out of business! However, I am a big fan of attending these events, even so much as to have been accused of being a conference junkie or working on my lanyard collection. I think it is important to be choosy as to which events you spend your time and money attending. Below are three reasons why you must go to the right events.



Events like Conferences bring out the best and the brightest within any industry. What an excellent opportunity to meet and learn from a host of experts from all over the country or world in one location. Some of the best business practices or presentations have come from me attending a breakout session at a conference. These presentations have led to my clients and me being financially better. Sometimes, it’s the one idea that you pick up that more than pays for any registration or travel expenses that may be incurred. There is a direct correlation between learning and earning, never stop doing either.


The networking and creating relationship is also one of the valuable results of attending a conference. Over my career I have made numerous friends throughout the world at such events. Typically like-minded people
attend similar events, therefore you can’t help but meet people who are interested in the same ideas that you deem valuable. However, it is often that some of the best ideas come from seeing what other successful people do in their lives/business. Much of the learning that I mentioned above has happened for me as a result of conversations that take place surrounding the actual event. I also mentioned earlier the fact that experts are gathered in the same place as presenters/speakers, what a great opportunity to meet and establish a relationship with someone with such influence.

Social media has added to the power of the conference. The shelf life of the content, as well as the ability to connect with other attendees has been greatly extended. I typically will tweet, post on LinkedIn and facebook before, during and after an event. Using #Hashtags to group/categorize posts helps to connect those in attendance and talking about the conference or subject.


It is important to work hard and most successful advisors do not have trouble with putting in the time. It is however important to step back and take a break from time to time. Good conferences are usually held in great resorts and beautiful locations. The group rate that a conference enjoys at hotels allows you to travel within budget and is often a business expense for tax purposes. So as you travel the world while learning and networking you are also getting a chance to rest and recharge your inner battery. This recharging
allows you to return to the office with new ideas, skills and to be overall more focused.


Most conference events offer some element of the three items listed above, but they weren’t all created equally. It is important to make good choices about which events make it into your calendar. I have a few that are mainstays and that I hate to miss. Find which ones work best for your goals and objectives and just go!

I would love to hear feedback via twitter, facebook and LinkedIn. What are some of your thoughts on attending events and which ones are your favorites?


Some of my favorites….

The Catalyst Conference

Triad Advisors National Conference

Kingdom Advisors

LEAP Symposium


Weekly Update – September 10, 2012

The major indices closed out last week in positive territory despite a disappointing jobs report as investors’ disappointment vied with renewed hope that the Fed could take action as early as next week’s FOMC meeting. The S&P gained 2.23%, the Dow gained 1.13%, and the Nasdaq closed up 2.26%.[i]


In light of the sustained rally, we want to discuss some of the forces at work right now and take a look at both the bull and the bear case for coming weeks.


Headwinds could trigger a market decline:


The market run-up puts the S&P trading at 13.3 times forward earnings estimates, meaning that investors are paying just over $13 for each dollar of expected corporate earnings. Given the insipid corporate performance of the second quarter, and reduced expectations for the year, most analysts don’t believe that markets will move significantly higher.[ii] Weak economic fundamentals may be a drag on market movements as we get closer to the end of the year. Last week’s disappointing jobs report underscored just how far the economy still has to go before it can be considered healthy. Although the overall unemployment rate fell to 8.1%, that decline can be largely ascribed to discouraged Americans dropping out of the job search.[iii]

Chronic troubles in Europe and Asia may continue to dominate headlines and provoke concern among investors about possible contagion. National elections in the Netherlands and a German ruling on the legality of Europe’s major bailout fund could severely hamper efforts to knit Eurozone countries more closely together. Domestically, presidential elections have often produced a great deal of uncertainty in markets. With January’s fiscal cliff looming, investors will look to politicians to provide leadership, potentially creating market turbulence as the parties duke it out.


Tailwinds could push equities higher:


There are important events coming down the pike that could lengthen the rally such as additional quantitative easing by the Federal Reserve. This is the big payoff traders have been waiting for all summer, and one of the major factors in the rally. Quantitative easing is getting so much attention because monetary policy is pretty much the only game in town for improving the economy right now, given the political impasse in Congress.[iv] It’s hard to know when the Fed will implement further easing, although many expect it to happen this year.


Activity by foreign central banks in Europe and Asia could also give stocks a bump. Last week’s bond-buying announcement by the European Central Bank did a great deal to reassure investors that Eurozone bankers and politicians have the backbone to push through much-needed changes to fiscal and monetary policy. The plan is Europe’s most ambitious yet and will be able to buy unlimited amounts of government bonds to stabilize the debt of struggling countries.[v]


In short, there are a great number of conflicting factors at play right now that could push equities higher or pull markets down. Regardless of how things move, we are committed to keeping you informed and to guiding you as you make investment decisions.



Tuesday: International Trade

Wednesday: Import and Export Prices, EIA Petroleum Status Report

Thursday: Jobless Claims, Producer Price Index, FOMC Meeting Announcement, FOMC Forecasts, Treasury Budget, Chairman Press Conference

Friday: Consumer Price Index, Retail Sales, Industrial Production, Consumer Sentiment, Business Inventories


Data as of   9/7/2012


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.


U.S. worker productivity grew in second quarter. Despite slower hiring, companies were able to get more from their workers this spring. Productivity, measured as the amount of output per hour, grew 2.2%, beating the consensus estimate of 1.6%. While this may have a positive effect on corporate earnings, it may mean companies will need to hire fewer workers.[vi]

U.S. economy loses global competitiveness. According to a recent World Economic Forum report, the U.S. economy has become less competitive, slipping two places to become the world’s 7th most-competitive economy, just behind Germany and the Netherlands. Economists cited concerns over fiscal health and macroeconomic stability as reasons for the decline.[vii]

China urges greater economic cooperation. While announcing a new government infrastructure fund designed to boost internal spending, Chinese president Hu Jintao expressed concern over the slowing global economy and urged greater cooperation between Asian-Pacific countries. Such an announcement could presage a move to coordinate further monetary policy easing.[viii]

Silver lining: Small businesses added 99,000 new jobs in August. Despite an overall disappointing jobs report, many sectors showed improvement in August. Small and medium-sized businesses added a combined total of 185,000 new jobs in August, compared with 16,000 jobs added by large companies. The service and construction sectors also added significant jobs, indicating that some areas of the economy are doing well.[ix]


“It’s not the will to win that matters—everyone has that. It’s the will to prepare to win that matters.” – Paul “Bear” Bryant