Archives For Todd Burkhalter

Less Talk, More Action

September 27, 2011 — Leave a comment

Weekly Update – September 26, 2011

After the brisk market rally we experienced two weeks ago, the tables turned dramatically last week as many asset classes experienced their worst week in years. The Dow tumbled 6.4%, the S&P 500 fell 6.5%, and the Nasdaq slid 5.3%. Even gold shed nearly 10% over the course of the week for its biggest drop on a percentage basis in 28 years.

In conjunction with persistent concerns about European debt and a weakening U.S. economy, the presumed trigger for the panic was that the Fed’s Open Market Committee (FOMC) launched “Operation Twist” on Wednesday. The move, designed to bring interest rates down and stimulate the housing market, scarcely proved to reassure investors. “Operation Twist” calls for the Fed to sell short-term securities (maturing in three years or less) from its sizeable $1.7 trillion holdings of government debt and use the $400 billion raised to buy longer-term mortgage-backed securities maturing in six to 30 years.

At the same time, the Fed accompanied its announcement with a lukewarm (at best) assessment of the economy. While stating that they continue to expect some pickup in the pace of recovery over coming quarters, they cited “significant downside risks to the economic outlook, including strains in global financial markets.”

While the stock market has undeniably taken a big hit, and investor confidence has been badly shaken, few things fundamentally changed from two weeks ago. In essence, market participants reacted to renewed concerns that policymakers aren’t doing enough to stabilize the global economy.

Notably, the Group of 20 major economies, including the United States, European Union, and China, issued a statement Thursday saying that it stands committed to “take all necessary actions to preserve the stability of banking systems and financial markets as required.”

It is likely that we will continue to experience a period of volatility as investors wait to see if the words of policymakers lead to tangible actions.

  • Monday – New Home Sales
  • Tuesday – S&P Case-Shiller HPI, Consumer Confidence
  • Wednesday – Durable Goods Orders, EIA Petroleum Status Report
  • Thursday – GDP, Jobless Claims, Pending Home Sales
  • Friday – Personal Income and Outlays, Chicago PM

Last week, the government released the latest census report showing the poverty rate rose to a 17-year high. A whopping 46.2 million people (or 15.1% of the U.S. population) live in poverty, and 49.9 million live without health insurance.

BP is preparing its rigs and workers to resume full drilling operations in the Gulf of Mexico, seeking to end a 17-month production slump following the worst U.S. oil spill.

The International Monetary Fund annual meetings wrapped up in Washington on Sunday with no immediate consensus on the solution. Participants said they were waiting for the ratification of the action plan agreed on July 21 by the Eurozone, particularly by the German Bundestag this week, before starting serious negotiations on increasing the rescue fund’s firepower or asking for a bigger write-down in private sector holdings of Greek debt.

For the first time in months, retail gasoline prices have fallen below $3 a gallon in places, including parts of Michigan, Missouri, and Texas. And the relief is likely to spread thanks to a sharp decline in crude-oil prices. The national average for regular unleaded gasoline is $3.51 per gallon, down from a high of $3.98 in early May. Last week’s plunge in oil prices could push the average to $3.25 per gallon by November, analysts say.

Don’t judge each day by the harvest you reap but by the seeds that you plant. –Robert Louis Stevenson

Why Independence?

September 22, 2011 — Leave a comment

Recently my firm Catalyst Wealth Management went through a transition into a different business model of the financial services industry; the Independent Model. Thankfully throughout this process we have maintained a great relationship with our previous Broker Dealer, kudos for their professionalism. Catalyst entered independence with a new Broker Dealer, Triad Advisors. Triad Advisors is a leader in the Independent Channel of financial services. So as we entered into the Independent space we were often asked; why are you making this change? A fair question since changing Broker Dealers is a quite cumbersome process. I had created a list of 16 reasons, but I will not bore you with the entire list. Our movement to independence primarily centered on three reasons:

 

 

Philosophy

We have always maintained this philosophy of putting our client first. This is central to how we think! Our leadership team felt that we could be more focused in this way being partnered with an organization that does not create any of their own financial products. This is the main objective of the entire independent business model.

Efficiency

As Christian business owners we must constantly monitor our stewardship of the resources and time that we are given. At Catalyst we want to create streamlined processes for our advisors. Processes including paperless environments and being less burdened with unnecessary management. This increased efficiency and structure allows for greater profitability and ownership for our advisors.

Marketing

The Independent Model allows for a firm to be just as the name implies Independent! This means the freedom to run your business the way that you want to run it, within the confines of industry regulations. Triad Advisors tag line states it as, Your Business, Your Way. So our firm is now marketing/communicating through social media and client events. Many of our clients have already expressed their appreciation for these new channels for conversation.

I am excited about the direction of Catalyst. We have already seen number of additional advisors who want to create this freedom within their practices. This change has placed us at the forefront of the direction of the entire financial industry. Again, it’s an exciting place to exist.

Friends, Clients:

Do you have any additional questions? Let me know if this was helpful or if we should discuss further.

Financial Service Professionals:

Could you benefit from the independent model described above?
Have you been thinking of independence?

What’s holding you back?
Is the business that you’re creating really yours?

Please leave your comments below

Weekly Update – September 19, 2011

U.S. stocks posted solid performance Friday to wrap up a five-day winning streak for the first time since July. The Dow and the S&P 500 were each up around 5% for the week, while the NASDAQ climbed 6.3% for the week. The five-day move was the best we’ve seen in two years.

Stocks rallied Thursday after the European Central Bank announced a coordinated action with other central banks and the U.S. Federal Reserve to offer banks easier access to dollar loans. That move, combined with comments from French and German leaders expressing confidence in Greece’s place in the euro-zone, helped propel the market’s performance last week.ii It is likely that comments from European leaders and bankers will continue to drive investor sentiment as the debt crises in Europe continues.

It is against the backdrop of European woes and a softening U.S. economy that the Fed will hold its policy-setting meeting Tuesday and Wednesday. The Federal Open Market Committee expanded its meeting from one to two days, which some investors have taken as a signal that action will be taken, though what that action will be is not clear.

One suggestion is that the Fed will try to pump money into the economy by purchasing bonds through a third round of quantitative easing, known as QE3. But this modified version of QE3, coined Operation Twist, would involve trying to boost lending by swapping out short-term bonds with long-term ones. The intended outcome of this swap would be to lower long-term interest rates without increasing the size of the Fed’s balance sheet. At this point though, we can only speculate about what the Fed will do.

In the week ahead, eyes will be focused on Europe and the Federal Reserve as they work to keep money flowing around the world.

  • Monday – Housing Market Index
  • Tuesday – Housing Starts, FOMC Meeting Announcement
  • Wednesday – Existing Home Sales, EIA Petroleum Status Report
  • Thursday – Jobless Claims

President Barack Obama said on Saturday that Americans need to be ready to “pay their fair share” to narrow the deficit, previewing his proposals to Congress that are expected to include more taxes on the rich. On Monday, the President will call for a new minimum tax rate for individuals making more than $1 million a year to ensure that they pay at least the same percentage of their earnings as middle-income taxpayers, according to administration officials.

Wall Street was cordoned off for a second consecutive day Sunday as about 300 to 400 people remained near Chase Manhattan Plaza for a protest dubbed “Occupy Wall Street.” A smaller group, followed by a column of police motorcycles, marched uptown on Broadway as people beat drums, strummed guitars, and held up signs reading “end corporate welfare” and “we are too big to fail.”

With Europe’s credit and banking crisis seeming to get worse by the day, there are now several reports that Brazil – as well as Russia, India, and China – may look to buy up a portion of sovereign debt from troubled European nations. The creation of a so-called euro bond, which would act as a common debt instrument much like the euro now acts as a unified currency, has been mentioned by many economists and financial experts as a possible way to help end the crisis.

There isn’t a person anywhere who isn’t capable of doing more than he thinks he can. –Henry Ford