Please see the link below for our July through September 2014 market review.
As we transition to summer, I am excited to announce the hiring of Jessica Munson as our new Branch Office Manager. She will be assisting our office with daily transaction processing, service requests, client review preparation, and appointment scheduling. Born and raised in Ellensburg, Jessica was an active member in 4-H and went on to serve the community as the 2011 Ellensburg Rodeo Queen. Currently, Jessica is finishing her online degree in Early Childhood Education at Liberty University. She and her husband, Aaron (married August 2013), enjoy spending much of their free time hiking and camping in the Northwest. As she will be in the office weekdays from 9:30am to 5pm, I’m sure you’ll get a chance to meet her in the months ahead. As is customary, we are attaching the summer edition of the KMS Client Quarterly Newsletter for your review. Through mid-June 2014, the U.S. stock market remains resilient, continuing its climb to new highs.
Newly appointed Federal Reserve Board Chairwoman, Janet Yellen, completed her first press conference on March 19th. Her first task was to explain their amended timeline for raising interest rates. In December of 2012, the Federal Open Market Committee (FOMC) publicly stated that it wouldn’t even consider raising the short-term interest rate that is sets (the federal funds rate) until the unemployment rate had fallen to 6.5 percent. At that time, the unemployment rate was hovering at 7.8 percent. In the last year, the unemployment rate has fallen rapidly to 6.7%. Markets wonder what the Fed will do if the rate reaches the targeted 6.5 percent. Yellen’s response on Wednesday was that they likely wouldn’t do anything. In a statement about the timing of interest rate hikes, the F.O.M.C. said that would “take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments.” They also suggested that it would be appropriate to maintain its rock-bottom target for the funds rate for a considerable time after its policy of quantitative easing ends. With their current bond buying program drawdown pace, the quantitative easing (bond buying) is likely to end in October 2014. As such, the timing of rate changes will be prompted by the qualitative guidance which would include overall economic health and inflationary pressures. At present, Wall Street isn’t expecting any change to rates until at least spring of 2015.
We wish you all a wonderful spring! Please give us a call if we can be of any assistance.
On Wednesday, December 18th, the Federal Reserve announced plans to modestly reduce their monthly bond buying program $10 billion. As such, asset purchases will be reduced from $85 billion per month down to $75 billion. Chairman Bernanke shared the board’s expectations that economic growth could be strong enough to support further job gains. Fed policymakers said they would likely continue to trim the purchases in measured steps at future meetings. The Dow Jones Industrial Average soared 300 points on the announcement. As we enter 2014, this is always an opportune time to amend your monthly savings contributions for the new year. If you have any questions on 2014 contribution limits or adjustments to your accounts, please feel free to give us a call.
Merry Christmas & Happy New Year!
In the most recent turn of events, the Federal Open Market Committee decided last week to continue its $85 billion monthly bond buying program. Prior to the September meeting, the Fed was expected to begin tapering these purchases. Fed Chairman Bernanke attributed the delayed tapering to lack of progress in the labor market. Policy makers’ surprising extension of the program sent stocks to record highs and prompted the biggest rally in Treasuries since 2011 as investors repositioned for a more accommodative central bank. Many economists now expect the Federal Reserve to begin tapering asset purchases in December of this year. Over the last few years, we restructured portfolios to address the potential impact of rising interest rates. If you have questions about your portfolio and how current Fed decisions might affect your long term goals, please give us a call anytime. We look forward to speaking with you!
As overall market returns were quite strong over the last year, we’ve recently seen the market correction many analysts have been expecting. On Wednesday, June 19th, Federal Reserve Board Chairman, Ben Bernanke, announced that the Fed’s $85 billion bond buying program could start to wind down by year-end if economic data remained strong. The program could be completed in entirety by mid-2014. Worldwide markets immediately sold off on the news. On Thursday, the Dow Jones Industrial Average closed down 353.87 points, or 2.34 percent. As the Fed begins tapering its bond purchase program, concerns arise over potential rising interest rates on sensitive asset classes. Among those U.S. sectors hit hard on Thursday were homebuilders, down 6.7 percent on concerns of higher borrowing rates. The S&P 500 has now fallen 4 percent from its all-time closing high on May 21 of 1669.16. As we progress through the year, it will be interesting to see whether this market correction provides an opportunity for investors to enter the market. As always, we welcome your calls if we can be of service to you. We wish you all an excellent summer among family and friends!
As noted in the KMS quarterly’s Investment Performance section, worldwide stocks enjoyed a strong rally over the last year. Considering the new tax regulations, high government debt levels, and continued uncertainty in Europe, one may wonder why markets have performed so well in recent months. Retail sales, jobless claims, and Fed policy are some of the main contributing factors to the market’s enthusiasm. Retail sales in February were expected to increase .5% over the previous month but came in much better than expected at 1.1% growth. The initial jobless claims reading fell to 332,000 in mid-March, which was lower (better) than expected. And most notably, The Federal Reserve continues its monetary easing program as inflation remains quite low. Bearing in mind the improving economic data noted above, speculation over whether the Fed will stop QE3 (monetary easing) earlier than their initial 2015 projection will surely be at the forefront of investor’s minds as we progress through the year. The central bank said it plans to hold short-term interest rates near zero at least as long as the unemployment rate remains above 6.5% (It was 7.7% in February).
As we enter 2013, please note that contribution limits to your IRA, 401K, and SIMPLE IRAs will be increasing. This is an opportune time to contact us if you would like to increase your contributions for 2013. Please see the table below for the 2013 contribution limits on these various retirement plans:
|Limit on employee contributions to 401k, 403b, or 457 plan||$17,000||$17,500||$500|
|Limit on age 50+ catchup contributions to 401k, 403b, or 457 plan||$5,500||$5,500||None|
|Traditional and Roth IRA contribution limit||$5,000||$5,500||$500|
|Traditional and Roth IRA age 50+ catchup contribution limit||$1,000||$1,000||None|
|SIMPLE 401k or SIMPLE IRA contributions limit||$11,500||$12,000||$500|
|SIMPLE 401k or SIMPLE IRA age 50+ catchup contributions limit||$2,500||$2,500||None|
****Please consult with your tax advisor regarding the particulars of your circumstances.
As always, please contact us if you have any questions or service needs on your accounts. We are happy to serve and wish you all the best in 2013!
You may have already noticed the significant rally in worldwide markets over the last few months. During this time, there has been much speculation over whether the Federal Reserve would provide further stimulus to the lagging economy. Late last week, Federal Reserve Chairman, Ben Bernanke, announced the third installment of quantitative easing, or QE3. Under the new plan, the Fed will purchase $40 billion of mortgage debt each month. Bernanke stated that the Fed was looking for “ongoing, sustained improvement in the labor market.” With no particular number in mind, the Fed will keep the bond-buying open-ended until the labor markets improve substantially. Of further note, Bernanke said it would probably hold the federal funds rate (rate at which depository institutions lend balances to each other overnight) near zero “at least through mid-2015.” After the announcement, stock indexes jumped to their highest levels since 2007.
As we enter the 4th quarter, all eyes will be on the election, fiscal cliff, and overall direction of our country. Since it is impossible to predict what will happen with these uncertainties, it is important to maintain your investment disciplines through a diversified portfolio. The Fed’s commitment to further monetary easing and low interest rates could potentially provide further downside pressure on the U.S. dollar, causing higher rates of inflation in the future. Over the last couple years, we have been working hard to adjust portfolios for the potential inflation and market risks associated with such Federal Reserve policies. If you have any questions about your portfolio or the information above, please give us a call at your convenience. We look forward to serving you!
It seems volatility has continued to plague investors throughout the first half of 2012. After a fickle 2011, equity markets posted some of their best gains on record during the first quarter of this year. Many of these gains were quickly erased in quarter two as uncertainty over Europe, the presidential election, employment numbers, and future tax rates came to the forefront of investor’s minds. A study released by the Congressional Budget Office, a nonpartisan agency of Congress that produces economic analysis and estimates the cost of legislation, reported that the economy will shrink by 1.3 percent in the first half of 2013 if the government is allowed to fall off the “fiscal cliff” on January 1st, 2013. The Fiscal cliff is in reference to the expiration of the Bush-era tax cuts and a scheduled round of automatic spending cuts. A recession is defined as two economic quarters of negative economic growth. A 1.3 percent decline in the first half of 2013 could be identified as a recession. Whether lawmakers can avoid political gridlock (as was the case last year) will yet to be seen. The uncertainties facing the world today have caused many companies to remain cash heavy as it is extremely difficult to plan when the future is so unsure.
Regardless of the outcome, we have been busy incorporating new strategies that are used to hedge against uncertain, volatile markets. If we have not met to discuss your portfolio in recent months, please feel free to contact me for a portfolio review. We wish you a wonderful summer season!