PEEK OF THE WEEK
October 31,2016
Leif Hagen & Donna Roberts
The Markets
It’s almost over…
During July 2016, Pew Research reported almost 60 percent of Americans were suffering
from election fatigue. They weren’t uninterested in the election. They were
just worn out by never-ending news coverage that focused on candidates’
comments, personal lives, and standing in the polls rather than their moral
character, experience, and stance on issues.
Last week, U.S. election news overshadowed
positive economic data causing U.S. stocks to lose value as investors shifted
assets into safe havens. Early on Friday, the Bureau of Economic Analysis released gross domestic product data,
which reflects the value of all goods and services produced in the United
States during the period. Initial estimates suggest the U.S. economy grew at an
annual rate of 2.9 percent in the third quarter of 2016, an improvement on
second quarter’s 1.4 percent growth. Consumer spending continued to be the
primary driver of growth in the United States.
Markets moved higher on the news, only to
retreat when the Federal Bureau of Investigation said it is looking at new
evidence in the Clinton email investigation. Financial Times wrote:
“Mr. Trump, Mrs. Clinton’s Republican
challenger, had fallen dramatically in the polls in recent weeks: market
strategists said this had eased uncertainty given the real estate businessman’s
controversial views on trade and immigration. However, the news of the new
probe – just 11 days before the presidential election – has sparked fresh
tumult.”
Financial
Times indicated the CBOE Volatility
Index (VIX), a.k.a. the fear index, moved higher on Friday. The index measures
the anticipated volatility of the Standard & Poor’s 500 Index over the next
30 days. In addition, U.S. Treasury yields, which had been increasing on rumors
the European Central Bank might begin to taper its quantitative easing program,
dipped lower.
The next few weeks are likely to be bumpy for
investors. During times like these, it’s critical to keep your eye on your
long-term financial objectives. We’ve weathered volatile times before, and we
will get through them again.
Data as of 10/28/16
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
|
Standard & Poor's 500
(Domestic Stocks)
|
-0.7%
|
4.0%
|
1.7%
|
6.5%
|
10.6%
|
4.4%
|
|
Dow Jones Global ex-U.S.
|
-0.6
|
2.1
|
-1.5
|
-3.2
|
1.0
|
-0.6
|
|
10-year Treasury Note (Yield
Only)
|
1.9
|
NA
|
2.1
|
2.5
|
2.3
|
4.7
|
|
Gold (per ounce)
|
0.6
|
19.8
|
7.9
|
-2.2
|
-6.1
|
7.7
|
|
Bloomberg Commodity Index
|
-0.2
|
9.4
|
-2.0
|
-12.2
|
-10.7
|
-6.4
|
|
DJ Equity All REIT Total
Return Index
|
-3.3
|
5.2
|
5.4
|
9.1
|
11.1
|
5.0
|
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg
Commodity Index returns exclude reinvested dividends (gold does not pay a
dividend) and the three-, five-, and 10-year returns are annualized; the DJ
Equity All REIT Total Return Index does include reinvested dividends and the
three-, five-, and 10-year returns are annualized; and the 10-year Treasury
Note is simply the yield at the close of the day on each of the historical time
periods.
Sources: Yahoo! Finance, Barron’s, djindexes.com,
London Bullion Market Association.
Past performance is no guarantee of future results.
Indices are unmanaged and cannot be invested into directly. N/A means not
applicable.
Ooooh! Some States’ estate taxes
are scary! Most Americans aren’t too concerned about federal estate
taxes. After all, 99.8 percent won’t have estates large enough to be subject to
the tax. For 2016, the estate tax threshold is $5.45 million (double that
amount for a married couple) and it is expected to be $5.49 million in 2017
(barring any changes to the tax code).
At
the state level, it’s a different story. Kiplinger’s
explained:
“However,
state estate taxes, which kick in for estates valued at only $1.5
million or less in several states, could take a big bite out of your legacy.
Your home and retirement accounts will be counted when your estate is valued
for tax purposes, and proceeds from your life insurance could be counted, too,
depending on how the policy is owned and who gets the money.”
The
Tax Foundation reports, in all, 15
states and the District of Columbia have estate taxes. They included:
·
Connecticut
($2 million exemption and 7.2 percent to 12 percent estate tax rates)
·
Delaware
($5.4 million exemption and 0.8 percent to 16 percent estate tax rates)
·
Hawaii ($5.4
million exemption and 0.8 percent to 16 percent estate tax rates)
·
Illinois
($4 million exemption and 0.8 percent to 16 percent estate tax rates)
·
Maine ($2
million exemption and 8 percent to 12 percent estate tax rates)
·
Maryland
($1.5 million exemption and 16 percent estate tax rate)
·
Massachusetts
($1 million exemption and 0.8 percent to 16 percent estate tax rates)
·
Minnesota
($1.4 million exemption and 9 percent to 16 percent estate tax rates)
·
New
Jersey ($675,000 exemption and 0.8 percent to 16 percent estate tax rates)
·
New York
($3.1 million exemption and 3.1 percent to 16 percent estate tax rates)
·
Oregon
($1 million exemption and 0.8 percent to 16 percent estate tax rates)
·
Rhode
Island ($1.5 million exemption and 0.8 percent to 16 percent estate tax
rates)
·
Tennessee
($5 million exemption and 5.5 percent to 9.5 percent estate tax rates)
·
Vermont ($2.75
million exemption and 0.8 percent to 16 percent estate tax rates)
·
Washington
($2.1 million exemption and 10 percent to 20 percent estate tax rates)
·
Washington
DC ($1 million exemption and 0.8 percent to 16 percent estate tax rates)
While
not all have estate taxes, Iowa, Kentucky, Maryland, Nebraska, New Jersey, and
Pennsylvania all have inheritance taxes. If you haven’t given much thought to
estate planning, contact your financial professional. They can possibly help
you find ways to minimize the taxes your estate and your heirs may owe.
Weekly Focus – Think About It
“Success is not
final; failure is not fatal: It is the courage to continue that counts.”
--Winston S. Churchill, Former British Prime Minister
Warm regards from Eagan,
Leif M. Hagen
Leif M. Hagen, CLU, ChFC
LP Financial Advisor
Securities offered through LPL Financial Inc., Member FINRA/SIPC.
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* This newsletter was
prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with
the named broker/dealer.
* The Standard & Poor's
500 (S&P 500) is an unmanaged group of securities considered to be
representative of the stock
market in general. You cannot invest directly in this index.
* The Standard & Poor’s
500 (S&P 500) is an unmanaged index. Unmanaged index returns do not reflect
fees,
expenses, or sales charges.
Index performance is not indicative of the performance of any investment.
* The 10-year Treasury Note
represents debt owed by the United States Treasury to the public. Since the
U.S.
Government is seen as a
risk-free borrower, investors use the 10-year Treasury Note as a benchmark for
the long-term bond market.
* Gold represents the
afternoon gold price as reported by the London Bullion Market Association.
The gold price is set twice
daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in
U.S. dollars per fine troy ounce.
* The Bloomberg Commodity
Index is designed to be a highly liquid and diversified benchmark for the
commodity futures market. The Index is composed of futures contracts on 19
physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT
Total Return Index measures the total return performance of the equity
subcategory of the Real Estate Investment Trust (REIT) industry as calculated
by Dow Jones.
* Yahoo! Finance is the
source for any reference to the performance of an index between two specific
periods.
* Opinions expressed are
subject to change without notice and are not intended as investment advice or
to predict future performance.
* Economic forecasts set
forth may not develop as predicted and there can be no guarantee that
strategies promoted will be successful.
* Past performance does not
guarantee future results. Investing involves risk, including loss of principal.
* You cannot invest directly
in an index.
* Consult your financial
professional before making any investment decision.
* Stock investing involves
risk including loss of principal.
* To unsubscribe from the
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Sources:
https://www.ft.com/content/7e71f0f2-9d3d-11e6-8324-be63473ce146 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/10-31-16_FinancialTimes-Tremor_Over_Clinton_Emails_Gives_Glimpse_of_Market_View_of_Trump-Footnote_2.pdf)
https://www.ft.com/content/eca532dc-9ce8-11e6-a6e4-8b8e77dd083a (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/10-31-16_FinancialTimes-Bonds_Bloodied_as_Markets_Face_Worst_Month_in_3_Years-Footnote_5.pdf)
