As we look back on markets last week, we see mixed results, with none of the major domestic indexes gaining or losing more than 1%. The S&P 500 was down 0.10% for the week, and the Dow gave back 0.39%, once again failing to reach 20,000. On the other hand, the NASDAQ increased by 0.96% and reached its sixth record close in 2017 on Friday.
What We Saw Last Week
Big banks reported earnings. Earnings season is upon us. On Friday, we saw JPMorgan Chase, Bank of America, and PNC Financial beat profit expectations. These positive results add some weight to the post-election financials rally, where financial-sector equities in the S&P 500 have added 17% since the election. A number of other banks will report this week, and we will look to see if their performance also matches the growth we have seen so far.
Retail sales grew. The monthly retail sales report showed a 0.6% increase, slightly below the 0.7% consensus expectations. With this growth, retail sales are now up 4.1% in the past year. However, not all retailers are performing well. General merchandise stores are suffering as consumers continue to shop online and move away from in-person retail stores. We see the results of this trend in declining retails sales numbers and large companies announcing store closures, including Macy's, Sears, CVS, and many more.
Consumer sentiment was high but divided. The University of Michigan's monthly report on consumer sentiment was 98.1, just below predictions but still near highs we have not seen since 2004. One interesting finding in the report is a strong partisan divide in consumer confidence. Richard Curtin, director of the consumer survey, described "extreme differences" between people's expectations for whether new political policies would help or hurt the economy. He reminded people that the most impact on consumer sentiment will come from "actual changes in the economy" as a result of Trump's work, which we will have to wait a few months to see.
What We're Looking at in the Week Ahead
Earnings season continues. The markets will be watching earnings closely during this four-day trading week - especially to see if other major financial institutions also beat expectations. Some analysts believe that to keep the current market rally going and demonstrate that there is weight behind the post-election growth, we'll need to see excellent reports from most companies.
Donald Trump becomes President. While earnings reports will be important to track, another event looms larger in many people's minds: Donald Trump's inauguration. After he takes the oath of office Friday morning and becomes President of the United States, we will begin to see how the market's expectations for Trump's policies match reality.
From trade to taxes to infrastructure and beyond, the next few months will give us a number of insights into how U.S. policies may change. Uncertainty remains, and we will watch for political developments that may affect the markets. In addition, we will continue to focus on the fundamentals that provide deep insight into how the economy is performing - and how we can strive to keep you on track toward your goals.
Quote of the Week
"Wealth is the ability to fully experience life."
--Henry David Thoreau
Golf Tip of the Week
Manage Your Big Slices with Racket Science
A very common challenge many golfers have is slicing the golf ball to the right, which makes them lose distance and accuracy. To compensate, golfers usually do an "over the top move" by bringing their hands, arms, and elbows far away from their body on the downswing and then swinging their club too far left on follow-through. With this move, you only succeed in making even bigger slices.
You can see if your technique is off by checking your tennis swing. In tennis, people often try to hit the ball over the net by extending their elbow too far away from their body. Grab a tennis racket and ball, and practice your swing to see where you point your elbow. With an accurate stroke, you should point your elbow down and keep it close to your side when you hit the ball. In this stance, you can add more power and control by rotating your body, rather than flaring out your arm.
And the same technique applies when managing your slices in golf. If you practice your tennis swing and notice your elbow outward, grab a golf club and do the following:
- Place the club in your dominant hand.
- Hold the club a little above the ground.
- Imagine a ball coming at you (like tennis) and hit a forehand.
- Do this motion multiple times until you feel instincts take over and hit like you're using a hard forehand.
After repeating this drill, you should feel your elbow pointed downward on the downswing. Remember: To play well, you must use your whole body, not just your arms. Practicing this stroke will help you bring your whole body into play and avoid a big slice.
Financial Question of the Week
Why should I run a retirement projection?
In a recent Financial Finesse study on the State of U.S. Employees' Retirement Preparedness, fifty-seven percent of employees at pre-retirement age, between 55 and 64, said they had not run a calculation to estimate whether or not they were on track to achieve their income goals in retirement. According to the study, after evaluating those who did not know if they are on track, an average wellness score of only 4.7 out of 10 was realized.
Planning for retirement today poses challenges past generations did not have, making retirement a more difficult goal to reach. These challenges include:
- Decreased Social Security and other government benefits
- Lower market returns and interest rates on investments
- Lower home equity to rely on due to the mortgage crisis
- Higher healthcare costs and longer life spans to plan for
Determining if you are currently on track to meet your goals is one of the first steps to developing a sound retirement plan. The sooner you take control of your financial situation, the greater your odds of a successful retirement. Please contact my office if you would like help evaluating your progress toward your financial goals.
