Newsletter — Q2 2019

It’s All Peachy!

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I’ve always been a fan of sunshine. During the summers growing up, I remember spending countless hours at my grandparent’s house swimming with my cousins. Trips to the beach, skateboarding the streets of Pasadena and bulldog basketball camps are all fond summer memories for me. Another thing that comes to mind as I think about summer: Peaches! There is nothing like a juicy peach on a hot, summer day. 

When we put fruit trees in our backyard, I told my wife a peach tree was a must. It was simply part of my DNA. The first late spring/summer harvest we had was incredible. Candidly, I didn’t know much about fruit trees or how to care for them. I also didn’t know about the enemies that would soon come and steal my joy away. Squirrels. Vicious, cruel squirrels completely destroyed our second harvest! How in the world could these little buggers do such a thing? I can remember making plans that January to distribute our harvest to friends and family. The problem was, I had a blind spot in my farming endeavors and needed guidance. 

Life is complicated. Finances can be complicated. Perhaps a stock market decline comes in and steals your peace like the squirrels stealing my peaches! Having a rock solid financial and investment plan should be designed to deliver financial peace even when intruders attempt to take it. 

Trade crisis between America and China, political unrest and increased interest rates are some of the headline “intruders” continually trying to steal people’s financial peace these days. Up and down stock markets and constant delivery of negative news continue to disrupt our days. It’s no wonder so many of us are “on edge” and anxious! Well, here comes some sunshine: 

The unemployment rate in the U.S. is the lowest it has been in 49 years. The federal reserve has indicated they do not intend to raise interest rates in the short term. The U.S. stock market has recovered nicely since the 20% decline in the 4th quarter of 2018. The international and emerging markets have also had nice recoveries. Additionally, earnings from corporations in the 2nd quarter have been strong.

There will always be “issues” that we face in the economy. It’s easy to get caught up in negative headlines which often will create negative emotions and fear. As we approach summer, enjoy the sunshine. When the financial storms come and the headlines create a counterfeit, remember there is sunshine in your midst and we are here to guide you. Have a great summer!

Positive Quote:
"Worry does not empty tomorrow of it sorrow; it empties today of its strength"
- Corrie ten Boom

Fun Fact
I recently completed a Spartan Race at Big Bear Lake. It was 38 degrees out.


The Markets

First Quarter Overview 

Following a tumultuous close to 2018, stocks enjoyed a robust January. Positive feedback from ongoing negotiations between the United States and China, coupled with strong job growth, low inflation, and stable interest rates, helped fuel investor confidence that pushed the major benchmark indexes to levels not seen in 30 years — despite a partial government work stoppage. Each of the indexes listed here posted notable gains, led by the small-cap Russell 2000, followed by the Nasdaq, S&P 500, Global Dow, and the Dow.

Stocks continued to climb in February, albeit not at the breakneck pace of the previous month. Corporate earnings reports were generally positive, and trade talks between the United States and China continued with no deal being reached, but signs of a favorable resolution in sight. The partial government shutdown ended at the end of January. The Federal Open Market Committee indicated that it was inclined to refrain from increasing the federal funds target interest rate range for the foreseeable future. Investors continued to push stocks higher. The Russell 2000 again led the way for February, increasing its value by over 16% over the first two months of 2019. Of the indexes listed here, only the Global Dow failed to gain at least 3.0% (or very close to it) by the end of February.

March saw stock values fluctuate on a fairly regular basis throughout the month. The large caps of the Dow posted minimal end-of-month gains, while the Russell 2000, which had been riding a solid wave of gains during the first two months of the year, took a bit of a dive in March, falling over 2.20% from its February closing value. The Global Dow moved ever so slightly down by the end of March. Only the Nasdaq and S&P 500 posted notable gains for the month.

Nevertheless, the first quarter of 2019 proved to be a positive one for stocks. Each of the benchmark indexes listed here closed the quarter with gains of more than 10% (except for the Global Dow), kicking the year off on very solid footing. Despite signs of a weakening global economy and low inflation, news that the Fed is backing off its plan to increase interest rates helped quell investors' concerns. Both the technology and energy sectors enjoyed a strong first quarter. By the close of trading on February 28, the price of crude oil (WTI) was $57.26 per barrel, up from the January 31 price of $53.95 per barrel. The national average retail regular gasoline price was $2.623 per gallon on March 25, up from the February 25 selling price of $2.390 but $0.025 lower than a year ago. The price of gold dipped by the end of February, falling to $1,314.40 by close of business on the 28th, down from $1,325.70 at the end of January.

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Eye on the Month Ahead

At the close of February, there was guarded optimism that a trade accord between the United States and China would come to fruition. As we leave March, negotiations are still ongoing with no real signs of progress being made. In any case, April may bring with it a heartier employment report while there's hope that the residential sector will continue to advance. A big unknown heading into April is the aftermath of the Brexit saga and its impact on the global economy.

Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.comMarket Data (oil spot price, WTI Cushing, OK); (spot gold/silver); Oanda/FX Street (currency exchange rates). News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. The U.S. Dollar Index is a geometrically weighted index of the value of the U.S. dollar relative to six foreign currencies. Market indices listed are unmanaged and are not available for direct investment.

I look forward to continuing to guide clients through 2019 and beyond. If you have a friend or family member that you think would benefit from working with me, please don’t hesitate to make the introduction. Thank you for your trust and business. 

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Brandon K. Cass, CWS®
Partner | Wealth Advisor
CA Insurance License #0E80823

Intrepid Wealth Management
5780 Fleet Street, Suite 170
Carlsbad, CA 92008