Jersey Benefits Advisors Newsletter Summer 2018

Jersey Benefits Advisors Newsletter Summer 2018

Market Watch

The Federal Reserve ended its June Federal Open Market Committee meeting on​ June 28th, and​ the only change indicated for​ the foreseeable future is​ that the Fed sees core inflation​ as​ somewhat less of​ a​ risk, while overall inflation​ is​ still a​ concern. Interest rates remained on​ hold at​ 5.25%, where they have been for​ a​ year now, and​ investors hoping for​ a​ rate cut have capitulated. this​ surrender by bond investors has provided a​ slightly positive slope to​ the yield curve, as​ long term rates are modestly higher than short term rates.

this​ leads me to​ believe there may be another way to​ view the inversion​ of​ the yield curve, which happened last year. While many view an​ inversion​ of​ the yield curve as​ a​ precursor to​ recession, historically we have not had a​ recession​ every time the yield curve inverts. this​ last inversion​ did precede the first quarter economic slowdown of​ 2018, so perhaps the inversion​ of​ the yield curve in​ 2018 was indicating the mid cycle slowdown which occurred earlier this​ year. The US economy has been expanding since November of​ 2018, so based on​ the length of​ the last two economic cycles, the first quarter slowdown of​ 2018 occurred right in​ the middle of​ the cycle. However, it​ should also be noted that the last two US economic cycles have been records, stretching from November 1982 to​ March 1991 and​ March 1991 to​ November 2018, when analyzed from the bottom of​ one cycle to​ the bottom of​ the next cycle, or​ trough to​ trough. There were 10 economic cycles from 1945-2018, and​ the average duration​ from trough to​ trough was 67 months. Nobody can really say, with any certainty, how long the current cycle will last, but given all of​ the shocks incurred over the last five years, the economy has been quite resilient.

of​ course, as​ long as​ the economy is​ growing, the stock market will react in​ a​ favorable manner. Although the indices are off their peaks set in​ the second quarter, as​ the books were closed on​ the first half of​ 2018, the DJIA stood at​ 13,408.62 which is​ a​ gain​ of​ 7.6% year to​ date. The NASDAQ closed at​ 2,603.23 for​ a​ gain​ of​ 7.8% thus far for​ 2018. The S&P 500 finished at​ 1,503.35 which is​ an​ increase of​ 6.0% for​ 2018. While the S&P 500 is​ off its record close of​ 1,539.18, the fact that it​ finally surpassed the old record of​ 1,527.46 set back in​ 2000 is​ a​ significant technical feat which bodes well for​ a​ continuation​ of​ the current bull market.

The consensus of​ economic forecasts for​ the second half of​ 2018 predict GDP growth of​ between 2%-3%, which is​ what should be expected for​ a​ mature expansion. How much strength remains in​ the economy depends on​ a​ number of​ factors. Maintaining healthy growth without increased inflation​ is​ paramount. While core inflation​ seems to​ be under control, the increases in​ the prices of​ food and​ energy are being felt by everyone. There is​ also a​ great deal of​ concern regarding the subprime mortgage market and​ the collateralized debt obligations and​ collateralized mortgage obligations on​ which many hedge funds feed. With mortgage foreclosures in​ the subprime market increasing, which lowers the value of​ CDO’s and​ CMO’s, there is​ a​ fear many hedge funds could incur significant losses, like those at​ Bear Stearns, as​ the value of​ their portfolios are rebalanced at​ the end of​ the quarter. as​ with most aggressive investment bets, when fundamentals change, things can go south in​ a​ hurry. in​ my mind this​ is​ just one more reason​ for​ diversifying your​ assets and​ not chasing returns.

Hype, Hope and​ the 4th of​ July Holiday

The Blackstone IPO and​ Apple iPhone’s debut were two very hyped events which took place in​ June. While Blackstone’s stock initially surged, it​ is​ now below the original offering price as​ private equity houses begin​ to​ reassess the cost of​ doing ever larger deals as​ the cost of​ debt increases. Apple’s faithful lined up in​ front of​ stores for​ days, prior to​ the release of​ the iPhone, and​ even with a​ cost of​ $599, sales are expected to​ be brisk. One can’t help but wonder how many people really want to​ watch video on​ their cell phone, especially with all of​ the huge plasma and​ LCD screens available for​ only a​ few hundred dollars more. Then again, after the 4th of​ July fireworks, it​ might be nice to​ relive the experience again​ and​ again​ while sitting in​ traffic on​ the way home.

Privacy Policy and​ Rollover Assistance

At Jersey Benefits Advisors and​ Jersey Benefits Group, Inc. protecting your​ privacy is​ very important to​ us. We want you​ to​ understand​ what information​ we collect and​ how we use it. We collect and​ use information​ from you​ on​ applications and​ other forms as​ well as​ information​ about financial transactions with us and​ from non-affiliated third parties. this​ “nonpublic personal information” is​ obtained in​ connection​ with providing a​ financial product or​ service to​ you.

We do not disclose any nonpublic personal information​ about you​ without your​ express consent, except as​ permitted by law. We may disclose the nonpublic personal information​ we collect to​ persons or​ companies that perform services on​ our behalf. We restrict access to​ your​ nonpublic personal information​ and​ only allow disclosures to​ persons and​ companies as​ permitted by law to​ assist in​ providing products or​ services to​ you. We maintain​ physical, electronic and​ procedural safeguards to​ protect your​ nonpublic personal information​ at​ all times.

Many people have 401k or​ 403b accounts from jobs they’ve left for​ various reasons. One of​ the problems with this​ is​ the duplication​ of​ objectives within​ each account. Having a​ lot of​ funds, in​ several accounts, does not always provide the diversification​ you​ aim to​ achieve.

if​ you​ or​ a​ family member are in​ this​ situation, and​ would like to​ consolidate assets into one diversified IRA and​ receive just one statement, please give me a​ call to​ analyze the accounts, make recommendations and​ assist with the paperwork involved. as​ long as​ you​ have terminated employment with the employer, or​ the particular plan has been terminated, you​ are eligible to​ roll the funds over into an​ IRA. you​ do not have to​ be of​ retirement age.

if​ you​ have retired, or​ are considering retirement, you​ have the option​ to​ move assets out of​ your​ employer plan and​ into an​ account, which can provide a​ lifetime income, when you​ retire. The whole idea is​ to​ work with someone you​ trust and​ is​ available to​ you, when you​ wish to​ discuss your​ account. Every employer plan is​ different, and​ every individual is​ different, so personal preference is​ very important, and​ there is​ no “one plan fits all”.

Depending on​ your​ appetite for​ risk, IRA accounts can be in​ stocks, bonds, mutual funds or​ ETF’s with one or​ more companies. if​ you’re somewhat risk averse, variable annuities offer participation​ in​ the market with downside protection​ and​ guaranteed growth for​ an​ additional fee. Feel free to​ contact me to​ discuss your​ options.

Jersey Benefits Advisors Newsletter Summer 2018

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