MONTHLY QUOTE
“Humor
is just another defense against the universe.” – Mel
Brooks
MONTHLY
RIDDLE
What has three feet yet
cannot run or walk?
Last month’s riddle:
This
word signifies a gap between hills or mountain ranges. Yet remove
just one letter, and it signifies a gap between buildings. What
is this six-letter word?
Last month’s answer: Valley.
MONTHLY
TIPIf
the estate-tax exemption drops from $5.12 million to $1 million
per person (which it will do by law on January 1, 2013, without
further “congressional action”), many families that have been
successful in accumulating wealth will have their flexibility in
estate planning and tax minimization shrink dramatically. Don’t
let procrastination close this “wide-open door” on you and
potentially cost your family millions of dollars of needless
taxes for generations to come. I can show you how to protect
your assets from optional estate taxation without giving up
control or access if needed later.
To
“add insult to injury” from a math standpoint, unlike
income-tax deductions that come “off the top”, a $1 million
estate-tax exemption results in a $345,800 tax savings "off
the bottom" of the estate’s value. It does NOT yield
$550,000 of tax savings computed "off the top" at the
peak tax rate of 55%, as most might expect. For most taxable
estates, the $1 million exemption saves estate tax at an
“effective rate” of less than 35%, whereas the “un-exempt”
estate pays taxes at a rate much closer to the widely-publicized
55% top rate.
Even
though the issues of estate planning and taxation may seem far
away and remote in your day-to-day life, these are a couple of
the many reasons to take
action now
to minimize these taxes your estate could pay later, as well as
keep control of your hard-earned assets for generations to come
– Jim
THE
MONTH IN BRIEF
March
brought gains and milestones. The NASDAQ ended the month above
3,000, which it hadn’t done in nearly 12 years. The Dow pulled
off its sixth straight monthly advance, and the S&P 500 and
Russell 2000 rose as well. Gas prices continued their march
upward, but consumer spending did not fall. The real estate
sector flashed some negative signals. Investors and economists
alike mulled the effect that potentially decelerating economies
in Europe and Asia might have on Wall Street. The U.S. economy,
on the other hand, seemed to show further improvement.1
DOMESTIC
ECONOMIC HEALTH
Gas
prices were putting the clamps on the consumer, right? Wrong. It
seemed consumer spending was rising, perhaps partly in response
to increased fuel costs. In fact, the Commerce Department said
personal spending rose 0.8% in February (the biggest gain in
seven months) even as incomes rose just 0.2%. As for that other
really important statistic affecting consumers, the nation’s
jobless rate had remained at 8.3% for February, although job
growth was impressive once again (227,000 positions added to
non-farm payrolls).2,3
Consumer
sentiment was the proverbial mixed bag. The Conference Board’s
survey slipped from February’s revised mark of 71.6 to 70.2.
The University of Michigan’s final March survey came in at
76.2, up from the 74.3 reading of late February.4
Consumer
prices moved in a pronounced direction – and that direction was
up. The federal government’s Consumer Price Index rose 0.4% in
February, the biggest monthly gain since April. Producer prices
matched that increase. Annualized CPI was running at 2.9%,
annualized core CPI at 2.2%. What role did gasoline costs play in
all this? A major one. A 6% February rise in retail gas prices
represented a significant portion of the advance in the overall
CPI. Pump prices have climbed close to 20% since December, and a
gallon of unleaded cost $3.93 at the end of the month, up 2o
cents from the end of February. Even with this price pressure on
consumers, the Census Bureau said retail sales were 1.1% better
in February. It also revised January’s gain up to 0.6%. Durable
goods orders also rose 2.2% in February.4,5,6,7
The
U.S. manufacturing and service sectors were holding up well. The
Institute for Supply Management’s March manufacturing PMI rose
a full percentage point to 53.4, and its non-manufacturing index
read 57.3 in February, an 0.5% gain.8,9
The
Federal Reserve conducted its annual stress test of 19 big banks
in March, and 15 lenders held up under the “doomsday”
scenario (Dow losing half of its value, home prices at 1996
levels, a 13% jobless rate). American Express, Bank of America,
Bank of New York Mellon, BB&T, CapitalOne, Fifth Third,
Goldman Sachs, JP Morgan Chase, Keycorp, Morgan Stanley, PNC,
Regions, State Street, U.S. Bancorp and Wells Fargo each got a
thumbs-up. The Fed felt that Citigroup, SunTrust, Ally and
MetLife would lose enough assets under the scenario to pose
systemic risk.10
GLOBAL
ECONOMIC HEALTH
To
what degree would the Eurozone economy slow down? Would Asian
economies turn around their manufacturing bases? Looking to
Europe, the signs were bleak. The Eurozone jobless rate ticked up
to a post-euro high of 10.8% in March. In Spain, the unemployment
rate was 23.6%; in France, it was 10.0%; in Italy, it was 9.3%;
in Germany, it was just 5.7%. The key Markit purchasing managers
index was below 50 for the eighth consecutive month in March,
with analysts growing increasingly certain that the EU had slid
into a recession.11
As
for the key economies of the Asia-Pacific region, factory output
was looking better. For March, official PMIs were in reasonably
good shape in China (53.1, best since last April), India (54.7),
and South Korea (52.0, a one-year high). India’s inflation rate
accelerated in March for the first time since October.12
WORLD
MARKETS
Many
major stock indices pulled back last month. That was not the case
for the Nikkei 225, off to a roaring start in 2012 (+19.26% for
Q1). The Japanese benchmark rose 3.71% last month. Germany’s
DAX was up 1.30% in March and Australia’s All Ordinaries rose
0.73%. Several major indices retreated: the CAC 40 lost 0.83%,
the FTSE 100 1.76%, the TSX Composite 2.41%, the Sensex 3.91%,
the Hang Seng 5.57% and the Shanghai Composite 6.82%. Despite
these losses, all of the above indices posted gains for the
quarter. The MSCI World Index rose 1.02% in March and 10.94% for
Q1 in USD terms. By the same measuring stick, the MSCI Emerging
Markets Index fell 3.52% in March but rose 13.65% for the
quarter.13,14
COMMODITIES
MARKETS
The
hottest marquee commodity of March was (guess what) retail
gasoline at +5.20%. Cotton went +3.85% last month. Most other key
commodities lost their
footing – most notably, natural gas. Those futures slid 18.73%
in March, a descent helped by unseasonably warm weather. Oil
futures lost 3.78% last month, settling at $103.02
per barrel on the NYMEX; for the quarter, prices rose 4.24%. Gold
slipped 2.30% on the COMEX on the month and rose 6.71% on the
quarter to wrap March at $1,671.90 on the COMEX. Copper (-1.40%)
and silver (-6.23%) retreated after two strong monthly advances.
RBOB gasoline futures rose 1.56% in March and the
U.S. Dollar Index pulled off its first monthly gain for 2012
(+0.44%).
Elsewhere, coffee futures sank 8.98%, corn lost 2.13% and wheat
lost 1.09%
for the month.6
REAL
ESTATE
March
didn’t bring much improvement. Interest rates on conventional
mortgages did go back under 4% after topping that mark at
mid-month. Looking at Freddie Mac’s March 1 and March 29
Primary Mortgage Market Surveys, we see that mortgage interest
rates did increase last month: 30-year FRMs went from 3.90% to
3.99%; 15-year FRMs went from 3.17% to 3.23%; 5/1-year ARMs rose
from 2.83% to 2.90%; 1-year ARMs went from 2.72% to 2.78%.15
Existing
home sales fell 0.9%
for the month, while new home sales pulled back 1.6%.
Year-over-year, the pace of residential resales had increased
8.8% while new home buying rose 11.4%. The Census Bureau
announced that the median new home sale price had risen 6.2% in a
year to $233,700. The National Association of Realtors noted the
first year-over-year increase in existing home prices since
November 2010. However, the January edition of the
S&P/Case-Shiller Home Price Index revealed that existing home
prices had essentially reset to early 2003 levels. The index
posted its fifth straight monthly retreat and was down 3.8% from
12 months before. The NAR also reported a 0.5% decline in pending
home sales for February.16,17,18
LOOKING
BACK…LOOKING FORWARD
Fear
seemed to take a holiday: the CBOE VIX was at 15.50 on March 30
after diving 15.90% for the month. The Dow ended March at
13,212.04, the S&P at 1,408.47, the NASDAQ at 3,091.57 and
the Russell 2000 at 830.30.1
%
CHANGE
|
Y-T-D
|
1-MO
CHG
|
1-YR
CHG
|
10-YR
AVG
|
DJIA
|
+8.14
|
+2.01
|
+6.97
|
+2.70
|
NASDAQ
|
+18.67
|
+4.20
|
+11.34
|
+6.75
|
S&P
500
|
+12.00
|
+3.13
|
+6.04
|
+2.28
|
REAL
YIELD
|
3/30
RATE
|
1
YR AGO
|
5
YRS AGO
|
10
YRS AGO
|
10
YR TIPS
|
-0.09%
|
1.00%
|
2.21%
|
3.48%
|
Sources:
money.msn.com, bigcharts.com, treasury.gov - 3/30/121,19,20,21,22
Indices
are unmanaged, do not incur fees or expenses, and cannot be
invested into
directly.
These
returns do not include dividends.
It
would be mind-blowing if the market put together consecutive
quarters like this, and even the most bullish of analysts don’t
expect a repeat. Then again, Wall Street has surprised us many
times. Some analysts think the current bull market may be due to
run out of steam given the apparent economic sluggishness in
Europe and the tendency of investors to “sell in May, go away”.
Others think that since the S&P 500 fell 19.4% in October
2011 from an April 2011 peak (actually more than 20%, if you
factor in intraday numbers rather than just the market close), we
are actually more or less in a new bull market that began last
fall. So would that be a baby bull within a secular bear, or
something more lasting? Whether you think the glass is half full
or half empty on Wall Street, the fact remains that stocks
surpassed expectations in the first quarter of the year – and
April may bring further gains.23
UPCOMING
ECONOMIC RELEASES
Here is the slate of releases for the rest of April: the March
ISM service sector index (4/4), the March unemployment report
(4/6), February wholesale inventories (4/10), a new Federal
Reserve Beige Book (4/11), the March PPI (4/12), the March CPI
and the initial University of Michigan consumer sentiment survey
for April (4/13), March retail sales and February business
inventories (4/16), March industrial output, housing starts and
building permits (4/17), the March Conference Board Leading
Economic Indicators index and March existing home sales (4/19),
March new home sales, the February Case-Shiller home price index
and the Conference Board’s April consumer confidence poll
(4/24), March durable goods orders and an FOMC policy
announcement (4/25), March pending home sales (4/26), the federal
government’s first estimate of Q1 GDP and the final April
University of Michigan consumer sentiment survey (4/27), and
finally the March consumer spending numbers (4/30).
*Registered Representative and Financial Advisor of Park Avenue Securities LLC PAS.
Securities products/services and advisory services offered through PAS a registered Broker-dealer and investment advisor.
Field Representative, The Guardian Life Insurance Company of America (Guardian) New York, NY.
PAS is an indirect wholly owned subsidiary of Guardian.
Wealth Design Group is not an affiliate or subsidiary of PAS or Guardian.
PAS is a member FINRA, SIPC.
This
material was prepared by MarketingLibrary.Net Inc., and does not
necessarily represent the views of the presenting party, nor
their affiliates. Marketing
Library.Net Inc. is not affiliated with any broker or brokerage
firm that may be providing this information to you. This
information should not be construed as investment, tax or legal
advice and may not be relied on for the purpose of avoiding any
Federal tax penalty. This is not a solicitation or recommendation
to purchase or sell any investment or insurance product or
service, and should not be relied upon as such. The Dow Jones
Industrial Average is a price-weighted index of 30 actively
traded blue-chip stocks. The NASDAQ Composite Index is an
unmanaged, market-weighted index of all over-the-counter common
stocks traded on the National Association of Securities Dealers
Automated Quotation System. The Standard & Poor's 500 (S&P
500) is an unmanaged group of securities considered to be
representative of the stock market in general. It is not possible
to invest directly in an index. NYSE Group, Inc. (NYSE:NYX)
operates two securities exchanges: the New York Stock Exchange
(the “NYSE”) and NYSE Arca (formerly known as the Archipelago
Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a
leading provider of securities listing, trading and market data
products and services. The New York Mercantile Exchange, Inc.
(NYMEX) is the world's largest physical commodity futures
exchange and the preeminent trading forum for energy and precious
metals, with trading conducted through two divisions – the
NYMEX Division, home to the energy, platinum, and palladium
markets, and the COMEX Division, on which all other metals trade.
Nikkei 225 (Ticker: ^N225) is a stock market index for the Tokyo
Stock Exchange (TSE). The Nikkei average is the most watched
index of Asian stocks. The DAX 30 is a Blue Chip stock market
index consisting of the 30 major German companies trading on the
Frankfurt Stock Exchange. The Hang Seng Index is a
freefloat-adjusted market capitalization-weighted stock market
index that is the main indicator of the overall market
performance in Hong Kong. The SSE Composite Index is an index of
all stocks (A shares and B shares) that are traded at the
Shanghai Stock Exchange. The CAC-40 Index is a narrow-based,
modified capitalization-weighted index of 40 companies listed on
the Paris Bourse. The FTSE 100 Index is a share index of the 100
most highly capitalized companies listed on the London Stock
Exchange. BSE Sensex or Bombay Stock Exchange Sensitivity Index
is a value-weighted index composed of 30 stocks that started
January 1, 1986. The
S&P/TSX Composite Index is an index of the stock (equity)
prices of the largest companies on the Toronto Stock Exchange
(TSX) as measured by market capitalization. The
S&P/ASX All Ordinaries Index represents the 500 largest
companies in the Australian equities market.
The
MSCI World Index is a free-float weighted equity index that
includes developed world markets, and does not include emerging
markets. The MSCI Emerging Markets Index is a float-adjusted
market capitalization index consisting of indices in more than 25
emerging economies. The US Dollar Index measures the performance
of the U.S. dollar against a basket of six currencies. Additional
risks are associated with international investing, such as
currency fluctuations, political and economic instability and
differences in accounting standards. All information is believed
to be from reliable sources; however we make no representation as
to its completeness or accuracy. All economic and performance
data is historical and not indicative of future results. Market
indices discussed are unmanaged. Investors cannot invest in
unmanaged indices. The publisher is not engaged in rendering
legal, accounting or other professional services. If assistance
is needed, the reader is advised to engage the services of a
competent professional.
Citations.
1
-
money.msn.com/market-news/post.aspx?post=ba5dfb2a-4c91-4d39-aa5e-f3bfb0d9bb5e&_nwpt=1
[2/29/12]
2
- www.cnbc.com/id/46902933/ [3/30/12]
3
-
articles.latimes.com/2012/mar/09/business/la-fi-us-jobs-20120310
[3/9/12]
4
- briefing.com/investor/calendars/economic/2012/03/26-30
[3/30/12]
5
-
www.usatoday.com/money/economy/story/2012-03-16/February-inflation-consumer-price-index/53561880/1
[3/16/12]
6
-
money.msn.com/market-news/post.aspx?post=087cac64-3d67-4737-b94a-31c3ff49ba16
[3/30/12]
7
- www.census.gov/retail/marts/www/marts_current.pdf [3/13/12]
8
- www.ism.ws/ISMReport/MfgROB.cfm [4/2/12]
9
- www.ism.ws/ISMReport/NonMfgROB.cfm [3/5/12]
10
-
www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2012/03/16/investopedia77515.DTL
[3/16/12]
11
- www.bbc.co.uk/news/business-17582051
[4/2/12]
12
-
www.reuters.com/article/2012/04/02/us-global-economy-asia-idUSBRE83104P20120402
[4/2/12]
13
- news.morningstar.com/index/indexReturn.html [3/30/12]
14
-
mscibarra.com/products/indices/international_equity_indices/gimi/stdindex/performance.html
[3/30/12]
15
- www.freddiemac.com/pmms/ [4/2/12]
16
-
www.bizjournals.com/washington/news/2012/03/23/new-home-sales-slow.html
[3/23/12]
17
-
articles.marketwatch.com/2012-03-27/economy/31242975_1_david-m-blitzer-index-committee-index-records
[3/27/12]
18
-
www.latimes.com/business/money/la-fi-mo-pending-home-sales-20120326,0,3632145.story
[3/26/12]
19
-
montoyaregistry.com/Financial-Market.aspx?financial-market=an-introduction-to-the-stock-market&category=29
[4/2/12]
20
-
bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=3%2F30%2F11&x=0&y=0
[3/30/12]
20
-
bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=3%2F30%2F11&x=0&y=0
[3/30/12]
20
-
bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=3%2F30%2F11&x=0&y=0
[3/30/12]
20
-
bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=3%2F28%2F02&x=0&y=0
[3/30/12]
20
-
bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=3%2F28%2F02&x=0&y=0
[3/30/12]
20
-
bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=3%2F28%2F02&x=0&y=0
[3/30/12]
21
-
treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield
[3/30/12]
21
-
treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll
[3/30/12]
22
-
treasurydirect.gov/instit/annceresult/press/preanre/2002/ofm10902.pdf
[1/9/02]
23
-
articles.businessinsider.com/2012-03-07/markets/31131044_1_bull-market-new-bull-first-year-bull
[3/7/12]
