Dear Valued Clients, Three Big Things & KCG Contingency Plans
Market Update
(all values as of 02.29.2024)

Stock Indices:

Dow Jones 38,996
S&P 500 5,096
Nasdaq 16,091

Bond Sector Yields:

2 Yr Treasury 4.64%
10 Yr Treasury 4.25%
10 Yr Municipal 2.53%
High Yield 7.63%

YTD Market Returns:

Dow Jones 3.47%
S&P 500 6.84%
Nasdaq 7.20%
MSCI-Europe 1.23%
MSCI-Pacific 3.98%
MSCI-Emg Mkt -0.27%
US Agg Bond -1.68%
US Corp Bond -1.67%
US Gov’t Bond -1.59%

Commodity Prices:

Gold 2,051
Silver 22.87
Oil (WTI) 78.25


Dollar / Euro 1.08
Dollar / Pound 1.26
Yen / Dollar 150.63
Canadian /Dollar 0.73

Dear Valued Clients,
As you are probably aware, not much has changed about our Three Big Things since our last quarterly newsletter.

Profit – Earnings growth has slowed, but not reversed;  Tariff talks continue with the G-20 meeting right around the corner;  US Energy exports continue to exceed imports in 2018, though gas prices, set globally, are going higher as a result of Iran’s shenanigans;  Manufacturing output and employment continue to increase steadily.
Liquidity – Credit markets continue to be more conservative;  Inverted yield curves persist; Interest rates increased in the second quarter, but Fed Chair, Jay Powell put a stop to that by signaling a cut in July.
Sentiment: Participate & Protect ! – A slow down is not a crisis and a recession can be a natural trough in the normal market cycle, generally followed by economic expansion.  This is not the time to “seek shelter” or to “go all in”.  Rather, revert to your optimal, long-term target allocation as defined in your Investment Policy Statement, which we developed with you, commensurate to your own circumstances and risk tolerance.

With so little change, I would like to use this space to share some of the business concerns and solutions that KCG has used to address them on your behalf.

KCG Contingency and Succession Plan
Many of you, my Clients, have experienced the transition from one advisor to another, and realize the importance of having a plan, as well as the right person to carry it out.  In addition to my concern for you,  I have talked with some of you about the services available to your children and beneficiaries and will be sharing more over the next few months.  A very important question for you to ask is “What if something happens to Kimberly?” I am relatively young, with no plan to retire (I love my work!), but things don’t always go as planned and I am writing today in hopes of dispelling any concerns you may have.

As your fiduciary, KCG maintains up-to-date plans and procedures to keep your data safe, secure and available in the event of a hurricane, other destructive natural disaster, or even my own incapacity or death.  Copies of these plans are kept in our offices – hard copy, electronically and in the cloud.  A separate copy is with our corporate attorney.

While I am seeking an ideal candidate for my succession plan, I have named my attorney, who is also a Certified Financial Planner (CFP) as your legal contact for KCG, should the need arise.  Benjamin P. O’Neal Esq., MBA, CFP, CPCU, of  Strategic Solutions and Counsel, LLC has agreed to help answer your questions, and access the financial services you and your family would need in the unlikely event of my absence.  My Executor has been instructed to work closely with Benjamin until  every Client need is addressed.

While these topics can be somewhat unpleasant to discuss, it is important that you know they are being addressed and that your interests remain our first priority.  If I can answer any additional questions or concerns, please don’t hesitate to call.

Sincere Regards,

Market Commentary & Investment Perspective

Macro Overview
Stocks and bonds rose in June as lower rates drove equities higher and international diplomatic tensions elevated bond prices. Indications by the Fed that there may be a rate cut later in the year helped sustain stock prices near record levels.
The G20 met in Osaka, Japan, at the end of June where trade tensions between the U.S. and China were on the forefront of global concerns. The U.S. and China reached a temporary truce over the trade war as the leaders from both countries agreed to re-start negotiations that had fallen apart earlier on. The de-escalation of trade tensions between the two countries led to heightened optimism surrounding global economic growth. Central banks from around the world will weigh as to how much a trade truce or settlement might impact other economies globally.
The 10-year Treasury bond yield fell to 2.00% at the end of June, with several bond analysts expecting it to fall below the psychological 2.00% level. Yields dropped lower in Europe with Austria issuing 100-year government bonds with a yield of 1.17%. Highly rated, positive yielding government bonds are in enormous demand globally as investors seek income from viable and reliable sources.
Mortgage rates dropped again in June to 3.73% on a 30-year fixed conforming loan, helping to sustain the housing market. The low rate environment has also fostered an inexpensive source of capital for U.S. and international companies, allowing for expansion and hiring as demand reappears.
Commodity prices including oil, gold, and iron ore all elevated in the first half of 2019, with most of the gains occurring in June. Rather than a traditional sign of inflation, falling inventories of oil and iron ore have pushed prices higher as demand has remained constant.

The U.S. Bureau of Economic Analysis found that the current economic expansion is the longest on record since 1945. The economic expansion that began in June 2009, following the depths of the financial crisis, has now lasted 121 months as of the end of June. The second longest economic expansion lasted 120 months, running from March 1992 until March 2001 when the dot-com bubble burst. There have been 12 economic expansion periods since the end of World War II in 1945 lasting 12 months or longer. (Sources: BEA, Freddie Mac, U.S.Treasury,, Bloomberg, Federal Reserve)

Market Commentary & Investment Perspective

Stocks Rebound In June – Equity Overview
Stocks and bonds registered the first half of the year with formidable gains propelled by an expected rate cut by the Fed later in the year. It was the best first half of the year since 1997 for equities, with the Dow Jones Industrial Index, S&P 500 Index, and the Nasdaq nearing new highs.
Equities were also driven higher in June by a relief in trade tensions between the U.S. and China as the expectation that the Fed will eventually cut rates sometime this year. Historically, a low-rate environment is favorable for equities in the form of inexpensive capital for expansion and loans.
The rebound in stock prices in the first half of 2019 from the turmoil that hindered markets in December 2018 has been one of the strongest rebounds in decades.

The Federal Reserve gave large U.S. banks the approval to repurchase their own shares and lift dividends, part of the Comprehensive Capital Analysis and Review process set in place by the Fed. Large money center banks as well as smaller regional banks were restricted from buying back their own shares as well as increasing dividends in order to fortify bank balance sheets following the financial crisis. (Sources: Federal Reserve, Dow Jones, S&P, Bloomberg, Reuters)

Yields Drop Further In June – Fixed Income Update

The 10-year Treasury bond yield dropped below 2% for the first time since November 2016. The 10-year Treasury continues to trade at a lower yield than the 3-month Treasury bill, signaling an inversion, which is when shorter term maturity bonds yield more than longer term bonds. The Federal Reserve communicated its confidence with the labor market and rising wages for lower paid workers as positive for the U.S. economy, but noted that inflation is still mundane and below expectations. Its concern is slowing global growth with anemic economic expansion in other parts of the world. Such concerns may lead to dismal expansion with the need to eventually reduce rates to help prop up economic growth. (Sources: U.S. Treasury, Federal Reserve)

Here’s What The U.S. Buys The Most Of From China – Trade Overview
In the past twenty-plus years, China has evolved from a heavy equipment machinery exporter to a prominent leader in technology product exports. Large international conglomerates have established an enormous manufacturing presence throughout China, utilizing its cheap labor and quick turnaround times. China’s manufacturing plants are among the most modern in the world, producing large capacities almost entirely for export.  As the world’s appetite for electronic devices has grown, so has China’s ability to manufacture and export these devices. As a product exporter, China is able to manufacture and export finished products worldwide. In addition, China is also an exporter of components, which may be used in the manufacture and assembly of products in other countries, such as the United States. By exporting components in addition to finished products, China is able to hedge against tariff issues and labor costs should they become a factor.
Sources: WTO, IMF, U.S. Dept. of Commerce2




Market Commentary & Investment Perspective


Retirement Planning
Changes Proposed For 401k Plans & IRAs  
This past month the House of Representatives passed the SECURE Act, which will
introduce various changes to retirement plans including IRAs and 401k plans. The
act was approved by the House in May and is expected to be approved by the Senate
and become law relatively soon.
One of the most significant revisions to IRAs introduced by the legislation is
repealing the prohibition on contributions to a traditional IRA by an individual who
has attained age 70 1/2. The legislation doesn’t propose a revised maximum
contribution age, yet states that more Americans continue working beyond
traditional retirement age. So essentially, there will no longer be an age limit on IRA
A modification to 401k plans that will affect eligibility requirements for part-time
workers is a major change. Longer term part-time employees will no longer be
excluded from 401k plans, allowing part-time workers the ability to save and
accumulate savings towards retirement.
Annuity payments will become an option for retirees when leaving their job and
taking their retirement savings. In addition to opting for a rollover of retirement
assets to an IRA or other qualified plan, retirees will be able to choose annuity
payments as well.
The Required Minimum Distribution (RMD) age for IRAs will increase from age 70
1⁄2 to 72. This is beneficial for those retirees that don’t need the income from their
IRAs or rollover IRAs until later, thus minimizing the tax liability on distributions
that would have been required at age 70 1/2.
Safe Harbor provisions will be simplified for 401k employer plans in order to
facilitate plan administration as well as allowing greater flexibility to employers and
employees. Such changes will eventually increase participation in employer
sponsored retirement plans, an objective of the SECURE Act.
Source: House Committee on Ways & Means;