September 2017
Market Update
(all values as of 10.30.2020)

Stock Indices:

Dow Jones 26,501
S&P 500 3,269
Nasdaq 10,911

Bond Sector Yields:

2 Yr Treasury 0.14%
10 Yr Treasury 0.88%
10 Yr Municipal 0.94%
High Yield 5.72%

YTD Market Returns:

Dow Jones -7.14%
S&P 500 1.21%
Nasdaq 21.61%
MSCI-EAFE -12.61%
MSCI-Europe -15.66%
MSCI-Pacific -7.42%
MSCI-Emg Mkt -1.00%
US Agg Bond 6.32%
US Corp Bond 6.45%
US Gov’t Bond 7.40%

Commodity Prices:

Gold 1,878
Silver 23.72
Oil (WTI) 35.71


Dollar / Euro 1.17
Dollar / Pound 1.29
Yen / Dollar 104.44
Dollar / Canadian 0.75

Macro Overview

Hurricane Harvey prompted an agreement between the President and congressional leaders to increase the politically charged debt ceiling in order to help fund repair efforts in Texas. The agreement will avert a government shutdown until mid-December, providing essential funds for ongoing government operations.

On track to be one of the most costly natural disasters in U.S. history, Hurricane Harvey is expected to be a catalyst for economic expansion as the clean up and rebuilding process begins. Such an effort, as occurred in Louisiana following Katrina, will involve concrete, lumber, plumbing, and electrical components from all over the United States.

The hurricane affected and closed an estimated quarter of all U.S. refining capacity. Harvey’s impact on the price of refined crude oil products, such as gasoline and jet fuel, validates how crucial the Gulf Coast and Texas are to the global energy markets. Ever since Congress lifted the oil export ban in December 2015, almost all exports of U.S. oil are shipped from ports in Texas. Department of Energy data shows that U.S. refiners were using 96.6% of their available capacity before Hurricane Harvey hit, the highest rate since 2005.

Unemployment has fluctuated between 4.3% and 4.4% over the past three months, with the most recent data lifting the unemployment rate to 4.4%. Even with such a low unemployment rate, the growing concern among economists and analysts is that wage growth is essentially stagnant, with less than 0.1% growth in August as reported by the Labor Department. Year-over-year growth for hourly earnings has been stuck at 2.5%, which means that American workers are barely keeping ahead of the current annualized inflation rate of 2.0%.

There are several suggestions as to why wage growth has remained stagnate. Ever since the crisis of 2008/2009, companies have embraced profound cost reductions, while also grappling with demographical constraints. Downward pressure on wages has also been a result of older (baby boom) workers retiring and being replaced by younger, lower paid workers.

For the prior year, the rising costs of health care and housing accounted for roughly 40% of growth in consumer spending. The two prominent age groups affected are seniors subject to rising healthcare costs, and younger consumers that struggle to purchase a home.

 It is expected that the Federal Reserve will finally decide to start paring its $4.4 trillion balance sheet of mortgage and government bonds this fall, following its two-day September policy meeting. No one truly knows how that will unravel, since it has never actually occurred to this magnitude.

Equity markets continued their resilient climb in August, with the Dow Jones Industrial Index reaching 22,000 for the first time. Geopolitical risks with North Korea helped drive government bond yields lower, as risk adverse tactics evolved. (Sources: Department of Labor, Department of Energy, Dow Jones, NOAA)



The Dow Jones Average Index Reached 22,000 For The First Time

Yields Hold Steady – Fixed Income Update

Heightened geopolitical tensions drove the demand for government bonds as investors allocated to safe havens driving bond prices higher and rates lower.

Several large U.S. corporations raised capital in the debt markets in August, taking advantage of the low rate environment. Apple and Tesla both borrowed through the debt markets at ultra low interest rates.

The national municipal bond market is bracing for the effects of Hurricane Harvey and Hurricane Irma, as municipalities assess the fragility of their tax base during the aftermath of the storms.

Bonds across most fixed income segments advanced modestly following tepid remarks by the Fed regarding economic data and inflation numbers. (Sources: Fed, Reuters, Bloomberg)

Equities Remain Immune To Geopolitical Events – Global Equity Markets

Equity markets were resilient in August to geopolitical events as major indices rose to higher levels. The Dow Jones Industrial Index reached 22,000 for the first time.

Emerging markets continued to experience the benefit of a weakening U.S. dollar, with a rise in August. For emerging markets, a weaker dollar makes it easier for those holding debt denominated in U.S. dollars to repay them. This is a significant factor since emerging markets carry a large amount of debt. A weaker dollar also helps exporters of commodities, as a weak dollar tends to boost commodity prices.

Companies are already struggling with tight margins so any increase in expenses would further reduce margins unless higher costs are passed onto consumers in the form of higher prices. (Sources: Bloomberg, Reuters, Dow Jones)

More Homes For Sale, Less Homes Sold – Housing Market Update

Dynamics within the housing market are a result of wages, consumer sentiment, interest rates, and the economic environment. Over the past year, the number of homes for sale and the number of homes sold has diverged. The U.S. Department of Housing and Urban Development carefully tracks all home listings and sales on a monthly basis. The most recent data available reveals that for the past year, as of July 2017, there was an increase in the number of homes for sale and a decrease in the number of homes sold. At the end of July, there were 276,000 homes for sale while there were 571,000 homes sold. July 2016 saw 627,000 homes sold with only 237,000 homes for sale nationwide. (Sources: U.S. Census Bureau, HUD)


Hurricane Harvey Is Estimated To Cost Over $75 Billion In Losses

Costliest Hurricanes – Historical Note

As flood waters recede in Texas, Hurricane Harvey is on track to be one of the costliest natural disasters in U.S. history. Not since Hurricane Katrina, which ravaged Louisiana in 2005, and Gustav & Ike in 2008, have insurance companies been levied with billions of dollars in settlement claims. Fortunately, nearly nine years absent of a significant natural disaster has allowed insurance carriers nationwide to fortify reserves and issue new policies.

Moody’s estimates that property losses from Hurricane Harvey will total between $45 billion to $65 billion, while economic losses will add $6 billion to $10 billion, totaling $75 billion. Other insurance industry estimates run as high as $100 billion, including uninsured businesses and individuals.

Historically, rebuilding efforts following natural disasters such as hurricanes, has led to pockets of economic growth. The enormous cost of Katrina in 2005 led to hundreds of millions of dollars for rebuilding homes, roads, buildings, and re-establishing businesses. (Sources: NOAA, Dept of Commerce, Moody’s, NASA)

Why Oil Went Down & Gasoline Went Up After Harvey – Energy Overview

Houston, the country’s fourth largest city, is a hub for the nation’s oil refineries. Harvey has resulted in more than 20 percent of refining capacity along the Texas Gulf Coast to cease, and it may take a while to ramp production back up to pre-storm levels. As a central hub of crude oil refineries domestically and internationally, Texas also acts as a critical juncture for pipelines and refineries.

In the aftermath of the hurricane, oil prices fell following a glut of unrefined oil that started to accumulate as refineries shutdown. A shortage of gasoline supplies then developed as refineries failed to produce fresh supplies. It may be weeks before most of the shut down refineries are back online and producing at pre-storm capacity. Gasoline and jet fuel supplies to the east coast were especially susceptible to the closed refineries.

Data from the EIA shows that the average price for all grades of gasoline rose from $2.46 to $2.74 nationwide, while the price of West Texas Intermediate (WTI) crude oil fell from $47.39 to $46.40 per barrel. (Source: EIA)

The Debt Ceiling Has Been Raised 79 times Since Its Creation In 1917

How The Debt Ceiling Came About – Historical Note

Formally known as the statutory debt limit, the United States debt ceiling or debt limit is a legislative restriction on the amount of national debt that can be issued by the Treasury. The debt limit has been raised 79 times since its creation in 1917, with 17 of these increases occurring over the past 20 years.

The United States has maintained legislative restriction on debt since 1917. To control the amount of total debt outstanding, Congress has placed restrictions on Federal debt issuance since the passing of the Second Liberty Bond Act of 1917, which eventually evolved into a general debt limit in 1939. The Second Liberty Bond Act of 1917 helped finance the United States’ entry into World War I, which allowed the Treasury to issue long-term Liberty Bonds.

Periodically, a political dispute arises over legislation to raise the debt ceiling. Until the debt ceiling is raised, the Treasury undertakes what is termed as “extraordinary measures”, which essentially buys more time for the ceiling to be raised.

The United States has never reached the point of default, where the Treasury is unable to pay its obligations. In 2011 the United States reached a point of near default, which in turn triggered the first downgrade of U.S. debt by credit rating agencies. Congress raised the debt limit with the Budget Control Act of 2011, which led to the fiscal cliff and set a new debt ceiling that was reached on December 31, 2012. (Source: Congressional Research Service)

Euro Getting Stronger, Dollar Getting Weaker – Currency Update

The euro jumped above 1.20 for the first time in 2 1/2 years, as weaker than expected U.S. economic data boosted European growth forecasts. The common currency has been rising for several months on the expectations that the European Central Bank (ECB) will begin tapering its bond buying program. So far this year the euro has advanced 14% against the U.S. dollar, its strongest performance since its inception in 1999. An elevating euro is a concern for European exporters due to exports heading for the U.S. become more expensive for American consumers.

A weaker U.S. dollar has led to recalculations by analysts expecting to see an increase in U.S. exports and margins as U.S. exports become more competitive in the international marketplace. The U.S. currency has been in a steady decline since the beginning of the year after reaching a 15-year high. The dollar is down approximately 8% since the beginning of the year versus a basket of major currencies. The decline has been especially pronounced against the Mexican peso, where ongoing NAFTA negations have been a focal point. (Sources: Reuters, Bloomberg)


The "Forgotten" Policy

The Facts about the “Forgotten” Policy (by Bob Veres)

Everybody knows about life insurance, and disability insurance covers millions through corporate plans.  Health insurance is always in the news thanks to the controversy around the Affordable Care Act.

But what about the forgotten stepchild: Long-Term Care (LTC) insurance?  How much do you know about it?  How do you know whether you need it or not?

Recently, the Morningstar mutual fund service published an eye-opening blog that provides 75 statistics about LTC coverage, some of which will help people evaluate this often-forgotten piece of their personal risk profile.

For instance: 52.3% of people turning 65 will need long-term care during their lifetimes—meaning either skilled care providers in their homes or, more often, a stay for months or years in a nursing facility.  Already, 10% of Americans over age 65, and 38% over age 85, currently have Alzheimer’s dementia, which, in its advanced stages, requires round-the-clock care.

But before you buy that policy that will pay for 5 years of assisted living or space in a nursing home, you should know that the average long-term care need for individuals who today are age 65 is 2 years, and only 22% of men will ever need more than one year in a nursing home.  The figure rises to 36% for women.  There is only a 2% (men) to 7% (women) probability of needing more than five years in a nursing home.

If you self-insure, what kind of costs are you looking at?  The median yearly cost for adult day care in the home is $17,680, but that rises to $43,539 a year if you move into an assisted living facility, and you can more than double that cost if you prefer a private room ($92,378).  Some places, like Manhattan, cost more: $164,250 for a private room.

Why can’t you just move in with your relatives if you begin to experience symptoms of Alzheimer’s or are too frail to get around on your own?  The blog cites some statistics: unpaid caregivers (usually family members, usually a daughter) suffer significant financial hardships; their 37 billion hours of unpaid labor cost them $3 trillion in potential earnings, in the most recent year for statistics (2013).  70% of these unpaid caregivers suffered work-related difficulties due to their caregiving duties.

Doesn’t the government pay for many peoples’ LTC expenses?  Yes; in fact, 62.3%: of long-term care services and supports are provided through Medicaid—and these payments make up roughly 20% of Medicaid’s total budget.  But there’s a catch: a Medicaid recipient can only retain up to $120,900 (total assets) to be eligible for long-term care benefits provided by Medicaid.

Suppose all of this has convinced you to buy LTC insurance.  You should know that there are now fewer than 15 insurers offering standalone long-term care policies, down from 125 back at the turn of the century.  Altogether, 7.25 million individuals have long-term care insurance coverage, with average annual premiums of $2,772.  Total benefits available at age 82, for a person who bought a typical policy at age 60: $547,000.


Facts About Powers of Attorney

Facts About Powers of Attorney (by Bob Veres)

Everybody should have a power of attorney.  But not everybody knows exactly what it is or why it’s so important.

A power of attorney is a legal document that empowers a person you trust to handle your financial affairs if and when you become incapacitated.  While you’re up and around, the document just sits in a file.  But if you’re in an accident, where suddenly you can’t act on your own behalf, the document allows somebody else to make decisions on your behalf—usually temporarily, until you can start handling your own affairs again.  At that point, the document goes back in the file, and you’re back in charge.

There are several flavors.  What is called a Limited Power of Attorney is used when you want someone to act on your behalf only in a certain circumstance.  A General Power of Attorney is more powerful because you’re giving someone else the power to act on your behalf whenever you’re unable to manage your own affairs on your own.  But either way, when the power of attorney is triggered, it can be used for all legal and financial matters.

Who would draw up this important document?  You should consult an attorney; many of them will have a template document that they can modify to your specific circumstances.  The key is finding a person you really trust to handle things on your behalf—and then hope you never need them to.


How to Respond to a Data Breach

How to Respond to a Data Breach (by Bob Veres)

You may have read that hackers broke into the Equifax database and stole personal information tied to 143 million people.  The hackers accessed people’s names, Social Security numbers, birth dates, addresses and, in some instances, driver’s license numbers. They also stole credit card numbers for about 209,000 people and dispute documents with personal identifying information for about 182,000 people.  There is no reason to think that data is not for sale to criminals who can use it to open new lines of credit or file phony tax refund requests in peoples’ names.

The company compounded its public relations nightmare by sending people to a website to find out if they were affected, and then including language so that anyone signing in to get this information had to waive any right to join a class action suit against the company should their identities be stolen and financial harm come to them.

The negative publicity forced Equifax to delete the waiver, but when you sign into the web page to find out if you were affected (the link is here:, the site requests the last six digits of each person’ social security number—and guessing first three isn’t as hard as you might think since different regions of the country use pre-assigned digits.  If you’re still worried about Equifax’s data security, then the company’s request for additional personal information is worrisome.

If you have credit, then there’s a high probability that identity thieves now have your Social Security number and address.  To contain the potential damage, the U.S. Federal Trade Commission recommends that you take several steps immediately.  First, under federal law you’re allowed to request a free copy of your credit report once a year from each of the three credit reporting agencies: Equifax, Experian, and TransUnion—at  You can do this every 122 days by rotating among the agencies.  Look for suspicious accounts or activity that you don’t recognize—such as someone trying to open a new credit card or apply for a loan in your name.  If you DO see something, visit http://www. to find out how to mitigate the damage.

Then monitor your online statements.  The credit report won’t tell you if there’s been money stolen from a bank account or suspicious activity on your credit card.  Unfortunately, you’ll have to turn this into a habit.  In most cases, theft happens over time, starting with small amounts stolen from across your accounts.

Finally, place a credit freeze and/or fraud alert on your account with all the major credit bureaus.  You can put a fraud alert, for free, by contacting one of the credit agencies, which is required to notify the other two.  This will warn creditors that you may be an identity theft victim, and they should verify that anyone seeking credit in your name is really you.  The fraud alert will last for 90 days and can be renewed.


How to Respond to a Data Breach

How to Respond to a Data Breach (by Bob Veres) – continued

If you’re really worried, consider putting a freeze on your credit.

A freeze blocks anyone from accessing your credit reports without your permission—including you.  This can usually be done online, and each bureau will provide a unique personal identification number that you can use to “thaw” your credit file in the event that you need to apply for new lines of credit sometime in the future.  Another advantage: each credit inquiry from a creditor has the potential to lower your credit score, so a freeze helps to protect your score from scammers who file inquiries.

Fees to freeze your account vary by state, but commonly range from $0 to $15 per bureau.  You can sometimes get this service for free if you supply a copy of a police report (which you can file and obtain online) or affidavit stating that you believe you are likely to be the victim of identity theft.

Many Americans have opted to sign up for a credit monitoring service, which won’t prevent fraud from happening, but WILL alert you when your personal information is being used or requested.  In most cases, there is a cost involved, but Equifax is offering a free year of credit monitoring through its TrustedID Premier business, whether or not you’ve been affected by the hack.  It includes identity theft insurance, and it will also scan the Internet for use of your Social Security number—assuming you trust Equifax with this information after the breach.

There’s one last way you can protect yourself.  ID thieves like to intercept offers of new credit sent via postal mail.  If you don’t want to receive prescreened offers of credit and insurance, you have two choices: You can opt out of receiving them for five years by calling toll-free 1-888-5-OPT-OUT (1-888-567-8688) or visiting

You can also opt out permanently online at To complete your request, you must return a signed Permanent Opt-Out Election form, which will be provided after you initiate your online request.