WMC- Happy New Year!

December 28, 2015 Follow Us On Facebook, LinkedIn and Twitter! | Kalispell MT | (406) 756-3787 |

CWMP's New Year's Resolution To Our Clients

No matter what specific resolutions you make for 2016, we're here to ensure you have the information and support you need to make sound financial decisions. Happy New Year from the CWMP team!

The Markets

It was a short week, but it wasn't quiet. Oil prices moved higher, according to The Wall Street Journal, after the U.S. Energy Information Administration reported crude-oil inventories fell unexpectedly last year. Analysts had predicted oil supplies would rise. One expert cited by The Wall Street Journal suggested the stockpile decline and subsequent oil price rally owed much to Gulf Coast refiners reducing inventories "to mitigate state ad valorem taxes on year-end crude stocks." If that's the case, the oil price increase may not be sustained. Regardless, improving oil prices gave U.S. stock markets a boost. In particular, the Standard & Poor's 500 Index (S&P 500) benefitted from improving performance in the energy sector: "Of 80 U.S. listed oil and gas producers, all but one - a bankrupt company - rose on the day, with nearly half of the companies up more than 10 percent. Energy shares were the biggest gainers Wednesday in the S&P 500, up 3.8 percent and helped the S&P 500 on the whole gain 1.2 percent in late-afternoon trading." Barron's reported energy stocks had gained 5 percent for the week, but were still off by about 22 percent for the year. The Organization of the Petroleum Exporting Countries (OPEC) released its World Oil Outlook last week. BBC reported OPEC anticipates oil prices will begin to rise in 2016, although its producers' share of the market is expected to shrink by 2020 as rival oil-producers proved to be more resilient in the face of low oil prices than had been expected. LOOKING BACK... Each week 'The Economist Explains' blog expounds on subjects ranging from current events to economics, from philosophical or scientific issues to everyday oddities. Let's take a quick look at a few of its headlines during 2015:  1. Why the Swiss unpegged the Swiss franc (January 18, 2015). Remember when the Swiss National Bank removed its currency peg last January? The Swiss franc realized double-digit gains in value and the Swiss stock market dropped. 2. Everything you want to know about falling oil prices (March 18, 2015). "The main reason for falling prices is increased supply from America thanks to its fracking boom, which has reduced its demand for oil imports. Other countries, notably Saudi Arabia, have been loth to curb supply lest they lose their share of the global oil market." 3. Why so many Dutch people work part time (May 11, 2015). More than one-half of the working population in Netherlands is employed part-time - a higher percentage than anywhere else in the world. "This is partly a relic of prevailing Christian attitudes which said that mothers should be home for tea time and partly down to the wide availability of well-paid "first tier" part-time jobs." 4. What Greece must do to receive a new bail-out (July 14, 2015). After challenging negotiations, Greece and its European creditors cut a deal, allowing the country to remain in the euro area. 5. China's botched stock market rescue (July 30, 2015). Chinese stocks lost nearly a third of their value last summer. China's authorities "resorted to heavy-handed measures to prop up swooning share prices, from pressuring banks to buy stocks to blocking big investors from selling theirs." 6. Why is the Nobel prize in chemistry given for things that are not chemistry (October 7, 2015)? Apparently, five of the last 10 Nobel chemistry prizes have been awarded for pursuits that might better be described as biology. A possible explanation is "the diversity of chemistry prizes reflects the fact that chemistry is found everywhere..." 7. How the Fed will raise interest rates (December 14, 2015). Just as the Fed employed unconventional monetary tools to stimulate the economy, it is using new policy tools to try to increase the Fed funds rate. We hope 2015 has been a memorable and rewarding year for you, and we look forward to working with you in the New Year. Weekly Focus - Think About It "It is not enough to have a good mind; the main thing is to use it well." --Rene Descartes, French philosopher, mathematician, and scientist

New Year's Resolutions

With 2016 just around the corner, it's time to start thinking about your News Year's resolutions. To help you come up with ideas, here are some not so successful resolutions and statistics. Top 5 New Year's Resolutions 1. Lose Weight 2. Get Organized 3. Spend Less, Save More 4. Enjoy Life to the Fullest 5. Stay Fit and Healthy How Long Do People Stick With Their Resolutions? Through the First Week: Past Two Weeks Past One Month Past Six Months 75% 71% 64% 46% No matter what your New Year's resolution is, we wish you the happiest of  New Year's and good fortune!

WMC - It's Not a Surprise!

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Weekly Market Commentary

 

December 14, 2015

The Markets

It's not like it's a surprise! Last week, investors didn't appear to be thrilled with the possibility the Federal Reserve might raise rates this week. They also weren't too impressed by another drop in oil prices. There was red ink everywhere as markets from Australia to Hong Kong, across the Eurozone, and throughout the Americas moved lower last week. Bloomberg reported there was a 74 percent probability of a Fed rate hike at the December Federal Open Market Committee meeting. The Wall Street Journal's survey of business and academic economists put the chance at 97 percent. More than 80 percent of those surveyed said the Fed would lose credibility if it doesn't act in December. It's important to remember the Fed doesn't actually set interest rates. It takes actions designed to influence financial behaviors. Even if the Fed does push to increase interest rates, it remains to be seen whether its efforts will bear fruit. The Financial Times wrote: "...As "lift-off" has drawn closer some analysts have begun to highlight just how experimental this interest rate rise will be. The Fed's bloated balance sheet - swelled by its quantitative easing program - prevents it from using its traditional interest rate tools, so it has unveiled and has been testing new ones. The main new levers are known as the "interest on overnight reserves" and the "overnight reverse repo program," and central bank officials are confident that they will be able to lift the Fed funds rate, which is the main target. But some analysts caution that it could be a choppy take-off." If the Fed acts and interest rates don't respond, there may be further volatility. The Financial Times reported markets almost certainly have priced in a rate hike at this point. We'll find out next week. NEXT YEAR, CHINA'S RENMINBI (A.K.A. YUAN) WILL JOIN THE U.S. DOLLAR, euro, yen, and pound. When it is added to the International Monetary Fund (IMF)'s Special Drawing Rights (SDR) basket - a supplementary foreign exchange reserve asset that is defined and maintained by the IMF. It will become the third weightiest currency in the basket. After the renminbi is added, the U.S. dollar will comprise 42 percent of the basket (unchanged from 2010). The euro will be 31 percent (down from 37 percent in 2010). The renminbi will be 11 percent. The Japanese yen will be 8 percent (down from 9 percent in 2010). The British pound will be 8 percent (down from 11 percent). Managing Director of the IMF Christine Lagarde said: "The Executive Board's decision to include the RMB in the SDR basket is an important milestone in the integration of the Chinese economy into the global financial system. It is also a recognition of the progress that the Chinese authorities have made in the past years in reforming China's monetary and financial systems. The continuation and deepening of these efforts will bring about a more robust international monetary and financial system, which in turn will support the growth and stability of China and the global economy." So, is the renminbi likely to give the U.S. dollar a run for its money? Not any time soon, according to economists surveyed by The Wall Street Journal. Over the next 50 years, they gave China about a 34 percent chance of challenging the dollar. One said, "To match the dollar's appeal, China will need markets as deep as those in the U.S. and to produce economic indicators that are trustworthy." Weekly Focus - Think About It "Power is of two kinds. One is obtained by the fear of punishment and the other by acts of love. Power based on love is a thousand times more effective and permanent then the one derived from fear of punishment." --Mahatma Gandhi, Former leader of the Indian independence movement

How Not To Be A Grinch

How Not To Be A Grinch

We all know who The Grinch is-that nasty, green-colored creature of Dr. Seuss' imagination. He stole Christmas, nearly ruined everything, and then repented at the eleventh hour. Well, you don't have to literally steal gifts out from beneath the tree to ruin the holidays for yourself and your family-all it takes is the wrong attitude.  If you're feeling your inner Grinch start to crawl out of his cave, try a few of these techniques that should have you back to your regular, cheerful self in no time. Make Lists: Make a list of recipes you want to make over the holiday season. Make a list of gifts you need to buy. Make a list of crafts you'd like to make. You get the idea! Use a binder, websites like Pinterest, or apps like Evernote, to keep it all easily accessible. Simplify: Overwhelmed by hosting a holiday meal? Make it a potluck. Stressed at the thought of running all over town to purchase gifts? Buy them online. Keep it simple! Learn to Say No: Don't feel as if you have to attend everything you're invited to. And be sure to schedule days when you're doing absolutely nothing except sitting bundled up on the couch with a good book and a cup of hot cocoa. Take a Break: If you're introverted and are feeling emotionally exhausted because you have family around 24/7-make sure you take frequent breaks to get quiet, alone time. Balancing time with others and time by yourself is always important. Get the Kids Involved:  Kids can do everything from decorating cookies to trimming the tree-as long as you're not a perfectionist who insists on having it exactly your way, which brings us to the next point.

WMC- Flat Is The New Up

Weekly Market Commentary

 

December 7, 2015

The Markets

Anyone looking at U.S. stock market performance last week might assume it was a pretty quiet week. They would be wrong. It was a very bouncy week. U.S. stock markets moved lower on Monday, rebounded on Tuesday, and then appeared to suffer a one-two punch mid-week that knocked indices lower. On Wednesday, the benchmark U.S. oil price sank below $40 a barrel as supply continued to exceed demand, according to The Wall Street Journal (WSJ). Analysts had expected stockpiles of crude oil, gasoline, and other fuels to decline. Instead, stores increased to more than 1.3 billion barrels. The glut of fuel drove energy stock values down and energy stocks led the broader market lower, according to WSJ. Performance did not improve on Thursday. In part, this was because the European Central Bank (ECB) underwhelmed markets when it delivered economic measures that were less stimulative than many had expected. The Financial Times reported the ECB reduced rates and pledged to extend quantitative easing for six additional months, but it did not increase the amount of its bond purchases, which disappointed investors. Stock markets in Europe and the United States lost value on the news. On Friday, a strong jobs report restored investors' enthusiasm and markets regained losses suffered earlier in the week, according to ABC News. The Department of Labor announced 211,000 jobs were added in November, which was more than analysts had expected. Strong employment numbers made the possibility of a Federal Reserve rate hike seem more certain and investors welcomed certainty. The ECB jumped into the good-news pool on Friday, too, announcing it would expand stimulus measures, if necessary. The Standard & Poor's 500, Dow Jones Industrial, and NASDAQ indices were all up for the week. It's That Time Of The Year. No, not the holidays. It's the time when investors begin to consider pundits' forecasts for the coming year. Here are a few of those forecasts: "Flat is the new up," was the catch phrase for Goldman Sachs' analysts last August, and their outlook doesn't appear to have changed for the United States. In Outlook 2016, they predicted U.S. stocks will have limited upside next year and expressed concern that positive economic news may bring additional Fed tightening. Goldman expects global growth to stabilize during 2016 as emerging markets rebound, and Europe and Japan may experience improvement. Jeremy Grantham of GMO, who is known for gloomy outlooks, is not concerned about the Federal Reserve raising rates, according to Financial Times (FT). FT quoted Grantham as saying, "We might have a wobbly few weeks...but I'm sure the Fed will stroke us like you wouldn't believe and the markets will settle down, and most probably go to a new high." Grantham expects the high to be followed by a low. He has been predicting global markets will experience a major decline in 2016 for a couple years, and he anticipates the downturn could be accompanied by global bankruptcies. PWC's Trendsetter Barometer offered a business outlook after surveying corporate executives. After the third quarter of 2015, it found, "U.S. economic fundamentals remain strong, but markets and executives like predictability, and that's not what we've been getting lately... Trendsetter growth forecasts are down, so are plans for [capital expenditure] spending, hiring, and more. It doesn't help that we've entered a contentious 2016 election season..." The Economist had this advice for investors who are reviewing economic forecasts, "Economic forecasting is an art, not a science. Of course, we have to make some guess. The average citizen would be well advised, however, to treat all forecasts with a bucket (not just a pinch) of salt." Weekly Focus - Think About It "Weather forecast for tonight: dark." --George Carlin, American comedian

Holiday Spending

Holiday Spending

 CWMP

Kalispell, Montana 59901     406-756-3787

The Great Recession caused holiday spending to dwindle, but in recent years the amount of money Americans are spending on gifts for the holidays has only increased. According to the American Research Group, holiday spending in 2014 was $861 per family, up 8% from 2013. 

Set a Spending Limit

Before you can maximize your holiday budget, you need to set a limit on what you can comfortably afford to spend. Try your best not to rely on credit cards, as credit counseling agencies see a 25% increase.

Shop with a List

Instead of aimlessly wandering malls and shops, figure out what you're going to purchase before leaving your house. This way, you're not tempted to overspend or buy things you don't need. We've all thrown in an item or two (or ten) for ourselves when holiday shopping, but this is unfortunately the easiest way to go over budget.

Suggest a "Secret Santa"

Most likely, you're not the only one who wants to save a little money this Christmas. If you have a large family or are planning on purchasing gifts for your coworkers, suggest a "Secret Santa" where everyone draws a name and buys a gift for that person. You can set a spending limit of $20 to make sure you don't spend more than necessary.

Bake Treats

Everyone loves homemade goodies, especially teachers and coworkers. Rather than spending hundreds on gifts ($10 gifts for five different teachers and ten different colleagues can add up), spend an afternoon baking bread, cookies, muffins and other holiday treats.

The Bottom Line

It's just too easy to overspend during the holidays. To avoid that hefty credit card bill come January, shop with a purpose, a plan and a fixed budget. Know who you're going to buy for, avoid impulse shopping and shop the sales. The holidays will only wreck your budget if you let them.

WMC- Black Friday Craze

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Weekly Market Commentary

 

November 30, 2015

American markets were relatively quiet during Thanksgiving week but there were fireworks in China's markets.

Late in the week, media outlets reported the China Securities Regulatory Commission was conducting inquiries into several securities firms as part of an anti-corruption crackdown triggered by last summer's wild market gyrations. The news sizzled through China's stock markets. The Financial Times wrote:

"It's like a trip down memory lane... if memory lane was vertical... The Shanghai Composite was down by as much as 6.1 percent in late trade, with the tech-focused Shenzhen Composite following suit, down by as much as 6.8 percent. It would be Shanghai's biggest one-day fall since August 25, when the benchmark slumped by 7.7 percent, writes Peter Wells in Hong Kong."

U.S. markets were sanguine, in part, because there was little activity on Friday, according to The Wall Street Journal. It also may have something to do with an upward revision in third quarter's gross domestic product (GDP), which measures the value of all goods and services produced in the United States. On Tuesday, the U.S. Commerce Department reported GDP increased at an annual rate of 2.1 percent during the third quarter, an improvement over the initial estimate of 1.5 percent.

Next week may be a doozy. The European Central Bank is expected to introduce additional monetary easing measures, while the U.S. Federal Reserve provides additional clues about the timing of its monetary tightening measures, said The Wall Street Journal. We'll also get news about U.S. home sales, automobile sales, chain store sales, factory orders, and employment. It's likely to be an interesting week.

It seems that shopping has joined food, football, and family as a favorite pastime on Thanksgiving Day.

Did you log on and do a little holiday shopping last Thursday while your holiday feast was cooking? If so, you are not alone. MarketWatch reported consumers spent $1.1 billion between midnight and 5:00 p.m. eastern time on Thanksgiving Day. That was a 22 percent increase over the year before.

After taking a break to give thanks, gorge on Thanksgiving delicacies, and enjoy family time, consumers fired up their devices again - more than one-third of sales were made via smart phone or tablet - for round two in the online shopping arena. On Friday, between midnight and 11:00 a.m. eastern time, they spent another $822 million. That's 15 percent more than last year. In total, Black Friday sales were expected to be about $2.6 billion.

By Friday morning, out-of-stock rates were reported to be double the level they normally reach this time of year. So, prepare for the possibility shoppers may be rabidly seeking more than one extremely popular gift item as we head deeper into the holiday shopping season.

That's a more welcome turn of events than 1953's glut of unsold turkeys. The Fiscal Times reported Swanson got started in the frozen dinner manufacturing business when it finished Thanksgiving with 260 tons of extra turkeys. Its solution was to package sliced turkey with trimmings on aluminum trays. In 1954, the company sold 10 million frozen turkey dinners and a new industry was born.

Since investors were concerned about weaker than expected retail sales just a couple of weeks ago, if retail spending continues to be strong in coming weeks, it could affect investors' confidence and outlook.

Weekly Focus - Think About It

"My first rule of consumerism is never to buy anything you can't make your children carry."

--Bill Bryson, American author

Your WMC- Happy Thanksgiving!

Weekly Market Commentary

 

November 24, 2015

Financial markets were remarkably calm last week.

Many stock markets in the United States, Europe, and Asia moved higher as investors chose to focus their attention on the minutes of the October 27-28, 2015 Federal Open Market Committee (FOMC) meeting, which were released on Wednesday, rather than recent terrorist attacks in Paris, Lebanon, Mali, and against Russia.

The FOMC minutes captured attention because they suggested even if the Federal Reserve does begin to tighten monetary policy in December, rate increases may be incremental and the target rate may not be as high as many imagined. Bloomberg reported:

"Fed officials received a staff briefing on the equilibrium real interest rate, or the policy rate that would keep the economy running at full employment with stable prices, according to the minutes. Fed officials discussed the possibility that the short-run equilibrium rate "would likely remain below levels that were normal during previous business cycle expansions," the minutes said."

Former Federal Reserve Chairman Ben Bernanke has written about the equilibrium real interest rate on his blog. The point he makes is the equilibrium rate - not the Fed - determines interest rates. The Fed uses its influence to move interest rates toward levels that are consistent with its estimate of the equilibrium rate. If the Fed pushes for rates that are too high, the economy may slow. If it pushes for rates that are too low, the economy may overheat. Not everyone agrees on this point, and that has led to debate between Mr. Bernanke and Former Treasury Secretary Lawrence Summers.

While the Fed is expected to begin tightening U.S. monetary policy, the European Central Bank (ECB) is expected to further loosen monetary policy in December. The Wall Street Journal reported the ECB is "prepared to deploy its full range of stimulus measures to fight low inflation..." The news was welcome. CNBC reported European markets closed the week at three-month highs.

IF THERE WERE A "PAGE SIX" FOR FINANCE AND ECONOMICS,

emerging markets would be splashed across it.

Remember the saying, "Buy low and sell high?" Well, emerging markets have not performed well for quite a long time, and that has a lot of people speculating about what may happen in the next few years.

Analysts at BlackRock opined, "Emerging-market (EM) equities are fighting an uphill battle, held back by an appreciating U.S. dollar, falling commodity prices, and flagging exports. These only add to their other medium-term struggles, such as dwindling corporate profits, declining productivity, and a dispirited investor base. With valuations of EM equities trading at the largest discount to their developed-market peers in 12 years, some opportunities are beginning to emerge."

In fact, several economists and asset managers have begun to compare and contrast the attributes of various emerging markets. Some say China is a better bet than Latin America. Others like the opportunities in Southeast Asia. A Goldman Sachs analyst cited by Bloomberg cautioned, "...Colombia, South Africa, Turkey, and Malaysia still need to tackle their current-account imbalances; Russia, India, and Poland are among nations that have improved enough for their assets to rally..."

The point is there is a buzz building around emerging markets. Sometimes, when analysts begin to emphasize the potential of an asset class, investors are tempted to pile in. While emerging markets investments can be a valuable part of a well allocated and diversified portfolio, it's a good idea to remember there are distinct risks which are not suitable for all investors associated with investing in emerging markets.

If you have questions about your financial strategy, please give contact your financial advisor.

Weekly Focus - Think About It

"All you need in this life is ignorance and confidence, and then success is sure."

--Mark Twain