Buy, Sell and Ponder October 2017 Hi guys!
LA port traffic has seen record imports.....July, August and now September.....with 40% of imports coming through LA. This looks good for Christmas. Also, where or at what price would you start to think about GE? Just pondering a bit....
Also, a Fidelity update:
Quarterly market update: fourth quarter 2017
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Key takeaways
The global economy is experiencing a relatively steady, synchronized expansion amid low inflation, with low risk of recession.
U.S. fiscal policy is supportive of growth, and hopes for tax-cut legislation represent a potential upside for corporate earnings.
A shift toward tighter global monetary policy may boost market volatility, underscoring the importance of diversification.
Each quarter, Fidelity's Asset Allocation Research Team (AART) compiles a comprehensive quarterly market update. Here is a summary of their outlook, plus key investor takeaways for the third quarter of 2017. For a deep dive into each, read the Quarterly market update: fourth quarter 2017 (PDF) or the interactive PDF.
First, let's look at how the markets did in Q3.
Market summary: Goldilocks backdrop persisted, widespread gains across asset markets
The synchronized expansion in global economic activity—along with low inflation and accommodative monetary policies—continued to provide a steady backdrop for asset markets in the third quarter of 2017. Non-U.S. equities spearheaded a global stock market rally for the third quarter in a row, bolstered by a weaker dollar and a strengthened economic backdrop. Credit spreads tightened further amid the "risk-on" tone, allowing emerging-market and high-yield corporate bonds to add to their solid year-to-date gains. Steady interest rates kept high-quality bonds in the black, and all asset categories posted positive returns.
Since equity markets hit a near-term bottom in early 2016, global assets have posted exceptional returns while experiencing remarkably low levels of volatility. Compared to historical averages, price fluctuations of riskier assets were extremely subdued, even as they registered big gains. More defensive assets such as investment-grade bonds posted smaller gains, but also experienced unusually low volatility.
Economy/macro backdrop: Synchronized global economic upturn, but markets may be tested by monetary policy shift
The global economy is experiencing a relatively steady, synchronized expansion. Broadly speaking, most developed economies are in more mature (mid-to-late) stages of the business cycle, with the eurozone not as far along as the United States. Recession risks remain low globally, although less accommodative policy in several countries, including China, may constrain the upside to growth going forward.
A rebound in global trade continued to bolster the global economy. The global expansion has been underpinned by a turnaround in export-oriented sectors and manufacturing activity. China's rising import demand over the past year has helped push the percentage of major countries with expanding new export orders to more than 90%. China’s economy remains in expansion, however, policymakers' tighter stance is beginning to show an impact, and peaking activity suggests that upside to China's cyclical trajectory is limited.
Elsewhere, the eurozone is on a cyclical upswing, enjoying a reasonably synchronized mid-cycle expansion across both its core and its periphery. The U.K., however, is confronting late-cycle pressures, as consumers’ expectations deteriorate alongside rising inflation and faltering real income growth.
The U.S. economy remains in expansion, between the mid- and late-cycle phases. Tight labor markets are supporting wage growth and the U.S. consumer, keeping recession risk low. So far, low inflation has been the key to a prolonged mid-to-late cycle transition in the United States. U.S. inflation is likely to remain range-bound due to multiple factors: Tight labor markets, rising wages, and increasing food costs have been supportive, while slowing shelter costs and other transitory factors have served to dampen inflation. Historically, rising wages pressure profit margins and cause the Federal Reserve (Fed) to tighten monetary policy; this in turn has caused a flattening of the yield curve and raised debt-servicing costs for businesses. While many of these indicators remain relatively healthy, they have all deteriorated and are indicative of a maturing U.S. business cycle.
U.S. fiscal policy is supportive of growth, and hopes for tax-cut legislation represent a potential upside for corporate earnings. However, tax cuts may do more to boost inflation than growth, as rate cuts tend to have a bigger impact on growth when there is a large amount of economic slack and monetary policy is easing (unlike today). Meanwhile, escalating tensions in the Korean peninsula represent a potential catalyst for meaningful market risk, as the U.S. and China are the world's 2 economies that are most central to global trade.
Firming U.S. inflation and global growth have given the Fed confidence to continue gradually hiking its short-term policy rate; other central banks may also recognize the need to begin moving away from extraordinary easing. The Fed's unwinding of its balance sheet, and the ECB's likely tapering of asset purchases next year, could pose a liquidity challenge to markets. Overall, the global economy is in a synchronized expansion amid low inflation, with low risk of recession. Going forward, a shift toward global monetary policy normalization may boost market volatility.
Asset markets: Non-U.S. valuations still most attractive, higher market volatility may be on the way
The third quarter was another strong quarter for U.S. and global equity markets. Growth stocks and emerging-market categories were the strongest performers, boosted by their exposure to big gains in the information technology sector. Credit categories continued to lead gains in the bond market, and year-to-date returns were almost universally positive across major asset categories and sectors.
Turning to fundamental factors, international corporate earnings growth has accelerated for several quarters and surpassed U.S. corporate profit growth. Earnings revisions have also stabilized for the first time in years, although lofty forward earnings growth expectations may provide a tougher hurdle to clear in the year ahead, particularly in emerging markets.
Generally speaking, stock valuations are mixed using one-year-trailing earnings; U.S. price-to-earnings ratios are above average, developed markets are below average, and emerging markets are roughly average. Forward estimates for all markets look more reasonable. Using 5-year peak inflation-adjusted earnings, P/E ratios for foreign developed and emerging equity markets remain lower than those in the United States. Despite dollar weakness in 2017, the value of most currencies also remains in the lower half of historical ranges versus the U.S. dollar. Meanwhile, yields and credit spreads across bond sectors remained low relative to history.
With the U.S. exhibiting the mid- and late-cycle phase dynamics, it's worth looking at the historical playbook. Historically, the mid-cycle phase of the U.S. business cycle tends to favor riskier asset classes, while late cycles have the most mixed performance of any business-cycle phase. The late-cycle phase has often featured more limited overall upside and less confidence in equity performance, though stocks have typically outperformed bonds. Inflation-resistant assets, such as commodities, energy stocks, short-duration bonds, and TIPS, have performed relatively well, as have non-U.S. equities.
From an asset allocation standpoint, given the maturing U.S. business cycle, the likelihood of less reliable relative asset performance patterns and increased volatility as a result of the risks in the global monetary policy, smaller cyclical tilts may be warranted. The possibility of higher volatility underscores the importance of diversification.
Long-term themes
Slowing labor force growth and aging demographics are expected to tamp down global growth over the next 2 decades. We expect GDP growth of emerging countries to outpace that of developed markets over the long term, providing a relatively favorable secular backdrop for emerging-market equity returns. Over long periods of time, GDP growth has a tight positive relationship with long-term government bond yields (yields generally have averaged the same rate as nominal growth). We expect interest rates will rise over the long term to an average that is closer to our 3.6% nominal GDP forecast, but this implies they would settle at a significantly lower level than their historical averages.
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the Pudd
Scottrade Account Promotion I rolled most of my TRP 401k over to an IRA at Schwab in 2014. I forget what Schwab's promotion gave me to do so, $1500-$2000 I think, and there were no taxes.
AAII Investor Survey: Bullish Sentiment Approaching 40% FYI: This week’s sentiment survey from AAII showed an increase in bullish sentiment back near 40% and back near the recent high of 41.29% from mid-September. While 40% is hardly an extreme reading by any stretch of the imagination, this year there have only been four weeks where bullish sentiment actually topped 40%. With 40% being hard enough, an actual majority is a long way off, and that should keep the current streak of 14
5 straight weeks below
50% safe for the foreseeable future.
Regards,
Ted
https://www.bespokepremium.com/think-big-blog/bullish-sentiment-approaching-40/
Scottrade Account Promotion Yeah, I subsequently found some of that info, tnx, pretty much identical to the other way, into ML. I shoulda done more but wanted to keep a big slug in Fido. Maybe in 10 months I will do the reverse and see if I can hit $2500, depending on how the market does ... I doubt I will even if possible.
Scottrade Account Promotion Hi Maurice...the bonus is minimal. I think I was quoted ~few hundreds bucks for one mill of equities stocks if tranfsferred over. Although I found Schwab probably give very good customer services at their firm and their induvidusl bonds/fees/costs provbavbly lowest in the business. I've compared bonds before and the finsl cost ~5 bucks less overall compared to other firms
blockquote class="Quote" rel="Maurice">@msf It has been a long time since I transferred an account from one broker to another. But this summer I explored such a transfer with Schwab. Visiting their brick and mortar store, I was verbally told that I would receive a cash bonus, but not before I inquired about it. I can't remember if there was an advertised deal, or if the account rep was just being accommodating. He also stated that Schwab would cover any charges incurred by me for transferring my accounts from Scottrade. I also had to inquire about the latter, because the account rep did not mention this in our discussion. I did not get these offers in writing, because I haven't yet committed to making the change. The key is that if you don't ask, you probably won't get these deals. This is one of those instances, where doing it all on the internet without talking to a human being, probably won't yield you the best deal.
Scottrade Account Promotion Here's a page of Fidelity promotions this year. Some (notably cash) have expired, but this page is presenting what were real offers:
http://www.topratedfirms.com/brokers/promotions/fidelity-promotionoffers.aspxFidelity Investments Up to $2,500 Cash Bonus Promotional OfferPromotion Offer: New and existing Fidelity customers can earn from $200 up to $2,
500 cash bonus from Fidelity Investments when they open and fund brokerage or IRA accounts within 60-days from the time of registration for the offer.
Wife's job change and her 401K After 20 years, I'm guessing that your wife had at least $
5K in the 401(k).
"Generally, if your account balance exceeds $
5,000, the plan administrator must obtain your consent before making a distribution."
IRS 401k guide.
While what's done is done, forcing your wife to take the money was likely illegal.
You have the option of recharacterizing the Roth conversion into a traditional IRA and not owe any taxes. You could then move the money back into the 401k (pre-tax) if that's where you really want it. However, you can't try to undo everything in one step by having the 401(k) take back the money (pre-tax) straight from the Roth IRA.
How can I recharacterize an amount rolled over to a Roth IRA from an employer-sponsored retirement plan?
You can only recharacterize amounts rolled into a Roth IRA from an employer-sponsored retirement plan by transferring them to a new or existing traditional IRA, and not back into the plan from which they were distributed.
IRS: IRA FAQs.If you want the money back in the 401(k) as a Roth 401(k) (and if the plan offers this and allows the transfer), then you could move the money back via a trustee-to-trustee transfer.
Note: After having converted to a Roth IRA, you can withdraw the amount converted (but not subsequent earnings) without owning tax on that money (since you just paid that tax). But so long as your wife under
59.
5, there will be an early distribtution penalty of 10% for the first five years after conversion.
Fairmark:
Distributions After a Roth IRA Conversion
