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July 2, 2012 - Special Edition Update
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In This Issue
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| The Markets:
While the first quarter of 2012 beat expectations, the second quarter poured cold water on investors' hopes for a strong encore. Much like the last two years, the economy got off to a solid start only to falter in the spring. Despite a strong showing in the latter half of June, markets are down for the quarter, erasing some of the gains we saw in Q1. However, the major indices are still up significantly for the year. Since January 1, 2012, the S&P has gained 8.31%, while the Dow is up 5.42%, and the Nasdaq grew by 12.66%.[1]
What are some of the factors that contributed to the Q2 doldrums? Most can be grouped into two major categories:
1. Global economic turmoil
Concerns about the European debt crisis continued to dominate headlines this quarter, as lawmakers struggled to contain a rapidly growing crisis that threatens the integrity of the entire Eurozone. Greece skirted the edges of a disorderly default on its debt as popular opinion rose against punishing austerity measures. Although voters elected a pro-bailout coalition government, it is still unknown whether Greece will remain in the Eurozone. The Spanish were able to secure bailout funds to recapitalize their struggling banks from a centralized bailout fund as the Eurozone gambles on a more centralized union to save itself.[2]
China, the world's second-largest economy is decelerating; its central bank is desperately trying to cushion the landing as China's manufacturing and export sectors - major drivers of the Chinese (and global) economy - slow.[3]
2. Concerns about domestic growth
Investors and analysts are worried about troubling economic reports this quarter that suggest the U.S. economy might be slowing. Stubborn unemployment, slow economic growth, and a stagnant job market continue to undermine confidence. One bright spot is that falling oil and gas prices offer consumer pocketbooks a break, and may encourage Americans to boost spending, the primary driver of economic expansion.
Taking into consideration the upcoming presidential election and expiration of the so-called Bush Tax Cuts in January, it's no wonder many analysts expect a period of sustained volatility in the months ahead.[4] With this in mind, we encourage you to stick to an investment strategy that is suitable for your own risk tolerance and personal investment objectives. Every individual has unique needs, and we always strive to match our clients to appropriate solutions to fill those needs. If you have any questions or concerns, please don't hesitate to contact us.
ECONOMIC CALENDAR:
Monday: ISM Mfg Index, Construction Spending
Tuesday: Motor Vehicle Sales, Factory Orders
Wednesday: Markets closed for Independence Day holiday
Thursday: ADP Employment Report, Jobless Claims, ISM Non-Mfg Index, EIA Petroleum Status Report
Friday: Employment Situation
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Performance: 
Notes: All index returns exclude reinvested dividends, and the 5-year and 10-year returns are annualized.
Sources: Yahoo! Finance, MSCI Barra. Past performance is no guarantee of future results.
Indices are unmanaged and cannot be invested into directly. N/A means not available.
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Brief: 'Obamacare' Supreme Court Decision
Big news last week was the Supreme Court's historic move to uphold the president's Affordable Care Act that will impact the way Americans receive and pay for medical care. What does this move mean for the general public, and for investors?
Broadly, the ACA stipulates that millions of people not currently covered by health care will have insurance by 2016. The Supreme Court upheld the individual mandate, meaning that by 2014, uninsured Americans must purchase insurance, or face a fine. Additionally, prior to the ACA, insurers could cherry-pick their insured, excluding those with pre-existing conditions; the new law prohibits insurance companies from excluding pre-existing conditions, and allows people to purchase insurance from state insurance exchanges.[5]
Winners: (Note: We are not recommending any investments here, just sharing some information.)
* Hospitals: Hospital stocks jumped sharply after the Supreme Court ruling. Hospitals gain by having to provide less free care for the uninsured; currently, 25% of the care provided by hospitals goes unpaid, an amount that will decrease substantially under the new law. Hospitals also stand to gain additional business from the estimated 33 million people that will be added to the rolls of the insured.
* Insurers: Although many insurance stocks dipped after the ruling, it's possible they were overbid on expectations that the Supreme Court would throw out the individual mandate or the entire ACA. Insurers stand to gain under the individual mandate provision by not having to pick up the tab for the uninsured. Additionally, by getting millions of young people into the risk pool, insurers will be able to offset the expense of insuring older Americans.[6] Losers:
* Medical Device Makers: Among the losers are medical device makers, who will be responsible for an excise tax of 2.3% on the sale of medical devices, expected to add $29 billion to federal coffers over the next 10 years. [7]
* Large Employers: Other losers could be employers (with more than 50 employees) who do not provide insurance to employees; they stand to pay a fee of $2,000 per full-time employee.[8]
* Wealthy Taxpayers: Medicare payroll taxes will increase for some high-income earners, and a new Medicare surtax will be levied on investment income. Investors who think they may fall into these categories should feel free to speak with us about strategies to mitigate these taxes.
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"If I have a thousand ideas and only one turns out to be good, I am satisfied."
- Alfred Nobel |
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Cilantro Lime Shrimp
Cilantro and lime flavors brighten this quick shrimp recipe from RealSimple.com. Ingredients:
2 Tbsp high smoke point oil such as grape seed oil, or canola oil
1-2 Serrano chiles, sliced into thin rings
1-2 garlic cloves, sliced thinly
1 pound shrimp, peeled and deveined
Salt
1/4 cup chopped cilantro
1-2 Tbsp lime juice
Directions:
1. Place a large sauté pan or a wok over your strongest burner on high heat. Let the pan heat up for a minute and then add the oil. Use a high smoke point oil since you will be cooking the shrimp on very high heat. Let the oil heat until it's shimmering. If it starts to smoke, remove the pan from the heat for a moment.
2. Add the chiles to the pan and toss to coat with oil. Cook 30 seconds. Add the shrimp and garlic to the pan and sprinkle with salt. Toss to coat with oil. Let the shrimp cook undisturbed for 1 minute before tossing again so they get a little bit of a sear. Stir-fry until cooked through, about 2-3 minutes.
3. Turn off the heat and mix in the cilantro, then the lime juice.
4. Serve hot or at room temperature. Serve alone, over rice, or in a folded heated flour or corn tortilla.
Hint: If you are using frozen shrimp, defrost them by placing them in a bowl of ice water or cold water. Adding a little salt to the water will help the shrimp retain their briny flavor.
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When and How to Practice
The best time to practice is right after you've played, while your body is still warm and the problems you experienced are fresh in your mind.
Even if you only want to go to the range for a workout, it's a good idea to break down your typical round of golf to see which shots you need to practice the most instead of hitting over and over again with your favorite club. For example, in a regulation round of golf, a scratch player would hit approximately fourteen drives, four fairway woods, four long irons (2, 3, 4), eight medium irons (5, 6, 7), six short irons (8, 9, PW), four chip shots, two bunker shots, and 30 putts for 72.
Based on these numbers, he or she should spend almost half their practice time on the putting green, about a fourth of the time hitting tee shots, and the rest of the time divided among all the others.
Break down your own rounds in a similar way, and you'll know how to practice effectively.
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Cut Fruits and Veggies Into Bigger Pieces
"A larger cut allows you to hold on to more vitamin C, which helps bolster immunity," says Roberta Larson Duyff, RD, author of the American Dietetic Association Complete Food and Nutrition Guide. Quarter carrots, potatoes, and tomatoes instead of dicing them; slice melons into crescents rather than cubing.
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The next time you're looking for something to do on a Saturday morning, why not grab a local paper and go visit some garage sales? Or better yet, host one of your own and earn a few extra bucks. Not only can you find some great treasures, you're also supporting the green initiative by reusing products that may otherwise have been thrown away.
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Share the Wealth of Knowledge!
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Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
Diversification does not guarantee profit nor is it guaranteed to protect assets
The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ. The DJIA was invented by Charles Dow back in 1896.
The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indexes from Europe, Australia and Southeast Asia.
The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
The Housing Market Index (HMI) is a weighted average of separate diffusion indices based on a monthly survey of NAHB members designed to take the pulse of the single-family housing market. Each resulting index is then seasonally adjusted and weighted to produce the HMI.
The Pending Home Sales Index, a leading indicator of housing activity, measures housing contract activity, and is based on signed real estate contracts for existing single-family homes, condos and co-ops. The PHSI looks at the monthly relationship between existing-home sale contracts and transaction closings over the last four years. The results are weighted to produce the index.
The BLS Consumer Price Indexes (CPI) produces monthly data on changes in the prices paid by urban consumers for a representative basket of goods and services. Survey responses are seasonally adjusted and weighted to produce a composite index.
The Conference Board Leading Economic Index (LEI) is a composite economic index formed by averages of several individual leading economic indicators, which are weighted to produce the complete index.
Google Finance is the source for any reference to the performance of an index between two specific periods.
Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
Past performance does not guarantee future results.
You cannot invest directly in an index.
Consult your financial professional before making any investment decision.
Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.
These are the views of Platinum Advisor Marketing Strategies, LLC, and not necessarily those of the named representative or named Broker dealer, and should not be construed as investment advice. Neither the named representative nor the named Broker dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.
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[1] http://www.google.com/finance
[2] http://money.cnn.com/news/international/europe_debt_crisis/index.html [3] http://www.ft.com/intl/cms/s/0/7361c312-c359-11e1-ad80-00144feabdc0.html [4] http://isharesblog.com/blog/2012/06/26/the-rocky-road-ahead-this-year/ [5] http://www.cnbc.com/id/47946647 [6] http://www.usatoday.com/money/perfi/columnist/waggon/story/2012-06-28/health-care-stocks/55900284/1 [7] http://www.usatoday.com/money/perfi/columnist/waggon/story/2012-06-28/health-care-stocks/55900284/1 [8] http://www.usatoday.com/money/industries/health/story/2012-06-28/health-care-ruling-whats-next/55900370/1
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