The Miller Financial Group
Perspective on the First Quarter
SPECIAL EDITION Q1 2013 Update - April 1, 2013
In This Issue
Golf Tip
Health Tip
Green Fact
The Markets:  

Equity markets experienced one of the best first quarters in years, with the Dow logging its strongest quarter since 1998.[1]  After flirting with record highs for more than a week, the S&P 500 finally broke through its 2007 ceiling to close at a new high of near 1,570. For the quarter, the S&P 500 gained 10.03%, the Dow increased 11.25%, and the Nasdaq closed up 8.21%.[2]


What are some of the factors that contributed to the strong market performance we've experienced?


Federal Reserve Stimulus Policy
Many analysts agree that the Fed's quantitative easing policies of rock bottom interest rates and bond purchases have played a significant role in the market surge. With 2012's QE-infinity program, the Fed essentially promised to continue to buy bonds until unemployment falls below 6.5% (as long as inflation remains tame); this aggressive action gave investors and business leaders confidence, boosting stock and asset prices and increasing consumer spending.[3]


Robust Domestic Economic Performance
While markets have certainly benefited from Fed policies, there are solid economic fundamentals underpinning much of the recent performance investors have experienced. The U.S. economy is humming along, and there's reason to hope for strong first quarter GDP growth. Some forecasts put Q1 GDP growth as high as 3.5%, which is a significant improvement from the 0.4% growth we saw in Q4 2012.[4]


The housing market was a major contributor to economic and market performance last quarter. Housing prices are increasing across most of the country, and a February report shows that permits for future construction increased at the second-fastest pace seen since June 2008.[5] Unemployment has also seen some recent improvement, with the latest report showing that jobless claims decreased in 22 states while wages increased in 42 states, yielding an unemployment rate of 7.7% in February.[6]  Overall, the economy still has a ways to go before it can be considered fully recovered, but the trends indicate that the recovery is continuing at a strong pace.

What factors could spark volatility in the weeks and months to come?

Uncertainty Around Sequestration Debates
While investors have largely shrugged off concerns about the federal budget sequestration that was triggered on March 1, we expect the impact of government budget cuts to drag on markets in the coming quarter. If lawmakers do not come to an agreement, federal spending will drop by more than $40 billion by the end of the year. While we are hopeful that an agreement will be forthcoming once the full effect of sequestration cuts is felt, the uncertainty around the current political stalemate may cause additional volatility.

Turmoil in Europe
The Eurozone debt and economic crisis remains of deep concern to analysts and investors. While the Cyprus banking situation was resolved with a 10 billion euro loan by raiding depositors' bank accounts, EU officials have set a bad precedent that may have long-term effects on their banking sector.[7] The IMF issued a recent report warning that ongoing political wrangling and piecemeal bailouts are threatening the stability of the Eurozone and that cooperative, comprehensive action was needed.[8]  Currently, both Italy and Spain are close to needing bailouts, as interest rates on their debt is rising to untenable levels and the political leadership in each country lacks the credibility necessary to push through needed reforms.

Looking Ahead
It's important to keep market milestones in perspective; while we are very pleased that the economy is steadily improving and markets are doing well, we know that the music will stop sometime. In the days and weeks to come, markets may experience volatility as investors take profits and wait for good news. Historically, markets have often underperformed in the second quarter after a big first quarter.[9]  Analysts will be closely watching first quarter earnings reports and economic data, along with monitoring Europe for clues on which way the market will go. However, if economic fundamentals remain solid, markets may experience further upside.

While we continue to remain optimistic about market performance in 2013, we advise our clients to expect some bumps in the road. If you have any questions about your investments or how your portfolio should be positioned for the rest of 2013, please don't hesitate to contact us. We are always delighted to be of service to you and your family.



Monday: Motor Vehicle Sales, PMI Manufacturing Index, ISM Mfg. Index, Construction Spending
Tuesday: Factory Orders
Wednesday: ADP Employment Report, ISM Non-Mfg. Index, EIA Petroleum Status Report
Thursday: Jobless Claims
Friday: Employment Situation, International Trade



Notes: All index returns exclude reinvested dividends, and the 5-year and 10-year returns are annualized. Sources: Yahoo! Finance and International performance is represented by the MSCI EAFE Index. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly.

Wealthy Cyprus account-holders will lose more than feared. Big depositors in Cyprus' largest bank will be given shares in the bank worth 37.5% of their deposits over 100,000 euros under the terms of the EU bailout deal. The rest may never be paid back.[10]

Public pensions reach highest holdings since 2007 peak. U.S. public pensions reached a major milestone in fourth quarter 2012 when assets in the 100 largest funds reached their highest level since the fourth quarter of 2007, just before the 2008 financial crisis.[11]

Fourth quarter GDP revised. The U.S. economy grew at a faster pace than originally estimated due to a bigger gain in business spending and a smaller trade gap. The revised estimate shows that GDP actually grew by 0.4%, up significantly from the original estimate of 0.1%.[12]

North Korea announces intention to enter "state of war" with South Korea. In a sign of further deterioration in international relations between the two countries, officials in North Korea's capital ratcheted up the warlike rhetoric. Although U.S. diplomats stated their intention to take the threat seriously, North Korea has a history of engaging in provocative threats.[13] 



Quote of the Week

"We are what we repeatedly do. Excellence, therefore, is not an act but a habit."

- Aristotle

Recipe of the Week

Ginger Broccoli
Broccoli gets a Southeast Asian treatment in this quick saute with fresh ginger, mellow rice vinegar, and rich, salty fish sauce. From


1 tablespoon canola oil
2 tablespoons minced garlic
4 teaspoons minced fresh ginger
1 pound broccoli crowns, trimmed and chopped (about 6 cups)
3 tablespoons water
1 tablespoon fish sauce
1 tablespoon rice vinegar

Heat oil in a large skillet over medium-high heat. Add garlic and ginger and cook until fragrant but not browned, 30 seconds to 1 minute. Add broccoli and cook, stirring until the broccoli is bright green, 2 minutes. Drizzle water and fish sauce over the broccoli; reduce heat to medium, cover and cook until the broccoli is just tender, about 3 minutes. Stir in vinegar just before serving.  



Golf Tip
Memorized Ball Position

Memorize your ball position for each club, or more correctly, the progression of ball positions as you go from club to club. Then, before every shot, check your distance out from the ball and the ball's position in your stance. Don't rely on "feel" as so many golfers do. If you use your standard swing and the ball is just 1/2 inch farther forward than usual, you will not hit consistently.

Some players have three or four basic positions - driver, long clubs, mid irons, short irons. Others have a gradual system that goes from off the left toe for drivers, all the way back to the right toe for short wedges. Whatever system you choose, stick with it to increase your consistency.
Healthy Lifestyle

Get Social


Communication and social skills can really improve your retirement lifestyle. Boost your social circle and stay active by participating in social events and activities. Research shows that retirees with an active social life are healthier and live longer.


Green Living
      Reclaim the Night
Studies have shown that light pollution can be harmful to both our health and the environment. You can help your neighborhood claim back the starry, dark skies of yesteryear by reducing the number of floodlights and spare lighting at home - especially the ones pointing out to the sky.
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.

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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[2] Source: Yahoo Finance


Robert G. Miller, CFP , RFC, LUTCF
The Miller Financial Group
7700 West Camino Real
Suite 400
Boca Raton, FL 33433
[email protected]