Global Concerns Weigh on Markets

Weekly Update - March 17, 2014

In This Issue

Equities experienced a rocky week as worries mounted about China's economic state and tensions escalated in Ukraine. While investors were not panicking, the pessimistic mood contributed to the Nasdaq posting its first drop in six weeks. For the week, the S&P 500 lost 2.0%, the Dow lost 2.4%, and the Nasdaq lost 2.1%.[1]

Tensions in Ukraine ratcheted up last week as Western leaders, including U.S. Secretary of State John Kerry and German Chancellor Angela Merkel warned Russia against annexing Crimea. Despite the threat of sanctions, Russia launched military exercises near its border with Ukraine and has moved thousands of troops into Crimea and neighboring areas.

The crisis in Ukraine matters to an international audience because a diplomatic and military showdown between Russia and the West could have long-term consequences in Europe. Europeans fear a return to Soviet-era invasions of Eastern Europe as Putin's interventionist foreign policy dreams become clear.[2] Any sanctions against Russia could be very costly for Europe (less so for the U.S.). Europe relies on Russia for approximately 30% of its natural gas; Russia is also its largest trading partner, a relationship that is worth nearly $461 billion in imports and exports every year.[3] Investors worry that a deterioration of the relationship between Russia and the rest of the world could affect the business environment.

Concerns about China also weighed on markets. A February report showed that exports fell 18.1% from the previous year; this is problematic because exports are a major driver of the Chinese economy.[4] Worries about the Chinese economy were intensified by weaker-than-expected retail and industrial data, which showed that China might be slowing down.[5] The recent first-ever debt default by a Chinese company also created new reservations about the health of China's financial system.[6] Investors fear that slowing economic activity in China may spread around the globe and cut into corporate profits.

One way to term investor reactions to these global concerns is a "flight to quality," where investors are fleeing emerging market securities in search of quality investments in the developed world. Realistically, it's unlikely that these concerns will go away quickly, meaning we can expect additional uncertainty and market volatility.

On a more positive note, new unemployment claims unexpectedly fell to a three-month low last week, raising hopes that the winter doldrums may be past. Even better, the four-week moving average, a less volatile measure, fell to the lowest level since early December.[7] Analysts will be looking closely at next week's unemployment claims for hints about the monthly job numbers.

The Fed will take center stage this week as the Federal Open Market Committee (FOMC) meets to determine its next monetary moves. There is little doubt on Wall Street that the Fed will stay the course on tapering and announce another $10 billion cut to its quantitative easing programs, bringing monthly bond purchases down to $65 billion. Analysts will be watching especially close as this will be new Fed chair Janet Yellen's first turn in the hot seat.[8]

ECONOMIC CALENDAR:

Monday: Empire State Mfg. Survey, Treasury International Capital, Industrial Production, Housing Market Index
Tuesday: Consumer Price Index, Housing Starts
Wednesday: EIA Petroleum Status Report, FOMC Meeting Announcement, Fed Chair Press Conference
Thursday: Jobless Claims, Philadelphia Fed Survey, Existing Home Sales

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

HEADLINES:

Consumer sentiment slips. A measure of consumer confidence fell in early March. However, most of the slip was attributed to cold weather, which gives analysts hope that confidence will improve once the weather warms.[9]

Record drop in bond holdings points to Russia. A surprising decline in foreign holdings of U.S. Treasuries has led some experts to speculate that Russia is cutting its dollar reserves ahead of potential sanctions from the West. Foreign central banks sold $104.5 billion in Treasuries last week - more than three times the previous record amount.[10]

Retail sales rise slightly in February. Higher than expected retail sales show that Americans shopped more in February. Data shows that retail receipts rose 0.3% in February, ending two straight months of declines.[11]

Business inventories climb in January. U.S. business inventories rose at the beginning of the year as businesses restocked after the holiday shopping season. However, a drop in sales means that inventories are piling up in warehouses, forcing businesses to buy less in the first quarter.[12]

"Strive not to be a success, but rather to be of value."

- Albert Einstein

Roasted White Fish With Carrots

Use any white, flaky fish like bass, rainbow trout or tilapia.

Ingredients:

1 cup quinoa
1 pound carrots, sliced
1 onion, sliced
1/4 cup olive oil
Kosher salt and black pepper
4 6-ounce boneless, skinless fish fillets
3/4 teaspoon paprika
Chopped fresh flat-leaf parsley leaves and lemon wedges, for serving

Directions:

Preheat oven to 375� F.Bring two cups of water to a boil.
Rinse quinoa in fine-mesh strainer and add to boiling water with � tsp salt. Lower heat and cover. Cook 15 minutes until fluffy.
Toss sliced carrot and onion with 2 T of olive oil, � tsp of salt, and � tsp of pepper. Place on rimmed baking sheet in one layer.
Roast 13-15 minutes, stirring once halfway through roasting, until carrots begin to soften.
Brush the fish fillets with remaining oil and season with: paprika, pinch salt, and pinch pepper each.
Lay the fish on top of the vegetables and roast 10-12 minutes until the fish is opaque throughout.
Plate the fish and vegetables on top of the quinoa and garnish with parsley and lemon wedges.

Recipe adapted from Lindsay Hunt | RealSimple.com

Special Exclusions for Cancelled Mortgage Debt

If a lender cancels money you owe, you generally have to pay taxes on that amount. However, the IRS makes an important exception for home mortgage debt that may apply in 2013. Here are some key facts to know:

If the cancelled debt was a mortgage loan on your primary residence, you may be able to exclude it if you have used the loan to buy, build, or improve your main home.
The loan must be secured by your main home.
The exclusion may also apply to refinanced debt, as long as the loan was used to buy, build, or greatly improve your main home.

For more information, contact a professional tax advisor or review IRS Publication 4681.

Tip courtesy of IRS.gov[13]

Create a Snap In Your Swing

By combining body drive with a wrist snap you can add power and distance to your swing. Here's how you do it: In the instant before you complete your backswing, start the downswing with your body and arms. This adds more of a wrist hinge on your downswing and will snap the club more powerfully into the golf ball. This is an advanced technique and requires practice to time the rotation of the clubface properly.

Tip courtesy of Jay Golden | Golf Tips Mag[14]

Keep a Fitness Notebook for Motivation

One of the hardest parts of maintaining a fitness regime is staying motivated. For extra motivation, track your workouts and activities in a notebook, so you can monitor your progress. Keep notes on your workout regime, how you felt before and after, and any other specifics like weights lifted or time involved. This diary can be a valuable way to see your progress and track your fitness in case you ever need to show it to a medical professional. If your will to workout starts sagging, you can flip through your notebook for workout ideas and an extra boost of motivation.

Tip courtesy of AARP[15]

Volunteer For the Environment

One of the best ways to preserve the environment around your home is to volunteer for creek cleanups, trail days, community planting days, and other local events. Volunteering allows you to spend some time outside, beautify your community, and learn more about how you can reduce your impact on the environment. Many park departments and environmental organizations rely on volunteers to fulfill their missions.

For ideas and events, visit the Nature Conservancy website or find a local organization in your area.

Tip courtesy of The Nature Conservancy[16]

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 Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of stocks of technology companies and growth companies.

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 Dow Jones Corporate Bond Index is a 96-bond index designed to represent the market performance, on a total-return basis, of investment-grade bonds issued by leading U.S. companies. Bonds are equally weighted by maturity cell, industry sector, and the overall index.

The S&P/Case-Shiller Home Price Indices are the leading measures of U.S. residential real estate prices, tracking changes in the value of residential real estate. The index is made up of measures of real estate prices in 20 cities and weighted to produce the index.

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, Broker dealer or Investment Advisor, and should not be construed as investment advice. Neither the named representative nor the named Broker dealer or Investment Advisor 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] https://www.briefing.com/investor/markets/weekly-wrap/weekly-wrap-for-march-10-2014.htm

[2] http://www.cnn.com/2014/03/14/opinion/ukraine-russia-putin-doctrine-joerg-forbrig/index.html

[3] http://edition.cnn.com/2014/03/10/business/russia-gas-and-trade-with-eu-u-s-/index.html?hpt=ibu_mid

[4] http://www.cnbc.com/id/101492226

[5] http://www.cnbc.com/id/101489500

[6] http://www.forbes.com/sites/chriswright/2014/03/13/another-chinese-default-but-its-still-not-a-bear-stearns-moment-for-china/

[7] http://www.cnbc.com/id/101490698

[8] http://www.cnbc.com/id/101496301

[9] http://www.reuters.com/article/2014/03/14/us-usa-economy-idUSBREA2C13J20140314

[10] http://www.reuters.com/article/2014/03/14/us-usa-fed-russia-idUSBREA2D1JW20140314

[11] http://www.cnbc.com/id/101490752

[12] http://www.cnbc.com/id/101481679

[13] http://www.irs.gov/uac/Newsroom/Special-Exclusion-for-Cancelled-Home-Mortgage-Debt

[14] http://www.golftipsmag.com/instruction/full-swing/quick-tips/time-the-snap.html

[15] http://www.aarp.org/health/fitness/info-01-2011/your_health_tips.html

[16] http://www.nature.org/about-us/volunteer/search-volunteer-opportunities/index.html

Rob Miller, CFP�
The Miller Financial Group
7700 West Camino Real
Suite 400
Boca Raton, FL 33433
561-353-3700
[email protected]
http://www.tmfg.com