What's Going On With The Economy and Interest Rates?
In This Issue
Markets ended on a high note with the S&P 500 setting a new record though economic data was lukewarm.[1]  For the week, the S&P 500 gained 0.31%, the Dow grew 0.45%, and the NASDAQ rose 0.89%.[2]

Months of tepid economic data and flirtation with higher interest rates lead many to ask: What's going on with the economy, and how will it affect the Federal Reserve's interest rate decision?

The Fed, which has kept interest rates low to help the economy out of the 2008 financial crisis, needs to start returning to "normal" monetary policy to keep inflation in check and to prevent too-low interest rates from spurring another asset bubble. However, raising rates too soon could derail the economic recovery, so the Fed is being quite cautious.[3] The Fed has emphasized flexibility in its approach to raising rates, which doesn't give us much of an idea of when they will raise rates. Right now, the consensus among economists is that the first rate hike will come in September, though it's not at all certain.[4]

Let's take a look at a couple of major indicators that give us a brief snapshot of the economy right now:

The latest jobs data shows that the labor market is improving. The economy added 223,000 new jobs in April, and the number of underemployed Americans is dropping.[5] Another recent report shows that the number of workers voluntarily quitting their jobs has hit its highest point since 2008 as Americans gain confidence in new opportunities.[6]

In the first quarter, economic growth flat lined, increasing just 0.2%, due to a combination of factors.[7] However, many economists expect the economy to shake off some of its headwinds and pick up this quarter.

Corporate profits in the first quarter were up a respectable 2.4% for S&P 500 companies (as of May 15, 2015), though revenues were down 3.7%.[8] However, companies have all lowered their expectations for the second quarter, indicating that they're still worried about domestic and global demand.

All of these indicators paint a picture of an economy that's still chugging along without showing the breakout growth we had hoped for this year. Though a recession doesn't seem likely, there are a number of global headwinds that may continue to dog the economy: volatile oil prices, a Chinese slowdown, and tepid consumer spending.

What would the Fed like to see before raising rates?

Recent statements from the Fed indicate that it is still in wait-and-see mode. Waiting to see what? A solid, sustainable turnaround in economic growth that's supported by the labor market. The deceleration of economic growth in the first quarter and a lack of wage growth gave the Fed pause for thought, and economists will want to see sustainable improvements in indicators like durable goods orders, business investment, and GDP growth before making their next policy move.[9]

What does this mean for investors?

Bottom line: We can expect markets to remain choppy as investors take stock of current conditions and try to determine where markets are going. Overall, we're cautiously optimistic about market performance. However, we recognize that persistent market highs in the face of mediocre data could set the stage for a short-term pullback. As always, we're keeping an eye on conditions and will let you know when anything changes.

Monday: Housing Market Index
Tuesday: Housing Starts
Wednesday: EIA Petroleum Status Report, FOMC Minutes
Thursday: Jobless Claims, Philadelphia Fed Business Outlook Survey, Existing Home Sales
Friday: Consumer Price Index, PMI Manufacturing Index Flash, Janet Yellen Speaks 1:00 PM ET

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.


Weekly unemployment claims fell unexpectedly. The most recent weekly jobs report showed that layoffs are dropping and new unemployment claims are close to the 15-year lows reached several weeks ago.[10]

Retail sales unchanged from March. Though March numbers were revised upward, April retail sales data was flat as Americans cut back on big-ticket purchases like televisions and autos. Economists had hoped that Americans would spend - rather than save - the money they pocketed from cheaper gasoline.[11]

China is America's largest creditor (again). Though central banks around the world have decreased their holdings of U.S. Treasuries, China's central bank is back on top with $1.261 trillion. Central banks hold foreign currency reserves mainly to cushion currency exchange rate shocks and keep rates steady.[12]

Mortgage applications fall as rates rise. A sharp rise in interest rates last week caused a drop in mortgage applications for both buyers and refinancers. Though mortgage volume is still up 14% from the same time last year, volume is shrinking as homebuyers balk at higher rates.[13]

"When one door of happiness closes, another opens, but often we look so long at the closed door that we do not see the one that has been opened for us." 

 - Helen Keller

Chocolate Dipped Strawberries
These luxurious treats can be made up to three days ahead and refrigerated.

Makes about 20 treats


4 ounces semi-sweet milk, or dark chocolate bar, coarsely chopped

1 pound fresh strawberries (about 20)

20 toothpicks

  1. Pick through your strawberries, discarding those that are discolored or soft.
  2. Line a rimmed baking sheet with wax paper and set aside.
  3. Make a double boiler by heating one inch of water in a pot and setting a heatproof bowl on top. Don't allow the bowl to touch the water. Add the chopped chocolate to the bowl and melt, stirring continuously until smooth. Take the bowl out of the pot.
  4. Insert a toothpick into each strawberry and dip it into the chocolate, allowing the excess to drip back into the bowl. Place each strawberry onto the wax paper, moving it slightly to the side to prevent an unsightly "chocolate foot" from forming.
  5. Refrigerate the sheet until the chocolate is firm.

Recipe adapted from Charlyne Mattox | RealSimple.com[14]





Need To Amend Your Return? Here's How.

If you discover that you've made an error on your tax return, you may need to file an amended return. Though you don't need to file if you've made a simple math error or left out forms (the IRS corrects for those automatically), you should file an amended return for missed credits, deductions, filing status, or income.
  • Use form 1040X to file an amended return (you'll need to use a paper form).
  • You'll need to use separate forms for each year you need to amend.
  • If you use any other forms or need to submit new documentation, attach them to the 1040X form.
  • If you need to claim an additional refund, wait until you receive your original refund before filing an amended return.
  • Pay any additional tax you owe as soon as possible to avoid accruing additional interest and penalties.
Tip courtesy of IRS.gov[15]
Focus Your Attention On What Matters

Focus in golf is placing your attention on what's relevant to the moment and tuning out distractions. The things that matter are the type of shot you're about to play, hazards, yardage, and the club you're going to use. It's very easy to get distracted by friends, players behind you, pre-swing jitters, and the score. These negative distractions take away your focus and get in the way of your performance. By the time you're setting up over the ball, you should only be thinking about your target and the execution of your swing. If you find your thoughts wandering before the swing, refocus your eyes on your target and use self-talk to redirect your thoughts where they should go.

Tip courtesy of Rick Sessinghaus, PGA | Golf Tips Mag[16]
Traveling With Hearing Loss

When you have hearing loss, traveling through busy airports and train stations can be a hassle. Here are some tips to make traveling much easier:
  • Sign up for text, email, or phone alerts so that you know when a flight has been changed or delayed. Don't rely on being able to hear announcements in the airport.
  • Don't forget your drying accessories, especially if you're traveling to a humid locale.
  • If you have trouble conversing in noisy places, bring along a notepad and pen to trade notes with personnel or other travelers.
  • Notify security screeners that you have hearing aids before entering scanners.
  • Let seat partners know that you have hearing loss so that they can help you understand announcements.
  • Take advantage of any discounts for passengers with disabilities.
Tip courtesy of AARP[17]
Optimize Your Dryer Cycle

Whenever possible, put similar items in the dryer so that they all take about the same amount of time to dry. Keep bulky items like towels and blankets separate so that you don't end up over-drying thinner clothing like shirts. Pulling out items that are already dry can slash your dryer energy use by up to 40%.

Tip courtesy of Prevention[18]
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. 


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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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