Pacific Wealth Management Market Comment

by Jim Kuntz on March 21, 2017

We hope you are off to a productive start for 2017 and making some fun plans for the warmer days of spring.

Despite a regular dose of drama from our new President Donald Trump, the stock markets have continued to trend higher in early 2017. The prevailing expectation is the White House and Congress will successfully enact; increases in infrastructure spending, individual and corporate tax cuts along with regulatory reform, to help boost our American economy. The financial markets have been relishing the novelty of a new government in Washington committed to implementing these first fiscal policy changes in more than a decade. Over President Trump’s first 30 days in office, the Dow Jones index gained the most we have seen for a new presidential administration, since the beginning of Franklin Delano Roosevelt’s 4th term in 1945. The higher levels of confidence are evidenced by some of the lowest levels of stock market volatility we have seen since 2007.  Our experience suggests that current market valuations are likely ahead of themselves and the pace of this post-election rally is unsustainable. Sooner or later, the Trump honeymoon will wane and the markets will “correct”.  Ultimately, these pullbacks and periods of consolidation are normal, healthy and expected.  Our diversified investment portfolios are strategically prepared to weather this future volatility.

In recent weeks, global markets have been moving sideways and appear to be digesting some of the gains they have enjoyed since the November election. Fortunately, we do not see this consolidation as an indication the extended market advance is over, as the steady stream of improving global economic reports show economies beginning to strengthen around the world.

For most of the last 10 years, global economic growth has been relatively slow and unsynchronized among the world’s geographic regions. Beginning late last summer, economic reports began to simultaneously improve in both developed and emerging economies.  In February, consumer confidence reached its highest level in 16 years.  Unemployment is declining, while global inflation finally appears to be shifting from deflation to reflation.  We believe the 1.37% 10 year Treasury bond yield reached last July will mark the secular low for interest rates.  Last week, as expected, Janet Yellen increased the Fed Funds target interest rate another ¼ point. We anticipate 2-3 additional increases by our Federal Reserve Bank in 2017 while the economy continues improving on multiple fronts. The large majority of our fixed income investments are already positioned in short-term duration bonds to preserve market values as interest rates trend higher.

Donald Trump took office promising a number of economic-policy changes for the United States.  Like all his predecessors in the Oval Office, he has quickly discovered our country’s political system is designed to prevent rapid, large scale change. Our American democracy is structured to create formidable obstacles to that change, from the powerful legislative branch in Congress along with the State governments, to the independent courts and judicial system.  We remain optimistic, despite these challenges, U.S. businesses will get their much anticipated tax and regulatory reform, but most likely in the second half of 2017.  The near-term economic benefits of personal and corporate tax cuts are substantial and could help accelerate U.S. growth beyond the tepid 2% it has averaged since 2010.  We believe Infrastructure spending increases may be more politically challenging and therefore unlikely until next year.

Questions and concerns regarding the new administration’s initiatives regarding health care insurance, budget, immigration policies and the potential impact of a border tax, all remain.  We anticipate the final outcome of these initiatives, in addition to the fiscal policy proposals discussed above, will look significantly different from the proposals being discussed today.  It is a certainty the ongoing drama in Washington will continue. As always, we remain vigilant and proactively posture investments to generate competitive risk-adjusted returns in the years ahead.

 

Sound Management For A Secure Future ™


This commentary contains forward looking statements and opinions. These opinions may not develop as predicted.  It is our goal to help investors by identifying changing market conditions. However, investors should be aware that no investment advisor can accurately predict all of the changes that may occur in the market.

Pacific Wealth Management Insights

by Ryan Fentin-Thompson on February 14, 2017

Pacific Wealth Management Insights: Taxes and Identity Theft

Soon after we settle into the beginning of another new year, preparation begins for tax season.  One of our goals at Pacific Wealth Management, is to always keep our clients’ financial information safe and secure.  We encourage everyone to remain vigilant in preventing tax-related identity theft during this high risk time of calendar year.  In 2016, many Americans experienced firsthand a growing nationwide problem when they filed their tax returns, only to discover that someone else had already filed a fraudulent return using their Social Security Number.  The IRS has amplified their efforts to reduce the frequency of this occurrence, but you can proactively take additional steps to minimize the likelihood you are similarly victimized.

Below are Pacific Wealth Management’s suggestions for some proactive steps you can take to help prevent tax-related identity theft in 2017:

   Computer Security: Use firewalls, virus protection and file encryption for any sensitive financial data

   Online Access: Update old passwords and use strong passwords (upper and lower case letters, numbers, and symbols) ESPECIALLY for financial websites

   Personal Information: Take additional precautionary measures by encrypting any old tax returns or tax records you have stored electronically. Avoid carrying documents, including your social security card, which contain your Social Security Number.

   Credit Report: Check at least once a year to monitor bank and credit card statements; sign up for identity theft monitoring services

While these measures may assist in preventing the filing of a fraudulent return, the best defense remains, as always, file your tax returns as early as possible.

Please keep in mind, with the IRS increasing their fraud prevention measures, you may experience a longer than normal delay in processing your return.

If you’ve been a victim of fraud in the past, be sure to use the Identity Protection PIN you were issued, as it provides further protection. Lastly, your tax preparer is usually your best resource during tax season, so be sure to take advantage of the resources they have available and the knowledge they can provide to keep your personal financial information secure.

Pacific Wealth Management Market Comment

January 6, 2017

We hope you enjoyed your holidays and were able to spend some warm moments with friends and family. The financial markets shrugged off several shocks in 2016.  The year began with the worst start for the stock market in history.  Last January, our U. S. Federal Reserve Bank had just raised interest rates for the […]

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Pacific Wealth Management Insights

December 16, 2016

Should you accelerate your future charitable contributions into 2016? Given the Republican control of both houses of Congress, one of Donald Trump’s campaign promises we feel is most likely to be enacted is tax reduction for both individuals and businesses. Fidelity recently published a well written article discussing the potential tax reform on the horizon […]

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Pacific Wealth Management Insights

December 1, 2016

Anticipated Tax Reform With the election behind us and the Republicans soon to be in control of the White House, Senate and House, anticipation is building for 2017 to be a year of major tax reform.   These changes in the tax code could easily be the most significant our country has seen since Reagan. We […]

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Pacific Wealth Management Insights

November 14, 2016

Truth and Consequences: Election Impact Much has been written and said in the short time since the unexpected election of Donald Trump as the 45th President of the USA. Political passions normally run high in elections and the one thing we can all agree on is that this election was anything but normal. For that […]

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Post 2016 Election Commentary

November 11, 2016

As Charles Dickens wrote in A Tale of Two Cities “It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity………………….”  America woke up on Wednesday to a new era. […]

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Clinton vs. Trump – How Their Economic Plans Compare

November 3, 2016
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Pacific Wealth Management’s Election Scenario Impact on the Financial Markets

November 2, 2016

With our USA’s interminable election almost behind us, America and the financial markets will soon be breathing a welcome sigh of relief. It looks like Hillary Clinton will win the presidency and the House of Representatives will remain in Republicans hands This is definitely the preferred outcome for the financial markets We expect this clarity […]

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Summer is behind us, here comes the Election

September 9, 2016

We hope your Labor Day was a relaxing one. August was especially quiet for the financial markets.  Stock market trading volumes were the slowest in decades.  After late June’s BREXIT volatility, the markets in late summer were on their best behavior. Unfortunately, this welcomed breather is likely to be temporary, as we now head into […]

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