Pacific Wealth Management Market Comment

by Jim Kuntz on 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 first time in 9 years, oil prices were continuing to move lower, corporate earnings were falling and stock prices were declining sharply.   After energy prices bottomed in mid-February, stock markets regained their footing and began to recover.  Gold investments experienced their most robust gains since 2012, thanks to the surge early in the year when global economic uncertainty moved interest rates lower.  After Great Britain voted to leave the European Union in late June, markets around the world had a dramatic, but brief, two day sell-off.   With negative interest rate pervasive internationally, our U. S. Government bonds hit their all-time low yield in July and now are trending upward. Then the November elections arrived.  The only thing more surprising than Donald Trump’s victory was the stock market’s reaction to the prospect of a new president with business friendly policies.  Investors believe our slowly growing economy will be boosted with Trump’s plans to lower both corporate and personal income taxes, deregulate the energy, healthcare and banking industries and increase infrastructure spending.  The long-awaited optimism helped boost stock market values into year-end, while interest rates moved higher.  The new political reality in Washington D. C. has certainly changed the landscape for most financial markets.

We are navigating this new landscape and have positioned our portfolios for the year ahead.  The Developed World’s Central Bank bond-buying programs, aka, Monetary Stimulus, have been the primary support for the global economy and the driver of market appreciation over the last 7 years.  In 2017, we see these monetary policies still being supportive but beginning to wane, giving way to structural tax law change and increases in fiscal spending.  We believe investors’ perspectives are still very much in the “honeymoon” camp, regarding their outlook for the proposed changes of our President-Elect.  While we, too, embrace this optimism, we believe disciplined risk management remains prudent.  Some of these drivers of growth could be moderated by a stronger U. S. $ and the political shift away from globalism, toward populism and protectionism.   Current stock valuations are on the higher end of the spectrum and earnings growth will become increasingly important as we progress through the year.

Heading into 2017, our country has a lot of reasons for optimism.  The United States remains uniquely positioned as a culture that encourages individualism, non-linear thinking and entrepreneurial innovation.  Only time will tell if a new president can move our tepid economy out of the malaise we have experienced over the last decade.  We anticipate the slow and steady growth continuing into 2017. At a minimum, we expect plenty of drama and an interesting year ahead.

Meanwhile, Pacific Wealth Management continues implementing proactive changes to grow and preserve our clients’ wealth.  Please give us a call if you have any questions or comments.

We wish you a Happy, Healthy and Prosperous New Year!

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 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 and how it may affect your charitable giving for 2016 and beyond.  We’ve summarized the main points below; however, if you want to dig deeper, feel free to enjoy the full article here.

We want to stress that all we have at the moment are proposals, which will likely change before the final legislation is enacted.

How might tax reform impact the income tax charitable deduction in 2017 and beyond?

– Any lower tax rates on individual, business and investment income will reduce the future benefit of making a charitable deduction.

– Similarly, tax savings from charitable contributions of long-term capital gains property would be reduced:
**  Under the current law savings are as much as 23.8% (20% capital gains / 3.89% Medicare surtax)
**  The new proposal would eliminate Medicare surtax and potentially reduce capital gains.

What should I consider doing before December 31?

– Contact your tax professional to see if your personal situation could benefit from making donations planned for 2017 before year end.


Our firm does not provide legal or tax advice. Be sure to consult with your own tax and legal advisors before taking any action that would have tax consequences. The information provided herein is obtained from sources believed to be reliable; but no representation or warranty is made as to its accuracy or completeness.

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

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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Brexit Commentary

June 27, 2016

The United Kingdom’s surprise vote last week to exit the European Union rattled financial markets around the world.  Stocks, currencies and commodities felt the brunt of the emotional knee-jerk reaction to the news. Friday’s selloff erased gains from earlier in the week, when polls were suggesting a victory for the Remain alternative. U.S. stock markets […]

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Market Commentary from Pacific Wealth Management

June 22, 2016

Since January of 2015 U.S. stock investments have experienced some significant ups and downs and, now 18 months later, are sitting today at around the same levels.  As we described in our last commentary, the financial markets in 2016 have wrestled with conflicting expectations for growth and inflation.  Globally, economic growth has slowed while the […]

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