2nd Quarter 2014
June 30. 2014

The markets and economy continued to build some positive momentum during the 2nd quarter of 2014, with the key areas of growth coming from energy, housing and the consumer sectors.  These numbers were muted during the 1st quarter, due to the severe winter weather, so we expected to see a rebound in the 2nd quarter, and a return to slow growth going into the fall.  The broader stock market has produced single digit returns thus far, but once you look below the surface, there are healthy adjustments taking place.  The biggest of which is the correction in the high flying social media names as well as the lack of return in smaller and medium sized companies.  Municipal bonds and foreign investments bounced back in the current quarter.  At the time of this writing, the S&P 500 is up approximately 6% year to date, while many small and foreign companies are flat to slightly positive.

Another interesting dynamic at work is the Federal Reserve continues to reduce monthly purchases of bonds in the marketplace (known as QE).  This process began last fall and is expected to be completed by the end of the year.  While the forecast has been for higher rates because the Federal Reserve is not buying as many bonds, reality has been the opposite.  Rates for the 10 year treasury have fallen from 3% to 2.5%.  If the economy can continue to show signs of improvement, albeit slow, we would be encouraged that it has enough velocity to grow on its own.  There are obvious headline risks at the moment in Ukraine and Iraq that have pushed energy prices higher which could ultimately trigger the inflation we have been forecasting for quite some time.  China’s growth rate is also slowing but, in spite of those issues, the US continues to demonstrate we are still a hub of entrepreneurial ideas and innovation for the entire world.

In the office, we congratulate Adam on passing his CFP® (Certified Financial Planner) exam.  This is the standard for professionals in our industry and with his hard work over the past 14 months he was able to accomplish it in a relatively short period of time.  We are proud of him and hope you will acknowledge his achievement the next time you see him in the office.

The summer brings about travel and vacations for many including those of us at Waterway.  Over the coming weeks you will notice a rotation of vacation for everyone on the team.  We believe it is essential and encourage each team member to enjoy their time away with family.   The office continues to be staffed for normal hours all summer so please feel welcome to call or visit anytime you are in the area.  We wish you a safe and happy summer!

Dan Michalk, CFP®, ChFC

2017-05-20T19:56:40+00:00