Once again, domestic markets reached record highs last week. The S&P 500 was up by 0.69% and the NASDAQ increased by 0.12%.[i] With its 0.96% week-over-week growth, the Dow has posted gains for 11 straight days and is currently experiencing its longest record streak since 1987.[ii] On the other hand, international equities in the MSCI EAFE lost ground, dropping by 0.25% for the week.[iii]
Last week did not offer much new information on economic fundamentals. With the exception of January increases for new single-family homes and the fastest pace of existing home sales since 2007, we do not have a tremendous amount of new data to share.[iv]
In the absence of this data, focusing on the roiling political conversations becomes much easier. As we have said before, we encourage you to pay attention to how the economy is performing—not what the headlines are blaring. Rather than recount the policy debates and political back-and-forth, we will discuss three important economic developments on our horizon: revised GDP, February CPI, and Fed interest rate deliberations.
February 28: Revised Q4 2016 GDP
On Tuesday, we will receive the second growth estimate of the U.S. economy during the fourth quarter of 2016, which came in at 1.9% in the first estimate.[v] The consensus is that the revised estimate will increase to 2.1%, but we will have to wait until March 30 to see the third and final measurement of Q4 economic growth.[vi]
The Bottom Line: GDP is key in measuring the U.S. economy’s strength. Any upward revisions would signal our economy is growing faster than the initial readings indicated.
March 15: February Consumer Price Index (CPI)
In January, the CPI experienced its largest month-over-month jump since 2013.[vii] The upcoming February report will help to show whether prices are continuing to increase and how the cost of living is changing.
The Bottom Line: The CPI measures changes in the average cost of specific goods and services that consumers purchase and is a key indicator of inflation.[viii] This data affects the bond and equity markets, labor contracts, Social Security payments, tax brackets, and more.[ix]
March 15: Federal Open Market Committee (FOMC) Meeting Announcement
From March 14 – 15, the FOMC will meet and determine whether or not to raise the Federal Reserve’s benchmark interest rates.[x] After the meeting concludes, Fed Chair Janet Yellen will announce their decision—a move that market participants will watch very closely. Yellen recently commented that “Waiting too long to [raise rates] would be unwise.”[xi] However, Wall Street does not expect an increase in March and shows a less than 1 in 5 chance of this move.[xii]
The Bottom Line: When the Fed changes its benchmark interest rate, the effects reverberate throughout our economy. According to Barron’s, the FOMC interest-rate policy meetings “are the single most influential event for the markets.”[xiii] If the Fed decides to raise rates, this choice would affect interest rates now and also imply that monetary policy will continue to tighten throughout 2017.[xiv]
These upcoming details are only a few of the noteworthy economic details on the horizon. If you have questions about what other fundamental data we are tracking or believe could affect your financial life, we are always here to talk.
Monday: Durable Goods Orders, Pending Home Sales Index
Tuesday: GDP, Consumer Confidence
Wednesday: Motor Vehicle Sales, PMI Manufacturing Index, ISM Mfg Index,
Friday: PMI Services Index, ISM Non-Mfg Index
|Data as of 2/24/2017||1-Week||Since 1/1/17||1-Year||5-Year||10-Year|
|Standard & Poor’s 500||0.69%||5.74%||22.67%||14.67%||6.31%|
|US Corporate Bond Index||0.75%||1.40%||5.48%||3.67%||5.16%|
|Data as of 2/24/2017||1 mo.||6 mo.||1 yr.||5 yr.||10 yr.|
|Treasury Yields (CMT)||0.40%||0.65%||0.80%||1.80%||2.31%|
Notes: All index returns exclude reinvested dividends, and the 5-year and 10-year returns are annualized. Sources: Yahoo! Finance, S&P Dow Jones Indices and Treasury.gov. International performance is represented by the MSCI EAFE Index. Corporate bond performance is represented by the SPUSCIG. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly.
Ginger Sesame Salmon Packets
An easy way to serve this Asian-inspired entree.
- 4 thin onion slices, separated into rings
- 4 medium carrots, shredded or julienned
- 4 fresh salmon filets (4 to 6 ounces each)
- 2 teaspoons fresh ginger, grated
- 2 tablespoons seasoned rice vinegar
- 1 teaspoon sesame oil
- Salt and pepper
- Preheat oven to 450° or prep grill to medium-high heat.
- Cut 4 pieces of non-stick aluminum foil, large enough to wrap each piece of fish.
- Place 1/4 of onions and carrots into the center of each piece of aluminum foil.
- Top each onion and carrot pile with a salmon filet.
- Sprinkle ginger on salmon filets.
- Drizzle sesame oil and rice vinegar on each filet.
- Season with salt and pepper, to taste.
- Bring up ends of one foil square.
- Seal packet by double-folding ends and top, leaving space inside for heat to circulate.
- Repeat foil prep for all packets.
- Garnish with a pinch of fennel.
If cooking in oven
- Place 4 packets on baking sheet.
- Bake for 16 to 20 minutes.
If cooking on grill
- Place packets directly on heated grill and close lid.
- Grill for 14 to 18 minutes.
Recipe adapted from The Food Network[i]
Know These Helpful Facts About Capital Gains and Losses
The IRS requires taxpayers to claim gains and losses they have on any capital assets they own when filing their personal taxes. How much you pay in taxes and whether or not you can deduct items depends on your unique financial details. Here are some details to keep in mind as you file your taxes this year.
What are capital assets?
You hold capital assets when you buy both physical and investment properties. Physical property includes items like a home or car. Investment property includes assets such as stocks and bonds.
What are gains and losses?
Whenever you sell a capital asset that you own, you will have either a gain (profit) or loss (deficit). You calculate your gain or loss by determining the difference between the basis (typically what you paid for the capital asset) and what you received after the sale.
Details to Consider
Net Investment Income Tax:
When filing your taxes, your income must include all capital gains. Depending on how much income you made, you may have to pay the 3.8% Net Investment Income Tax on your capital gains.
Taxpayers are able to deduct any financial losses on their investment properties. However, any physical properties you own for personal use do not count toward your deductible losses.
You may be able to carry over your total net capital losses if this amount is more than the amount you’re allowed to deduct.
Tip courtesy of IRS.gov[i]