Enjoy this week's edition of The Friday Buzz. I hope it's worthy of a few minutes of your time to wrap up your week and kick off the weekend.
- Stocks Recover Mid-Week: The volatility continued in stocks this week. On Monday all three major stock indexes were up strongly before reversing and ending the day down. During trading Monday, all three major indexes, the Dow, NASDAQ, and S&P were in correction territory, which is defined as being 10% below their peak. By Wednesday the S&P had finished up two consecutive days in a row for the first time for October.
- GDP Still Going Strong: Last Friday the Commerce Department reported that the economy grew at a 3.5% annual rate in the third quarter after adjusting for inflation. The second quarter growth rate was 4.2%. Those might be the highest rates we see in a while as the Atlanta Fed expects 4th quarter growth to come in at 2.6% and the Federal Reserve believes the next few years will come in even a little lower.Earnings Still Strong: As of last week, 48% of S&P 500 companies had reported Q3 earnings. Those companies' earnings are up 22.5% ahead of last years. This is a great number, of which, about half is estimated to be from the new lower corporate tax rate of 21%. But even half of that growth is still a good number. Professor Jeremy Siegel in his seminal book "Stocks for the Long Run," states the long-term earnings growth rate for stocks is 7.7% and he is using data going back to 1871. And earnings are projected to grow another 9.9% in 2019.
- U.S. Wages Up: The wages and salaries paid to private-sector workers rose 3.1% in Q3 from a year earlier. That is the strongest year-over-year gain since 2008. Wage growth is one of the key indicators the Federal Reserve will examine to determine how high they should raise short-term rates.
- Fed Governor Backs Pausing Rate Hikes: Neel Kashkari, the president of the Federal Reserve Bank of Minneapolis, advocated pausing short-term rate hikes. What was unusual is he wrote it in an Opinion article for the Wall Street Journal. It is not unusual for Fed presidents to openly discuss their opinions, but usually it is expressed in speeches or interviews. Over the last month, others have also advocated for pausing short-term rates. The meeting notes from the next few Federal Open Market Committee Meetings should be interesting and hopefully give clarity on the Committee's thoughts.
- Utah 529 Plan is Rated Gold: We help many clients with planning and saving for college. The best vehicle can vary by client but many times a 529 plan account is recommended. If the client's residential state plan is not beneficial or advantageous, we will recommend the Utah 529 Plan. The Utah plan has great investment options, is easy to work with, and periodically lowers the plan fees. Morningstar performs an annual ranking of 529 plans, and this year only four state plans received the highest ranking of Gold, and Utah was once again given that rating. We're happy the plan continues to offer a great experience for our clients!
- The World is Getting Better for Children: It's easy to focus on negative feature stories in the news, but the bigger picture looks different. I came across this great graphic that shows how child mortality rates have declined dramatically across the decades. Even over the last two decades the decline has continued in Africa, Asia, and Latin America. A little good news to cheer about.
- Tuesday is Voting Day: November 6th the nation will decide on all 435 Representatives for the House, 35 Senators, and 36 Governors. Many will be watching the House race, as it is projected to turn over to the Democrats. No matter who you vote for, get out there and vote!
- Mueller Probe to Gain Visibility After Election? The media has not focused on the Mueller probe much lately, but a lot of political pundits believe the will take center stage post-election. The investigative team has quietly been working and conducting interviews. If the Democrats win the House, will an impeachment proceeding follow? We’ll have to wait and see, which is a nice segue to…
- Autumn Cocktails: While you are waiting for the election results on Tuesday, maybe you can enjoy a nice fall cocktail by the fire. Besides, who couldn’t use a strong drink while watching our politics these days? I think the Maple Bourbon Old-Fashioned sounds yummy.
Thank you for taking the time to read The Friday Buzz. Have a great weekend!