Last week’s Black Forest Fire dominates our thoughts in today’s Weekly Update. What was to have been a review of the interesting sessions Jeremy and I attended at the international financial conference in Philadelphia will have to wait another week.
Having had some of our wonderful clients lose their homes in the conflagration here in Colorado is far more concerning to us. It also serves as a reminder to review one’s personal Disaster Recovery Plans which we can help you with (see attached).
We hope you’ll keep the 300 or so families who lost their homes in your thoughts and prayers. As will we.
All the best,
Lee and Jeremy
PS-- As you’ll see in the Update, markets sold off a bit last week in spite of still more solid U. S. economic data. We expect a bounce back…. We will see! L&J
This Week’s Quote:
“Your own property is concerned when your neighbor's house is on fire.”
~ Horace
JL Davis Thoughts This Week:
Last week’s fire in the Black Forest area of Colorado Springs was indeed a raging inferno. Sadly, several of our clients lost their homes as well as all the contents that they were unable to physically escape with. They are certainly in our thoughts and prayers as we write this missive. We’ve been in touch with them and will be helping where we can.
A few years ago, the Castle Pines Village area south of Denver where Lee and Kathy live was similarly threatened. Flames encroached on the western boundary and blustering winds flowed heavily eastward which meant that the entire area of approximately 1400 homes was in direct line of the fire. All homeowners were notified by reverse 911 calls. Lee and Kathy quickly gathered contents of their fireproof safe, a few family heirlooms, art pieces, computers, some personal items, and family pictures as well as some personal items and shoved them into their automobiles. Then they quickly left.
Thankfully, the wind then changed direction, blowing the fire back onto itself. The brave firefighters from several communities that were involved were able to get the flames under control and no one in Castle Pines Village lost anything. Others were not so lucky.
Neither were our friends in Black Forest. While it will be sometime before the cause of the flames can be discovered, it will be much longer before life returns to anything close to normal for those who lost their homes. We’ll be right here to help, as will many, many others.
We have written before about the need for a disaster protection plan for all of us in case of a natural disaster such as the recent fire. This terrible circumstance once again reminds us of the need for such a plan.
If you, your loved ones, or business associates would like a copy of the material we have prepared for such a plan, please jot us a note in response to this email and we will happily provide it. Please also feel free to pass this along to others you care for who may need a gentle reminder.
In the meantime, let’s all keep our friends in Colorado Springs in our thoughts as they navigate the difficult terrain ahead.**
Best regards,
Lee and Jeremy
Market Week: June 17, 2013
The Markets
Investors already on edge about the future of central bank efforts around the globe seemed unnerved by the Bank of Japan's decision not to expand economic stimulus efforts there and arguments over a German court challenge to the European Central Bank's ability to aid weaker eurozone members. The Dow industrials continued to see triple-digit swings, and it was the third week out of the last four in which the S&P 500 has lost more than 1%. Bond markets, under pressure for the last six weeks, suffered from mood swings, especially abroad. The 10-year Treasury managed to rebound from midweek losses, though demand at an auction of 30-year Treasuries was weak.
Last Week's Headlines
•A nearly 2% increase in auto-related sales helped drive up retail spending 0.6% in May, according to the Commerce Department; not counting autos, sales rose 0.3% for the month. Total sales were 4.3% higher than a year earlier.
•After the Bank of Japan declined to inject further economic stimulus through further expansion of its bond-buying program, the yen rose strongly against the U.S. dollar. The BOJ's decision raised concerns that a stronger yen might make Japanese companies less competitive globally.
•Wholesale prices rose 0.5% in May, according to the Bureau of Labor Statistics. The increase was driven largely by the prices of gas, trucks, and food (a 41.6% leap in the cost of eggs was responsible for 60% of the increase in food prices). The May figure brought the wholesale inflation rate for the last year to 1.7%.
•U.S. industrial output was little changed in May. The Federal Reserve said utilization of the nation's manufacturing capacity slipped 0.1% to 77.6%, while industrial production was up 0.1% after declining slightly for two months. In China, factory output slipped slightly in May but was still up 9.2% year-to-date.
•Standard and Poor's raised its outlook for the United States' credit rating from negative to stable, though it maintained its AA+ rating for U.S. debt. Meanwhile, the International Monetary Fund lowered its forecast for U.S. growth in 2014 to 2.7% from 3%, and cautioned that the Fed should be careful about withdrawing economic support too quickly.
Eye on the Week Ahead
Tale of the taper: All eyes will be on the Fed's Wednesday announcement and Chairman Ben Bernanke's press conference afterwards for any guidance on when economic support might begin tapering off. Coupled with key manufacturing and housing data as well as the quadruple witching options expiration at week's end, there's a lot of potential for the news to move markets.
Key dates and data releases: Empire State manufacturing survey, international capital flows (6/17); housing starts, consumer prices (6/18); Federal Open Market Committee meeting announcement (6/19); home resales, Philly Fed manufacturing survey (6/20); quadruple witching options expiration (6/21).
Data sources: Includes data provided by Brounes & Associates. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results.
The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indexes listed are unmanaged and are not available for direct investment.
Prepared by Lee Davis** and Broadridge Investor Communication Solutions, Inc. Copyright 2013
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