The only thing greater than the beauty of San Francisco last week was the talent of the keynote speakers at this year’s MDRT Top Of the Table Meeting. What a fine financial conference!
We think you’ll enjoy reading briefly about Flight 1549, the Miracle on the Hudson, as shared by its Captain, “Sully” Sullenberger. Also, we’re sure you’ll find the comments of former Secretary of State Condoleezza Rice and ESPN broadcaster Dick Vitale worthwhile. It was great hearing from them in person.
This international meeting of top advisors is a special event. It was also filled, as always, with cutting edge information about the financial world that we’ll utilize in working with our great clients.
Please let us know your thoughts!
Best always,
Lee and Jeremy
PS—As you’ll see, markets were moving nicely, too!
This Week’s Quotes:
“That wasn’t as bad as I thought it would be.”
― Captain Sullenberger to his co-pilot, after the emergency landing in the Hudson
“Only in this amazing country could a descendent of slaves become its 66th Secretary of State.”
― Condoleezza Rice
“When you have a lucky life, pass it on, pay it forward, and give it back.”
― Dick Vitale, coach, ESPN broadcaster
JL Davis Thoughts This Week:
Last week we took a little time out to “sharpen the saw”, as author Stephen Covey put in some years ago. Ever trying to get sharper is a habit of ours. The venue was the MDRT Top of the Table meeting in San Francisco, attended by about 350 top financial advisors from more than 30 countries. Invitations are coveted-- membership in “TOT” is attained by less than ½ of 1% of financial advisors worldwide.
While the financial topics of the day were laid out in detail through numerous breakout sessions and programs, the most compelling communication came from the keynote presentations given this year.
Day One’s keynote speaker, Captain Sully Sullenberger, captivated the audience with a moment by moment personal recollection of Flight 1549, the Miracle on the Hudson – and the only known successful emergency water landing of a commercial aircraft. Lasting only 210 seconds, the flight was pure terror for passengers and crew alike, to be sure. But the skills needed for a successful outcome after the devastating bird strike to the plane’s engines were a tall order. Those skills took Captain Sully 42 years to develop. The stoic pilot carefully detailed his reliance on teamwork, training, task shedding, focus and resolve. Announcing to the passengers only “brace for impact”, Captain Sullenbeger saw to it that in the end all on board disembarked safely from the plane—and the frigid Hudson waters that cold morning. The amazing cockpit recording and flight recreation are worth your time at:
https://www.youtube.com/watch?v=pWpSAfF6elI
Day Two’s guest lecturer, former Secretary of State Condoleezza Rice, humbly demonstrated her prodigious intellect in an eloquent speech where she walked the audience through the four “shocks” to America that occurred on her watch under President George W. Bush. Connecting those elements to present day events such as ISIS and the Russian incursion, she then postulated about the future. Her view is of a Middle East in turmoil for many, many more years to come and an emboldened Russia with an oil stranglehold on Europe. She sees a Europe dominated by German economic power for the foreseeable future and buffeted by change. As for Asia, she cited the 186,000 riots in China in recent years (yes, 186,000) and the inexorable climb of a population hungry for economic success and, perhaps, freedom.
On the third day, ESPN broadcaster Dick Vitale brought his over the top energy and message, “Winning the game of life.” For college basketball fans, “Dickie V” is a living legend. His comments centered on the lessons learned from Mom, Dad, and family in his boyhood Catholic home. Lessons that formed every element of his remarkable life. He described how his personal greatest setbacks became the stepping stones to his ultimate successes, which you can hear about at https://www.youtube.com/watch?v=v5-acctJnMs. (Caution—it’s 28 minutes!) Now 75 years young, his “V Foundation” (named for his friend and fellow coach Jim Valvano) will raise millions yet again this year to treat pediatric cancer, propelled by the likes of celebrities Magic Johnson and Kenny Chesney and many others.
We will carefully evaluate the latest in advanced wealth management and estate planning concepts we learned in San Francisco. We’ll certainly stay humbled and inspired by the examples of the incredible people you just read about. Most important, we’ll take to heart their common theme, which is also our most fervent aspiration—to serve.**
Lee and Jeremy
Market Week: September 22, 2014
The Markets
Whether it was Fed-induced relief, anticipation of one of the world's largest IPOs, or anticipation of the tech world's largest iPhone ever (so far), something put equities investors back in a record-setting mood once again last week--at least those who were interested in large-cap stocks. The S&P 500 and Dow industrials hit their 34th and 18th all-time record highs of 2014 respectively, while the Nasdaq was basically flat and the small caps of the Russell 2000 saw a loss.
Key Dates/Data Releases
9/22: Home resales
9/24: New home sales
9/25: Durable goods orders
9/26: Q2 GDP (final)
Last Week's Headlines
• The Federal Reserve's monetary policy committee reaffirmed its "considerable time" estimate for starting to raise interest rates once its bond-buying program ends in October (absent any economic surprises). However, increases could be steeper than previously thought. A majority of members expect the Fed funds interest rate (the rate at which banks lend to one another) to rise to almost 1.4% by the end of next year, almost 2.9% by December 2016, and 3.75% a year later. Only three months ago, the 2015 and 2016 rate forecasts were 1.125% and 2.5%. The Fed also will keep reinvesting the proceeds of its existing holdings until rates begin to rise, and will begin to test using so-called reverse repo agreements (essentially a type of money-market instrument) as part of its strategy for raising rates.
• Falling energy costs in August, including gas prices, more than offset higher prices for food and shelter, leaving the consumer inflation rate down 0.2% for the month. According to the Bureau of Labor Statistics, that left the CPI-U index up only 1.7% for the last 12 months--well within the Federal Reserve's target range. Meanwhile, the BLS said final-stage wholesale prices remained essentially flat for the month, with a 1.8% inflation rate for the last year.
• As the summer wound down in August, housing starts and building permits slowed but remained higher than the previous summer. The Commerce Department said housing starts were down 14.4% for the month but were 8% higher than in August 2013, while despite a 5.6% decline in August, building permits were 5.3% higher than a year earlier.
• U.S. manufacturing data was mixed. While the Philly Fed index continued to show growth, the pace retreated a bit from its three-year high of the previous month, slipping from 28% to 22.5%. Also, the Fed's gauge of industrial production nudged downward 0.1% in August--the first decline since January--and its July gains were revised downward. However, the Fed's Empire State index rose to its highest level since October 2009, going to 27.5% from 14.7%.
• The Conference Board's index of leading economic indicators continued to rise in August, though the 0.2% increase represented a more sluggish pace than during the previous two months. The Conference Board said housing permits and business spending on capital equipment held back the index.
• (Still) a united kingdom: Scotland voted to remain part of the UK. After an initial relief rally, the British pound saw a post-vote pullback that left it little changed from before Thursday's election.
• Economic data from China showed slowing in some key areas of the country's economy. Though industrial production was up 6.9% in August from a year ago, that was down substantially from July's 9% increase. Also, housing sales were down nearly 11% since the beginning of the year. However, interest in Chinese economic data paled in comparison to the attention paid to the IPO of Alibaba, reportedly one of the world's largest ever.
Eye on the Week Ahead
With the Fed meeting, the Scottish independence vote, and Alibaba's IPO now in the rear-view mirror, housing stats plus the final Q2 GDP number will give investors some economic data to focus on.
Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). 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 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.
Prepared by Lee Davis** and Broadridge Investor Communication Solutions, Inc. Copyright 2014
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