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    Markets "In a Nutshell" for July 3, 2018

    Jul 03, 2018

    Investment Week at a Glance

    Stocks finished lower for the week. The Dow Jones Industrial Average was down 1.26%, the S&P 500 fell 1.33%, the New York Stock Exchange Composite (2,000 stocks) was down 1.07% and the average investors index (Value Line Index) was down 0.16%. Foreign stocks (DJ Global ex U.S.) were down 1.90%. Bond prices were higher for the week, pushing the yield on the 10-year U.S. Treasury down 4 basis point to finish the week at 2.86%. (Data sources: Barron’s Financial, Wall Street Journal)


    Economic Signals are Strong as Quarter Ends

    The second quarter of 2018 ended with economic signals both strong—new home sales in May were well ahead of forecasted estimates—and tepid: GDP for the first quarter was revised lower for the second time, to just 2.0%, on downward revisions to spending on services and decreases to inventory investment.

    U.S. equity investors generally maintained their preference for defensive sectors last week, with the utilities and consumer staples sectors outperforming. Among cyclical sectors, energy was the bright spot. However, most sectors were negative—with the once red-hot tech sector suffering the worst on reports that the Trump administration might restrict U.S. technology companies' exports to China. Talk from the White House about possibly banning Chinese companies from acquiring U.S.-domiciled tech firms further hurt the sector.

    In the fixed-income markets, longer-duration U.S. government bonds underperformed comparable European bonds—although, on the plus side, both were up for the week. Emerging markets debt underperformed as currencies in these markets continued to weaken.


    Good News Overseas

    International economies saw mostly good news.  French consumer spending was higher than anticipated. Great Britain's GDP for the first quarter beat expectations on a quarter-over-quarter basis and was in line with predictions on a year-over-year basis. German unemployment was better than expected. (However, CPI and retail sales were lower than forecast.)

    Overseas, European stocks were weak—especially in Germany, where concerns about Trump's tariffs hitting the auto Industry weighed on the market. In contrast, larger emerging markets in Latin America such as Mexico outperformed as political fears subsided.



    Divorce will affect many retirement-plan owners. The account may be split as part of the divorce settlement. Which of these is NOT TRUE?

    a)   Employer sponsored retirement plans are split using a qualified domestic relations order

    b)   IRA’s are split using a divorce decree

    c)   Retirement assets should be transferred from one spouse to the others to avoid taxation to the owner of the source account

    d)   A distribution from an employer plan to an ex-spouse who is under 59.5 years of age is subject to a 10% early distribution penalty


    Have a good week!





    Answer to quiz:

    d)   There is an exception to the 10% penalty for distributions made from an employer plan to an ex-spouse under a qualified domestic relations order