Darren's Blog

A resource for the thoughts and writings of Darren Brennan

June 2017 Market Commentary

 

Economic Outlook

 

The optimism surrounding a Trump economy can lead to consumers ramping up their spending, corporations finally putting their trillions of cash to work, and Americans willing to take the risk to start their own business-all of which should benefit the economy greatly. And it seems as if investors are also optimistic on the future as stocks are at or near record highs.

However, President Trump does not have an easy path ahead of him to try and get his agenda moved through Congress. It appears that there are many in Washington on both sides of the isle who are “globalists” where an “America First” policy does not fit in their plans. These politicians are not going to relinquish their grip on power so easily so you have a President that is besieged by not only the Democrats, but also those within his own party. This explains much of the day-to-day chaos that has gripped Washington and the unsubstantiated reports that utilize “unnamed” or “anonymous” sources that try to pass as real journalism. In the meantime, I expect that Trump will continue to push through his agenda with the tax cut being the issue that I am most focused on right now. Historically, tax cuts have acted as an economic stimulus, which in turn, could bode well for the stock market. So naturally I would like to see a big tax package that lowers the tax rates not only for individuals, but also for corporations, passed by September which would be retroactive to January 1st of this year.

 

 

 

Stock/Bond Report

 

Although the U.S. markets are trading near record highs, we recently saw that any possibility of Trump not achieving his goals could send stock values declining. This was evidenced when the ridiculous impeachment talk intensified in early May, which then led to a sell-off in the equity markets. It is important to remember that the equity market appears to be pricing in Trump getting his agenda through, and if Trump’s agenda is delayed or diminished, there is a real chance that stock values will adjust to the downside. However, I still think that those politicians who are most vulnerable in 2018 will eventually come to the table ready to deal and eventually Trump gets his agenda through by the end of the year, which could provide added optimism for the stock market. In the meantime, the current bull market that began the day after the election looks to have legs. I am seeing that the rally is not based on the backs of a few stocks, but rather it is more broad-based across many industries, which is extremely encouraging.  

I continue to think bond values will remain in a trading range until there is clarity on whether Trump can get the economy jumpstarted again, and we have seen this recently as bond values have actually seen less volatility and have risen slightly since the Fed last raised rates. However, I am planning on interest rates trending higher over the next 5 years, at least, as the Fed tries to unwind the artificially low rates that were the result of the Great Recession. I suspect that over the next two years, the bond market will offer me the most challenge in managing my client’s assets, but I do have experience negotiating the choppy waters of the debt world, as this is not the first time there have been rising interest rates since I have been a financial adviser.

 

 

 

 

 

Just a Thought

 

 

 

“The world would never amount to a hill of beans if people didn’t use their imaginations to think of the impossible.”

 

-Pete Seeger, folksinger

 

 

 

 

 

The views expressed are not necessarily the opinion of FSC Securities Corporation, and should not be construed directly or indirectly, as an offer to buy or sell any securities mentioned herein. Investing is subject to risks including loss of principal invested. Past performance is not indicative of future results.   This material contains forward looking statements and projections.  There are no guarantees that these results will be achieved. No investment professional or strategy can accurately predict market performance. The bond market involves risk. In general, when interest rates go up, bond values go down and vice versa, and this effect is usually more pronounced for longer-term securities. No investment strategy can guarantee a profit or protect against loss. **Guarantees are subject to the claims paying ability of the insurance company.

 

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 Any fixed income security sold or redeemed prior to maturity may be subject to a substantial gain or loss. Depending upon the municipal bond offered, alternative minimum tax and state/local taxes could apply. Generally, municipal bonds generate tax-free income, and therefore pay lower interest rates than taxable bonds. Therefore, municipal bonds may not be suitable for all investors. Please see your tax professional prior to investing.

 

 

 

There is no guarantee that a diversified portfolio will outperform a non-diversified portfolio in any given market environment. The price of commodities, such as gold, is subject to substantial price fluctuations over short periods of time and may be affected by unpredictable international monetary and political policies. The market for commodities is widely unregulated and concentrated investing may lead to higher price volatility. Sales of CD's prior to maturity may result in loss of principal invested. Federal deposit insurance generally covers deposits of up to $250,000 in the aggregate for each depositor in each bank, thrift, or credit union. A customer should ensure that purchasing any insured CD will not bring his or her aggregate deposit over $250,000 FDIC insurance limit. Investors should be aware that there is no FDIC insurance coverage for any principal losses that may be incurred.

 

These links are provided for informational purposes only and FSC Securities Corporation does not endorse or accept any responsibility for the content of these websites. FSC Securities Corporation does not guarantee the accuracy or completeness of the information appearing on the linked pages and does not assume any liability for any inaccuracies, errors or omissions in any information provided on the pages.

There are no guarantees that dividend-paying stocks will continue to pay dividends. Companies may reduce or eliminate the payment of dividends at any given time.

 

 

 

July 2017 Market Commentary from Darren Brennan
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