If you don’t have to return to work until Monday 9/08/14, then you may be one of the 535 members of Congress that are now on recess until the week after the Labor Day holiday. Upon their return to Washington, the 435 House members and 33 Senators that are up for re-election will have just 57 days until the 11/04/14 mid-term voting takes place. Democrats are hoping to avoid the performance of the Republicans in the 2006 mid-terms (i.e., 6 years after President Bush took office) when the party not in control of the White House picked up 30 House seats and 6 Senate seats (source: Congress).
As had been expected, the Federal Reserve announced on 7/30/14 that its monthly asset purchases will be $25 billion going forward, the 6th reduction since December 2013 when purchases were $85 billion a month. The Fed is on track to end its “print-and-purchase” policy at its late October 2014 meeting. When the current program was announced by the Fed on 9/13/12, then Chairman Ben Bernanke anticipated running with the strategy “as long as necessary,” stating at the time that interest rates will be kept at historically low levels through at least the middle of 2015 (source: Federal Reserve).
The government reported strong +4.0% growth in the US economy during the 2nd quarter (i.e., quarter-over-quarter change expressed as an annualized number), the largest increase over the previous quarter’s result in 14 years. This caused the bond market to react negatively (i.e., prices down and yields up), anticipating that the huge jump in the economy may push the Fed into earlier action than had been expected. But the nation’s jobs report at week’s end (gain of +209,000 new hires) was far from robust and quickly dampened the heady expectations of premature Fed rate hikes (source: BTN Research).
Notable Numbers for the Week:
- FIFTY YEAR BOND? – The US government is soliciting indications of interests in Treasury bonds with maturities longer than 30 years. Mexico offered a 100-year bond in March 2014 (source: BTN Research).
- A BETTER WAY – Almost 3 in 4 Americans (72%) that have inherited assets from deceased parents plan on handling the disposition of their wealth differently than the way their parents transferred assets (source: UBS).
- MOST ARE UNPREPARED – Just 5% of Americans currently on Medicare have retirement savings of at least $1.11 million. 50% have savings less than $61,400 (source: Kaiser Family Foundation).
- IMPACTING THOUSANDS – The city of Detroit filed for Chapter 9 bankruptcy protection on 7/18/13. Judge Steven Rhodes will preside over the city’s bankruptcy trial, scheduled to begin on 8/21/14 (source: The Detroit News).
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This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed by NFP Securities, Inc. as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. The indices mentioned are unmanaged and cannot be directly invested into. Past performance does not guarantee future results. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the US stock market. Copyright © 2014 Michael A. Higley. All rights reserved.
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By By T. Kevin Taylor