Market News – Week of January 22nd, 2018

LOW VOLATILITY CONTINUES WITH NO SIGNS OF STOPPING:

It has been 392 days since the last time the S&P 500 pulled back 5% or more. The record is 394 days set in the mid-90s. The average is 92 days.

MARKETS SHRUG OFF GOVERNMENT SHUTDOWN:

The S&P 500, and other U.S. indices, hit fresh record highs as investors shrugged off the threat of a U.S. government shutdown. Instead, the focus was on corporate earnings. On Friday, several regional banks announced their positive fourth quarter results, which lifted their stock prices and financial stocks in general. On the other hand, American Express recorded its first quarterly loss in more than 25 years and IBM surprised to the downside. Keep in mind that fourth quarter earnings reports will include more rosy future projections as companies take tax savings into account.

APPLE REPATRIATING:

Investor optimism was aided by Apple, Inc.’s announcement that it would pay a one time tax of $38 billion on its overseas cash holdings in order to ramp up spending in the U.S. The total planned spending amounts to about $350 billion over five years.

GOVERNMENT SHUTDOWNS HAVE HISTORICALLY LED TO MODEST LOSSES:

Since 1976, the average market downturn following a U.S. government shutdown has been 0.6%. There have been 19 in that timeframe ranging from one to 21 days.

TO OUR SURPRISE:

It is looking more and more like Greece will be able to exit from their bailout program this August. This follows nearly eight years of economic and political turmoil in that country. Last week, Greek parliamentarians approved the latest package of reforms including new bankruptcy procedures and limits on unions’ ability to stage strikes, that were demanded by creditors to release the next tranche of bailout funds of about $7 billion. Greece’s economy returned to growth last year after nearly ten years of recession.

REFINANCING STUDENT LOANS:

Often, the key to getting ahead is getting that advanced degree, or simply getting a first degree. It often comes at the cost of high student loans, especially for doctors and lawyers, but others also. Often, graduation comes at the cost of lots of separate, government and private, student loans at varying, and sometimes rather high interest rates. Only a few years ago, some financial institutions stepped into the breach, and refinancing to a lower interest rate, consolidated loan can become an attractive option for many who are now making decent income but are burdened with these loans. Some of the companies are becoming well-known, others less so, but here is a list of ones of which we am currently aware:

• SoFi (sofi.com)
• Earnest (earnest.com)First Republic Bank (firstrepublic.com)
• Common Bond (commondbond.co)
• LendKey (lendkey.com)
• Credible (credible.com)
• Splash Financial (splashfinancial.com)
• Education Loan Finance (ELFI) Southeast Bank (elfi.com)
• LinkCapital (linkcapital.com)
• Laurel Road (laurelroad.com)

We do not endorse any of these, and have no particular expertise with any, but have had some limited experience with a couple. It is worth researching these companies if you or one of your children is saddled with lots of student loans.

References:

LOW VOLATILITY CONTINUES WITH NO SIGNS OF STOPPING: https://horsesmouth.com/what-s-behind-the-bullish-start-to-2018
TO MY SURPRISE: https://www.wsj.com/article_email/greece-inches-closer-to-ending-bailout-regime-1516098601-lMyQjAxMTE4NTE4NzIxNzc5Wj/
APPLE REPATRIATING: https://www.wsj.com/articles/apple-to-pay-38-billion-in-repatriation-tax-plans-new-u-s-campus-1516215419?mod=searchresults&page=1&pos=8
GOVERNMENT SHUTDOWNS HAVE HISTORICALLY LED TO MODEST LOSSES: https://www.marketwatch.com/story/heres-how-the-stock-market-has-handled-past-government-shutdowns-2018-01-16