July 20, 2015 | Market Update
Week in ReviewThe markets experienced another week of volatility, with bonds making a short comeback of .42%.
The Fed finalized a pair of rules in the Dodd-Frank law that raises the capital requirements for 8 of the so-called "too-big-to-fail" banks. J.P. Morgan Chase & Co, the largest US bank will have to maintain more capital than any of the other banks, with a requirement to raise an additional 4.5% in capital.
Inflation has come to the attention of Congress once again. In Washington not all programs are created equally, and some vital programs havent had their revenues adjusted for inflation in over 20 years. This is especially true for the Highway Trust Fund, which pays for much of the nation's highway and mass-transit projects. The fund has been depleted because the federal tax of 18.4 cents/gallon of gasoline hasn't been changed since 1993.
Gold, Silver and Platinum hit a 5-year low! The Gold for August Delivery, one of the most actively traded futures, closed down 2.2% - a level not seen since March 2010. Silver sank to its lowest level since 2009, and Platinum hit its lowest price in more than 6 years.
Understanding The NYSE's Unexpected ShutdownFor those of you wondering what last weeks' NYSE shutdown meant, here's a quick recap:
The shutdown only affected one segment of the New York Stock Exchange (NYSE) that shut down for nearly four hours due to a technical problem on Wednesday, July 8. The vast majority of markets we trade in remained open for trading. Overall, this temporary glitch was a non-event.
However, it serves as a reminder of how quickly issues like this could happen and potentially change the course of daily business. Just to recap:
1) The stock market primarily represents ownership of companies or company debt.
2) Just because a stock is not actively pricing on an exchange doesnt mean there is no value.
3)Companies such as Apple and Walmart were still selling products and creating earnings while the exchange worked out its glitch. As long as a glitch does not materially impact the underlying business, there is no reason to be alarmed.
4) Access to a stocks value can be delayed. It is always prudent to have some liquid cash for immediate needs, and not rely on market-related products for payment needs. The securities exchange is very liquid, until its not.
4) For our clients with distributions, we fund three months worth of distribution in their accounts. This provides some cushion even in their investment accounts.
Questions? Comments? Ask David!
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by radical promoting and their editorial staff based on the original articles written by jeff cutter in the falmouth enterprise. This article has been rewritten for David Gaylorand the readers of David's Family Finance. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.