Friday’s Financial Update 4-7-2017

by Michelle Smalenberger, CFP® / April 7, 2017
Written By: Michelle Smalenberger CFP® 

Have you been busy?  Perhaps, you feel like you’ve missed a lot of the news throughout the week.  Let’s review all that has filled our screens, newspapers, and airwaves.  The following is a graphic I put together to summarize big picture stories and the way to invest in the midst of everything happening. The snapshot below is of the S&P500 from CNBC overlaid with highlights of the events this week I wanted to point out.  Individually, they may seem like they should make a bigger impact than what really happened.

Similar events have been categorized by color:

Green reflects news political in nature

Blue reflects news economical in nature

Red reflects news geopolitical/military defense in nature

Market Risks - 4.7.17

This week was a very clear reminder of various risks that are present when you invest in the stock market.  In the last five days alone we have been reminded of the risks in the economy continuing to grow, such as political leaders not working together and geopolitical conflicts.

At a time like now, where hard decisions are being made to gain progress and maintain strength, the stakes for getting these decisions right are high.  Despite all this, the stock markets have held strong.

Politically, the confirmation of Neil Gorsuch to the Supreme Court took all week to complete.  A filibuster to prevent a vote was put in place by those in opposition.  In order to gain his confirmation, the Republicans had to enact the “nuclear option” which removes the 60-votes required.  The Senate followed with a 55-45 vote in favor of Mr. Gorsuch’s appointment confirmed today.  The nuclear option sets a precedent for future votes but as witnessed by the graph above did not directly impact market performance.

Economically, there were a couple of reports given this week that weren’t as positive as hoped.  The US only created 98,000 jobs in March versus 180,000 expected.  There were two main reasons that the numbers came in low: retail and weather.  The retail sector has been an interesting story of transition with many brick and mortar stores going out of business or shifting to more online availability.  Weather issues were another reason with mid-month snow and storms affecting multiple parts of the country where employees couldn’t show up to work and therefore were not included in the job count.  Since these two specific reasons are explainable, the market didn’t react.

Geopolitical and Military Defense action that is not “the norm” for US news on a daily or weekly basis definitely gave validation to the concern that many have had.  During the election debates and since taking office many have been concerned about President Trump and what he would do regarding military defense and geopolitical tension between other countries where relationships are not in good-order at the moment.

An example of this has been looming tension between other countries and an unknown of what will happen when action does need to take place.  This week, with the chemical attack on Syrian civilians, President Trump gave authorization for an airstrike of 59 missiles on a Syrian airbase.  This one action is now the subject of massive analysis regarding how this affects our relationship with several other countries such as Russia, China and North Korea just to name a few.

Did this action send a message that was important to establish strength and make a point?  Or did this need to be done simply to try and stop the furtherance of uncivilized actions hurting people?  Unrest and protection of our country is not new and it has happened before.  Although the market is not immune to it, today’s reaction was minimal.

This week is such a big reminder of why it is important to have a diversified investment portfolio because various risks are always present.  Staying invested for the long- term rather than speculating on short-term movement is the best way to maintain progress toward reaching your goals.  As you can see there is so much going on that can affect investment performance.  We need to invest with a “bigger-than-today” mentality so that we have a well-rounded strategy in place for all that is happening.

The market essentially finished where it started.  Investors are really waiting to see how all of these stories will play out over the long-term.  Stay tuned as next week we will be watching the kickoff of earnings season.

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Michelle Smalenberger, CFP®

I have a passion for helping others develop a path to financial success! Through different lenses on your financial picture, I want to help create solutions with you that are thoughtful of today and the future. I have seen in my life the power of having a financial plan while making slight changes of direction from time to time. I believe you can experience freedom from anxiety and even excitement when you know your finances are on track.