February 15, 2017

Weekly Market Commentary February 15, 2017 The Markets As positive news comes across in the markets and comments are being made about potential interest rate increases our practice has been adjusting accounts by reducing bond holdings and adding more stock exposure. For those of you that have had a large percentage of bonds you’ll observe that changes have been made on your behalf. This has been a twofold approach. If rates rise it can hurt the value of bonds as we saw in the 3rd Q of 2016 and equities have been improving so therefore adjustments have been made. The United States stocks pushed higher over the past weeks on positive earnings growth. With 71 percent of companies in the Standard & Poor’s 500 Index reporting results for the fourth quarter of 2016, “…the blended earnings growth rate for the S&P 500 is 5.0 percent. The fourth quarter will mark the first time the index has seen year-over-year growth in earnings for two consecutive quarters since Q4 2014 and Q1 2015.” Consumer confidence remained high, but wavered a bit in February, according to the University of Michigan Surveys of Consumers. Americans are happy with their current financial circumstances, but expectations for the future dropped sharply. This week could be bumpy. On Valentine’s Day, Fed Chair Janet Yellen will testify about the state of the economy before the U.S. Senate. . ON THE ROAD TO BREXIT…Last week, Members of Parliament (MPs) approved the Article 50 bill, green-lighting Britain’s exit from the European Union (EU). If the House of Lords follows suit, which is far from certain, then the British government will follow the lead of the British people and invoke Article 50 of the Lisbon Treaty. (Article 50 gives member states the right to withdraw from the EU.) Michel Barnier, the EU’s chief Brexit negotiator, indicated the matter of how much Britain owes must be settled before questions about Britain’s future relationship (i.e., trade agreements) with the EU can be addressed, according to Bloomberg. The pending negotiations bring to mind the words of German Field Marshal Helmut Von Moltke, “No operation extends with any certainty beyond the first encounter with the main body of the enemy.” Weekly Focus “What counts for most people in investing is not how much they know, but rather how realistically they define what they don’t know.” –Warren Buffett, The Oracle of Omaha Best regards, Bill Spalding

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