Your Weekly Summary – May 21, 2018

Small Caps only US Major Stock Index Up for the Week


Last week saw the Russell 2000 Small Cap Stock Index hit a record and is now up over 6% for 2018. It has always been mentioned that US Small companies were to benefit greatly from the change in our tax code. In addition, many small companies do a larger percentage of their business in the United States, so they may not be as affected by tariff issues. This may be the reason for the outperformance of Small Caps compared to other parts of the Market.


Year to date, the DJ Industrial Average is up .62%, the S&P500 is up 2.01%. On Bond Market side of the fence, the Barclay’s Aggregate Bond Index is down 2.73% for 2018.


China and Tariffs


Treasury Secretary Steven Mnuchin told CNBC that the United States and China have backed off imposing Tariffs for the time being. Apparently China has made a “pledge” to import more US goods. He said the trade war has been put “on hold”.   It’s interesting that Mnuchin is calling this a “trade war”. To me, having our government call this a trade war indicates that we will not hesitate to play “tit for tat” with China. I certainly hope this does not happen, as the two largest economies in the world certainly need to trade freely and fairly.


I will continue to hope that when this is said and done, that we have trade agreements around the world that foster true entrepreneurship, competition and fair dealing. In the meantime, the Markets will certainly look to trade on any positive or negative information.


Interest Rates


The US 10 Year Treasury ended the week with a yield of 3.07%, up from 2.94% the week prior. The 2 year Note also rose to 2.55%, up from 2.48% the week prior. As I’ve been writing, I believe this is the reason the US Markets have not moved forward in a meaningful way. Will the 3% 10 year finally hold? I think it will unless something comes out of the walls to suggest the US economy is definitely going to slow down and soon. Will the Markets come to grip that rates may be higher for the foreseeable future? I certainly hope so!!


Economic Data


Last week, the Empire (New York) State Manufacturing index reported well ahead of consensus. Housing starts on the other hand were reported below consensus. Permits for new construction did come in at consensus estimates.


On Wednesday & Thursday of this week, we’ll hear reports on the Housing Market. Additional Manufacturing reports from various parts of the US will be announced on Tuesday and Thursday.


After each Federal Reserve Meeting, the “minutes” of their meeting are released to the public. On Wednesday, many economists and investors will pour through the report looking for clues of what may happen to interest rates going forward.


Question of the Week?


What are the Requirements to do a Roth Conversion?

a) Have Earned Income

b) Be Under age 70 1/2

c) Earned Income under $189,000 filing a Joint Return

d) None as long as you have an eligible account to convert


Answer to Last Week’s Question of the Week!


The question was, “What is the name of the Medicare Enrollment Period that applies to people turning age 65, who have health insurance coverage through their employer which employs over 20 employees?


a) The General Enrollment Period  

b) The Open Enrollment Period 

c) The Initial Enrollment Period  

d) The Special Enrollment Period


The Correct Answer is: d) The Special Enrollment Period


The Special Enrollment Period:

If you are covered by the Employer Sponsored Health Plan where the employer employs 20 or more employees, you are not required to sign up for Medicare upon reaching age 65. You will however need to secure all of your Medicare coverage’s to coincide with the termination of your group benefits after age 65. It’s always a good idea to call Social Security to check on your enrollment requirements and write down when you called, whom you spoke with and what they specifically said.


Other Multiple Choice Definitions:


The General Enrollment Period:

This period is for people who missed either their Initial or Special Enrollment periods. Under these circumstances you can only sign up for Medicare annually between January 1 and March 31st. This is the only time one can enroll under these circumstances and coverage will not start until July 1st of the year of enrollment.


The Open Enrollment Period:

This period is for people who are already on Medicare and desire to make changes. The Open Enrollment period runs annually between October 15th and December 7th.


The Initial Enrollment Period:

This period is for anyone who turns age 65, who is NOT covered by an Employer Sponsored Health Plan and whose employer employs 20 or more employees. If you fall into this category you must enroll in Medicare sometime between 3 months prior to the month you turn age 65. This way, all of your Medicare related coverage’s will be effective the 1st of the month you turn age 65.


There are many rules about enrollment periods that Medicare Beneficiaries need to know. For a listing of our upcoming informational workshops on Medicare, please click here: Medicare Workshops

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