Monthly Archives: March 2015

Federal Reserve’s Bullard Issues Caution

St. Louis Federal Reserve President James Bullard suggested there may be serious consequences in the market if the disconnect continues between the market’s expectation for the timing of rising interest rates and when the Fed actually does raise rates. His belief is that the longer the market goes without adjusting for rising rates in the future the greater the possibility of a correction. “I think reconciliation between what markets think and what the committee thinks will have to happen at some point….That’s a potentially violent (encounter)….and I am concerned about that. I am hopeful that markets and the policy committee can come to some kind of meaningful meeting of the minds in the coming months and quarters.” Bullard said a rate hike should occur at some point this summer, while monetary policies would continue to remain accommodative. Continue reading

Market Recap

The markets saw quite a bit of volatility this week, as it was all eyes on the Federal Reserve. We will discuss the Fed below, but here is a quick recap of how the markets performed this week:

Price Returns
Index Level 1 Week YTD
Dow Jones 18,127.65 2.13% 1.71%
S&P 500 2,108.06 2.66% 2.39%
NASDAQ 5,026.41 3.17% 6.13%
WTI Oil 45.72 1.96% -14.17%
MSCI EAFE 1,887.31 3.94% 6.33%
MSCI EM* 964.98 2.71% 0.91%
* As of 3/19/2015 Continue reading

Oil Prices Fall To Six-Week Low

The International Energy Agency (IEA) released a report Friday, warning that the recent stabilization in oil prices may have just been temporary. Their reasoning behind this statement was due to U.S. production showing no signs of slowing down, despite the existing oversupply conditions. Also, as we noted last week, U.S. producers are running out of places to store the oversupply. “U.S. stocks may soon test storage capacity limits. That would inevitably lead to renewed price weakness, which in turn could trigger the supply cuts that have so far remained elusive,” the IEA said. It does appear that supply cuts are on the horizon. The U.S. oil-rig count declined for the 14th straight week to 866, down from the peak of 1,609 in October. Though this has not yet translated into reduced supply, the U.S. should see reduced output from these declines later this year. Continue reading

Ryan Powers Promoted to Director of Wealth Management

I would like to announce the promotion of Ryan Powers to the position of Director of Wealth Management at Paradigm Financial Advisors. Ryan has excelled at Paradigm in his role as Wealth Manager while working with a large number of our clients. He has developed exceptional knowledge and skills in advanced financial planning and investment management. Ryan’s attention to detail and incredible work ethic have contributed greatly to the trust and confidence our clients have developed in him as part of the Paradigm Financial Advisors team. Continue reading

Apple to Replace AT&T in the Dow Jones Industrial Average

The Dow Jones Industrial Average will add Apple (AAPL) to its index after close of trading on March 18th. As the Dow is “capped” at 30 stocks, AT&T (T) will be removed from the index to make room for Apple. Due to how the index works, the swap will not affect the value of the Dow on March 18th. However, given that the Dow is a price-weighted index, growth in Apple’s stock price will affect the value of the Dow more than growth in AT&T’s stock price would have going forward. The move to include Apple in the Dow did not come as a surprise, as it has been discussed ever since Apple’s 7-1 stock split took place back in June of last year. Continue reading

Fed Chair Janet Yellen Testifies

Fed Chair Janet Yellen testified on Tuesday and Wednesday, stating it would be “several months” before the Fed expects to raise interest rates. She noted that interest rate hikes will be considered “on a meeting by meeting basis” before adding that she does not expect to see the first rate hike for at least a couple of meetings. Short-term interest rate futures are showing that the market expects the first rate hike in September and did not change based on Yellen’s testimony. Continue reading