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Friday, February 17, 2017
To fund retirements lasting many years, today’s workers expect to rely more on personal sources of retirement income, such as their savings plan and IRA, than is presently the case for those over 65.

Save more, save earlier. Great retirement advice. Max out your 401K plan and take advantage of employer matching contributions. Great retirement advice. Make the most of tools like 529 plans to amass tax free gains needed to unburden younger generations’ education debt loads so they can start saving too. Great retirement advice. Don’t let fear or intimidation of the market derail your retirement plans when there are solutions available such as target date allocations which offer instant market diversification and a tailored glide path. Great retirement advice. Another valuable piece of advice is working past what is considered normal retirement age. According to Voya Retirement Coach Holly Kylen, a Certified Financial Planner with Voya Financial Advisors, retirement is “ultimately about ‘doing what you want, when you want and not being dependent on your wealth to be able to do it. Working longer could significantly help you when it comes to the cost of health care. Furthermore, deferring Social Security benefits past the full retirement age will result in a boost to benefits until age 70. Additionally, working longer can help married couples decide where to live and how to live in retirement. Research from Voya Financial found that when it comes to an ideal retirement lifestyle, among those with a spouse or partner, 37 percent did not agree or had not discussed the topic, so by delaying retirement, you can work to define retiring on your own desired schedule.” Please review some expectations regarding retirement on page 83 of the Voya Global Perspectives™ book and read more of Holly Kylen’s advice here.

Thursday, February 16, 2017
The U.S. has more than recovered the output level lost in the Great Recession and has reached new highs. Expansions historically last about five years.

Another day, another record? Investors worried about the market lull at the beginning of February have been treated to a significant winter thaw. The market is responding to better than expected corporate earnings and economic data that smacks of the V shaped recovery we must have slept through in 2010. The Philly Fed manufacturing index soared to 43.3, the highest level since America was watching Dynasty, Knots Landing and Family Ties. In case you’re too young to remember that was 1984. The latest housing starts figure was a little lean, down 2.6%, but permits for new construction surged 4.5% to the highest level since 2007. Yes, the Fed may raise rates in March and the global landscape if full of potential geo-political party killers, but the economy is starting to run on all cylinders. As for the pro-growth policies, are they already priced in? Some investors may say yes. However, consider how many moving parts are involved when it comes to tax, regulation, trade, healthcare, infrastructure, defense, energy and immigration policies. If true pro-business policies are enacted, the market and the economy may just be getting warmed up. And by the way, in 1984 the U.S. GDP was 7.3%. Follow U.S. GDP on page 68 of the Voya Global Perspectives™ book and notice that despite trillions of economic stimulus the U.S. has been running below trend since the recession ended in 2009.

Wednesday, February 15, 2017

A plethora of good economic data was released today. Retail sales were up .4% to an all-time high in January, Core inflation (CPI) hit 2.3% YoY, the highest the market has seen in four years, and the Empire State manufacturing index jumped to 18.7, the highest level in more than two years. But the jobs situation is by far the most important ingredient of a healthy economy. Here’s the latest on the labor market.

  • Our labor Market Conditions index as of 1/31/2017 improved to 3.1 from 2.8.
  • The unemployment rate rose to 4.8 from 4.7, as the labor force participation rate and the employment to population ratio rose to 62.9 from 62.7 and 59.9 from 59.7 respectively.
  • Average hours were unchanged at 33.6 and average earnings were lower at 2.4 vs 2.5.
  • The Non-farm payrolls change was 227 vs 157 the prior month, and initial claims rose to 246 from 237 the prior month.
  • Temporary employment rose, and long term unemployment increased.
  • The index is above its 20-year average value of 1.4, indicating labor market conditions consistent with long run equilibrium in the labor market. The most recent high of the index was 3.5 in 1/2007. Please see the latest investment weekly for all of the latest market stats.- Special Guest Blogger: Elias Belessakos, Ph.D

    Tuesday, February 14, 2017

    First it was not enough water in California and now it is too much. After a four-year drought wreaked havoc with farmers, businesses and consumers, the state now faces the prospect of a calamity due to too much water — as the emergency spillover component of California’s Oroville Dam is in jeopardy of collapsing. As a result, nearly two hundred thousand people were ordered to evacuate nearby towns, and millions of gallons of precious fresh water have been wasted. It was also reported that over a decade ago, three groups filed a motion to have a federal regulatory agency armor the Oroville dam with concrete, but to no avail. Water is critical to our economy and well-being and is virtually the “new oil” not only in California but globally. Moreover, water is a Global Perspectives core “tectonic shift” that was added in our 2015 Market Forecast. For more detail on these tectonic shifts, please read our 2015 Market Forecast: Sustainable Global Expansion Driven by Tectonic Shifts.

    Friday, February 10, 2017
    Returns for a globally diversified strategy over the last 10 years refute the notion of a “lost decade”.

    The retirement world is ever-changing. With the new Presidential Administration dominating headlines, minor stories such as retirement get pushed aside making it difficult to remain well informed regarding the current retirement landscape and your financial future. One key headline that is often overlooked is 84 percent of all people over 65 and about 90 percent of surviving spouses over 65 receive income from Social Security, and for three-fifths of them, Social Security makes up at least 50 percent of their income.* This significant dependence on Social Security highlights the need for an additional source of income during those vital retirement years. Entire dependence on the government’s fleeting retirement program is a dangerous game; a retirement income producing alternative is essential to a happy and financially secure retirement. That alternative solution is a personal retirement account backed by a solid and reliable investment strategy. Please turn to page 5 of the Voya Global Perspectives™ book to see how a retirement strategy backed by the Global Perspectives can produce consistent throughout this ever-changing world.
    *Reuters: Retirement News, Feb 2017

    Thursday, February 9, 2017
    Investors seeking income may benefit from the rich opportunities for higher yield available from global bonds.

    Now that interest rates are on the rise, bonds are bad for a portfolio, right? Wrong! Sure long maturity bonds are sensitive to interest rates as bond prices move inversely with rates. And if you bought an individual 10 year treasury bond last summer with a 1.6% yield, now that current 10-year rates are above 2.3%, although you will receive steady income and a return of principle at maturity, you will take a loss if you try to unload it today. But interest rates have recently dialed back after their post-election surge, reflecting the risks in the market and economy. In fact, major bond indices are up YTD across the board – corporate bonds, high yield bonds, global bonds and even long, long 20 year Treasuries all positive for the year (thru 2/8). Additionally, there are numerous flavors of bonds and when rising rates are reflective of economic growth many post positive returns. Senior loans for example, are floating rate and do not have duration risk. But more importantly, bonds may provide risk control and peace of mind so investors can tango with stocks. With all the recent political turmoil stirring the risk pot, investors could use some calm in the storm. As Voya IM, CIO Matt Toms stated in the latest edition of Money, “A core bond fund can still play a very constructive role in a diversified portfolio. Those bonds do a good job of offsetting equity volatility.” See how bonds have performed in previous rising rate environments on page 31 of the Global Perspectives™ Book.

    Wednesday, February 8, 2017

    The economic ball is in the Administration’s court, with some favorable winds at its back. The January employment report was about as good as they come in our current, low growth environment. While too early to tell if a new trend is developing, this is heartening; an increase here will give the Fed more comfort to move deliberately with rate hikes. Some other positive developments include a January rise in ISM manufacturing to 56, Vehicle sales continue to hold at a high level of 17.5 million in January and near fifteen year highs in consumer confidence. So the issue now is policy direction. There remains confusion about the border adjustment tax which will have to be settled as part of corporate tax rate reform. There are some issues of whether this is WTO compliant, though other countries have a similar tax. Policy risk comes from the impact on the macro economy of tax and regulatory changes being pushed off, perhaps into 2018. At the margins, businesses are likely to move slowly on investment decisions until the full tax package is seen. What’s more, with a border adjustment in play, businesses may take early moves to off-set the expected impact. To the extent that imports would be affected, we could see a buildup of inventories, but with imports subtracting from current growth. My outlook remains broadly unchanged: I expect that policy will be pro-growth but the question is timing. A pro-growth policy will put further upwards pressure on wages in the short run. Importantly, if structured to increase business investment then fiscal policy should lead to higher wages and employment. This would be a good backdrop for risk assets, though would come with higher bond yields with a stronger dollar. - Special Guest Blogger: Tim Kearney

    Tuesday, February 7, 2017

    Although the trade deficit grew by less than expected in December, the entire year’s trade gap of $502.3 billion, up .4% from 2015, was the biggest since 2012. The trade deficit is a subtraction from U.S. GDP, so the U.S. needs to boost exports to boost GDP. Yet a strong domestic economy increases consumption/demand for imports and also strengthens the dollar, which in turn makes exports less attractive to other countries. With so many players in the global arena, each with their own selfish agenda, achieving an intended goal is tricky to say the least. Fair and transparent trade agreements can help level the complex playing field. For 2016 the top trading U.S. partners were China, Canada and Mexico. Of the $502.3 billion U.S. trade deficit, $347 billion was not surprisingly attributable to China, $68.9 billion to Japan, $64.9 billion to Germany and $63.2 billion to Mexico. The lion’s share of trade with Mexico involves the automotive industry, so expect to see more political wrangling with automakers in the headlines. The U.S. does have trade surpluses - Hong Kong, Netherlands and United Arab Emirates are the top 3 countries that buy more from the U.S. than they export. Hong Kong buys gold and diamonds, Netherlands imports pharmaceuticals and United Arab Emirates is a huge purchaser of civilian aircraft. Many more interesting stats are available at the government website. Although trade is a concern, the market is moving forward. Watch Doug Coté on CNBC to see why the market is marching to all-time highs.

    Friday, February 3, 2017

    A week of political wrangling over trade and immigration has rattled investors. In addition, the President has ordered a review of the Labor Department’s key fiduciary rule requiring advisers on retirement accounts to work in the best interests of their clients. The fiduciary rule, which is set to take effect in April, will have an enormous impact on those preparing for retirement as it scrutinizes and aligns the interests of advisors and clients as well as steers clients away from high-risk or high cost investments that solely profit the broker. While Trump may or may not roll back this regulation, it still brings to light how those preparing for retirement need to be aware of potential changes (okay, that’s everyone). Keep in mind, on the economic front, the data has been solid. The latest non farms payrolls report shows a much better than expected 227K jobs were added in January and more workers came back into the workforce, although the average wage increase of .1% was disappointing. The market historically follows corporate earnings which are also doing well. So retirement savers need to put the political drama on the back burner and remember that accelerating economic growth can be a powerful elixir to all of the political bitterness. Please follow the investment weekly for all of the up to date facts and figures.

    Thursday, February 2, 2017
    Labor costs have climbed higher but productivity has lagged.

    The good news is that productivity increased in the fourth quarter, up 1.3%. The bad news is that U.S. productivity has been rising by less than 1% annually for six years in a row. And what's worse is labor costs are moving up faster than worker output, putting a squeeze on company earnings. Some analysts contend that productivity is just measured incorrectly in our cyber oriented world. After all, I can now check my bank balances, pay some bills and snag a few online bargains, all while my boss is at lunch. Pretty darn productive. But measurement is only part of the puzzle. Businesses have been unusually reluctant post-recession to make the investments in equipment and technology that are needed to make workers more productive. The recent wave of pro-growth optimism could be the boost companies needed to make the long-term investments need for higher GDP growth. Please follow productivity gains on page 63 of the Global Perspectives Book.


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