Solis Wealth Management Report – August 18, 2014

The Markets

If you have young children or grandchildren, you may have read “Alexander and the Terrible, Horrible, No Good, Very Bad Day” by Judith Viorst. Well, that’s what last week was like on the European continent from an economic perspective.

Hopes of economic recovery were put on hold when gross domestic product (GDP) figures across the region showed no – nada, zero, zip – growth overall during the second quarter of 2014. First quarter’s growth (0.2 percent) hadn’t been all that impressive either, but at least it was headed in the right direction. The strongest second-quarter performers were Netherlands, Spain, and Portugal, according to The Economist. However, some of Europe’s largest economies (Italy , Germany, and France) contracted during the period.

Geopolitical unrest prompted the Euro area’s poor showing. Turmoil in the Middle East, violence in Ukraine, and sanctions against Russia have, among other things, led to a slowdown in demand for luxury goods that has negatively affected European economies. After delivering strong performance in 2013, the MSCI Europe Textiles, Apparel, & Luxury Goods Index was down more than 10 percent in the month of July and down 4.75 percent for the year. China’s anti-bribery and corruption campaign also has reduced demand for luxury goods, according to Bloomberg.

The Euro area’s economic growth (or recent lack thereof) has sparked fears of deflation in the region. The Economist offered this insight:

“Deflation would be particularly grave for the euro area because both private and public debt is so high in many of the 18 countries that share the single currency. Even if inflation is positive, but stays low, it hurts debtors as their incomes rise more slowly than they expected when they borrowed. If deflation were to set in, the effects would be worse still: when prices and wages fall, debts, which do not shrink, become harder to repay.”

Woes across the Atlantic put a shine on markets in the United States, according to Reuters. Major U.S. stock markets finished the week ahead and benchmark U.S. treasury yields finished the week at a 14-month low.

Data as of 8/15/14 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor’s 500 (Domestic Stocks) 1.2% 5.8% 17.7% 17.5% 14.8% 6.1%
10-year Treasury Note (Yield Only) 2.4 NA 2.8 2.3 3.5 4.3
Gold (per ounce) -1.1 7.9 -2.5 -9.3 6.8 12.4
Bloomberg Commodity Index -1.3 0.0 -3.0 -7.4 0.1 -1.5
DJ Equity All REIT Total Return Index 1.6 18.6 20.3 14.9 20.4 9.6

S&P 500, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT Total Return Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.

Sources: Yahoo! Finance, Barron’s, djindexes.com, London Bullion Market Association.

Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

AT A CERTAIN AGE, YOU BEGIN TO UNDERSTAND WHY YOUR ELDERS shook their heads at newfangled ideas like television, 24-hour convenience stores, automobiles, and buying on credit. Here are a few business and marketing trends that may change the way baby boomers think about things:

  • Where words fail, music speaks. Athletic shoe companies, fast-food retailers, and luxury brands are using digital music services to amplify their brand identities and engage with customers. For instance, a well-known cruise line’s playlist includes tunes with fun summer vibes, while a shampoo brand’s list embraces singing-in-the-shower songs.
  • Have a commercial with that commercial. A popular music identification app is helping television networks and advertisers connect with consumers’ second screens – their smart phones and tablets. The app’s logo appears during commercials and TV shows. If viewers interact with the logo, then the show or product has opportunities to re-market to viewers through their mobile devices.
  • It’s a meal ticket, literally. Some of the hottest restaurants around aren’t taking reservations anymore. They’re selling tickets in advance. It’s a business decision that eliminates the cost of last-minute cancellations which may lead to better prices for diners, according to experts cited by National Public Radio .
  • Want to attract a crowd? New and growing businesses have a lot of options when it comes to raising capital. If a business wants to borrow money, in addition to traditional sources, they can turn to peer-to-peer and social lending platforms. If a company wants equity investors, they may pursue equity crowdfunding. In fact, a recent study reported:

“Today, it’s apparent the crowdfunding phenomenon has indeed affected the VC (venture capital) ecosystem – as a complementary force. With thousands of consumer-oriented hardware campaigns looking for financing for everything from smart watches to beacon technologies, crowdfunding platforms… have provided VC investors with a valuable source for dealflow.”

Whether you’re a consumer or a businessperson, it’s important to remain aware of the ways in which the world is evolving and take advantage of opportunities that can make your life easier and/or your business more successful.

Weekly Focus – Think About It

“If your actions inspire others to dream more, learn more, do more and become more, you are a leader.”

–John Quincy Adams, Sixth President of the United States

What’s happening at Solis Wealth Management?

Please enjoy this week’s commentary from ~ Anthony Spedaliere, Marketing and Administration Coordinator

This summer has really been going by quickly for me.  I’ve lived long enough in the desert to be accustomed to the heat, and the humidity doesn’t bother me as much as most people.

Last month my nephew turned 2 years old and this month my niece turned 3.  They are starting to talk more and more and it’s great to hear the ideas they have and the things that are going through their heads.  The other day my nephew was following me around the house and copying every move I made.  When I would lean against the couch – he would also, when I would drink some water – he would drink water from his “sippy” cup, and when I would sit down so would he. It made me realize how we learn from all our family members at different stages in our life; how the young learn from the elder.  It also makes me want to be a better person so the things that he copies me doing are things that will make him a better person.

All in all it has been a relaxing summer and I have no complaints.  I am looking forward to the upcoming months when the weather will improve, I’ll be done with my big CFP® test, and for all the other big surprises that await me.

As always do not hesitate to reach out to us if you need anything.  God bless ~ Anthony

Greg R. Solis, AIF®
President

78-075 Main Street
Suite 204
La Quinta, CA 92253
Office: (760) 771-3339
Fax: (760) 771-3181

www.soliswealth.com
E-Mail: greg.solis@lpl.com

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The Wealth Advisors of Solis Wealth Management are also Registered Representatives with and securities and advisory services are offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC

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* This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named broker/dealer.

* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.

*Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.

* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.

* The Standard & Poor’s 500 (S&P 500) is an unmanaged index. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.

* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.

* Gold represents the London afternoon gold price fix as reported by the London Bullion Market Association.

* The DJ Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.

* The DJ Equity All REIT TR Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.

* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.

*The economic forecasts set forth in the presentation may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

* Past performance does not guarantee future results. Investing involves risk, including loss of principal.

* You cannot invest directly in an index.

* Consult your financial professional before making any investment decision.

* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

* Stock investing involves risk including loss of principal.

* To unsubscribe from the Solis Wealth Management Weekly Market Commentary please reply to this e-mail with “Unsubscribe” in the subject line.

Sources:

http://en.wikipedia.org/wiki/Alexander_and_the_Terrible,_Horrible,_No_Good,_Very_Bad_Day

http://www.economist.com/news/finance-and-economics/21612254-recovery-grinds-halt-cyclical-stagnation (or go to http://peakclassic.peakadvisoralliance.com/app/webroot/custom/editor/08-18-14_The_Economist-Recovery_Grinds_to_a_Halt-Footnote_2.pdf)

http://www.nytimes.com/2014/08/07/business/international/italy-falls-back-into-recession-raising-concern-for-eurozone-economy.html?_r=0

http://www.msci.com/resources/factsheets/index_fact_sheet/msci-europe-textiles-apparel-luxury-goods-usd-net.pdf

http://www.bloomberg.com/news/2014-08-14/gold-demand-in-china-contracts-52-after-buying-frenzy-subsides.html

http://www.reuters.com/article/2014/08/15/usa-stocks-weekahead-idUSL2N0QL23Y20140815

http://www.qualitylogoproducts.com/blog/5-brands-jam-with-spotify-playlists/

http://adage.com/article/digital/shazam-plans-survive-social-tv-shake/291391/

http://www.npr.org/blogs/thesalt/2014/08/05/337834577/no-more-reservations-exclusive-restaurants-require-tickets-instead

https://www.cbinsights.com/blog/crowdfunded-venture-capital-hardware/

http://www.brainyquote.com/slideshow/topics/top_10_leadership_quotes.html