Solis Wealth Management Report – March 31, 2014

The Markets

Whether it’s good news or bad news, it is often surprising how investors and markets react. Last week, Russia annexed Crimea and the Standard & Poor’s 500 Index gained about 1.4 percent.

This week, U.S. investors had the chance to bask in the glow of some good news: jobs growth was healthy, consumer spending improved modestly, consumer confidence numbers were better than expected, and fourth quarter’s U.S. gross domestic product (GDP) growth number was revised upward. How did U.S. markets respond? Only the Dow Jones Industrial Average finished the week in positive territory.

What offset the good domestic news?

First, there was some not-so-good domestic news. Several banks, including a leading global bank, failed the Federal Reserve’s stress test causing share prices in the banking sector to fall.

Next, there was some global news that proved to be unsettling for American investors. According toBarron’s, U.S. markets had a strong negative response to comments made by President Obama after a summit meeting with top European Union (EU) officials. Reuters quoted the President as saying, “If Russia continues on its current course, however, the isolation will deepen, sanctions will increase, and there will be more consequences for the Russian economy.”

The President also said NATO would increase its presence in Eastern European member states that share borders with Russia and Ukraine. The upcoming Group of Eight summit meeting was cancelled and a G-7 meeting – excluding Russia – was scheduled for June in Brussels.

Investors and stock markets in other countries were far more sanguine about world events, and most finished the week higher. As reported by Econoday, “Investors were cheered by talk of Chinese stimulus and encouraging U.S. economic data… Equities advanced thanks to renewed chatter about monetary stimulus from the European Central Bank.”

Data as of 3/28/14

1-Week

Y-T-D

1-Year

3-Year

5-Year

10-Year

Standard & Poor’s 500 (Domestic Stocks)

-0.5%

0.5%

18.4%

12.3%

18.7%

5.2%

10-year Treasury Note (Yield Only)

2.7

NA

1.9

3.5

2.7

3.5

Gold (per ounce)

-3.1

7.8

-19.0

-3.0

6.9

11.9

DJ-UBS Commodity Index

1.4

7.2

-2.0

-6.8

4.7

-0.9

DJ Equity All REIT TR Index

0.4

8.1

2.7

11.1

29.8

8.4

S&P 500, Gold, DJ-UBS 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 TR 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.

WHAT DOES THE FUTURE HOLD? If you’re wondering about reality television, National Public Radiosays it may be virtual reality goggles that let viewers feel as though they are part of a show or let them interact with shows. If you’re asking about astronomy, it could be finding a planet that’s ten times larger than earth orbiting our sun. Of course, if you’re curious about global economic growth, it’s almost as exciting – experts indicate we can expect relatively steady growth.

The Economist asked a group of economists to predict GDP growth for 2015. GDP is “the monetary value of all the finished goods and services produced within a country’s borders in a specific time period.” For the most part, they predicted 2015 will be better for developed nations than 2014.

“Only the economies of Britain and Japan are expected to expand at slower rates in 2015. But for those European countries that have suffered deep recessions, notably Italy and Spain, growth is likely to remain sluggish over the two year period.”

The story in emerging countries is improving, too. According to Price Waterhouse Coopers, economic fundamentals (such as labor force growth and potential for capital investment and productivity improvement) in emerging countries look good over the longer term.

The International Monetary Fund, which has more robust projections for growth than The Economist’seconomists, expects to see improvement in emerging markets. Growth is projected to increase to 5.1 percent this year and 5.4 percent in 2015. Eastern Europe and Latin America aren’t expected to grow much faster than the United States in 2015. However, growth in developing Asia is expected to reach 6.8 percent. One exception to the rule is China where growth is forecast to slow from 7.5 percent in 2014 to 7.3 percent in 2015. Even for an economy with slowing growth, those are some pretty good numbers.

Weekly Focus – Think About It

“The fact that an opinion has been widely held is no evidence whatever that it is not utterly absurd.”

–Bertrand Russell, British philosopher

What’s happening at Solis Wealth Management?

Please enjoy this week’s commentary from ~ Tami Salzer, LPL Registered Administrative Assistant

Spring time in the desert brings lots of visitors and a bit more traffic, but I love to see our valley thrive.

My daughter Morgan, the two granddaughters Lili and Demitra and I love to walk or hike on the weekends. The last couple of weekends we have met such great people from all over; some from other countries.

What I notice so clearly as I get older is the beauty of the desert.  I never appreciated it as much as I do lately.  The wonderful smell of the fruit tree blossoms, the picturesque desert landscape in full spring bloom, and how blue our sky is.   I’m feeling blessed to call the CoachellaValley home.

Thanks again for the opportunity to stay in touch.  I am only a phone call away if you have any questions or concerns. Happy Spring to all. ~ Tami

Best regards,

Greg R. Solis, AIF®
President

78-075 Main Street
Suite 204
La Quinta, CA 92253
Office: (760) 771-3339
Fax: (760) 771-3181www.soliswealth.com
E-Mail: greg.solis@lpl.com

CA Insurance License #0795867

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://online.wsj.com/public/resources/documents/b-econoday.htm (Click on Resource Center » U.S. & Intl Recaps, Simply Economics/”Spring thaw slow so far”, Stocks section and the Economy section

http://www.usatoday.com/story/money/business/2014/03/26/fed-stress-tests/6922129/

http://www.reuters.com/article/2014/03/26/us-ukraine-crisis-idUSBREA2P0VB20140326

http://online.wsj.com/public/resources/documents/b-econoday.htm (Click on Resource Center » U.S. & Intl Recaps, International Perspective/”Ukraine and China blur outlook”, Global Markets and Europe and UK sections)

http://www.npr.org/2014/03/10/288712948/path-to-televisions-future-may-be-paved-in-virtual-reality

http://www.theguardian.com/science/2014/mar/26/dwarf-planet-super-earth-solar-system-2012-vp113

http://www.economist.com/news/economic-and-financial-indicators/21598659-economist-poll-forecasters-march-averages (or go to http://peakclassic.peakadvisoralliance.com/app/webroot/custom/editor/03-31-14_The_Economist-Poll_of_Forecasters-March_Averages-Footnote_7.pdf)

http://www.economist.com/blogs/graphicdetail/2014/03/daily-chart-14 (or go tohttp://peakclassic.peakadvisoralliance.com/app/webroot/custom/editor/03-31-14_The_Economist-Growing_and_Spreading-Footnote_8.pdf)

http://www.investopedia.com/terms/g/gdp.asp

http://www.pwc.co.uk/economic-services/global-economy-watch/emerging-markets-will-they-be-stranded-at-low-tide-march14.jhtml

http://www.imf.org/external/pubs/ft/weo/2014/update/01/ (Scroll down to Table 1)