Breakout

Burt White, Chief Investment Officer, LPL Financial Jeffrey Buchbinder, CFA Market Strategist, LPL Financial The S&P 500, Dow Jones Industrials, and other major indexes have recently broken out to new highs. But this commentary is not about the breakouts in those indexes (check out lplresearch.com for more on those). Nor is this commentary about the classic video game called Breakout that debuted in the mid-1970s, which some of us more seasoned investment professionals recall. And it’s definitely not about the 2008 Miley Cyrus album by that name (even though the authors of this report have six daughters between the two of them). In this week’s commentary, we look at some interesting, under-the-radar breakouts in the economy and markets. BREAKOUT #1: ECONOMIC SURPRISES Many wonder how the stock market can do so well when S&P 500 earnings have not produced any gains since the second quarter of 2015, and even then earnings grew by a meager 1.3%. Valuations have risen, which has been helpful (more on that below). Central banks have also helped, which could explain why he VIX measure of stock market volatility is sitting near post-financial crisis lows and about 7 points(or 35%) below its 25-year average. But another...
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The New Gradual Retirement

Working a little (or a lot) after 60 may become the norm. Do we really want to retire at 65? Not according to the latest annual retirement survey from the Transamerica Center for Retirement Studies which gauges the outlook of American workers. It found that 51% of us plan to work part-time once retired. Moreover, 64% of workers 60 and older wanted to work at least a little after 65 and 18% had no intention of retiring.1 Are financial needs shaping these responses? Not entirely. While 61% of all those polled in the Transamerica survey cited income and employer-sponsored health benefits as major reasons to stay employed in the “third act” of life, 34% of respondents said they wanted to keep working because they enjoy their occupation or like the social and mental engagement of the workplace.1 It seems “retirement” and “work” are no longer mutually exclusive. Not all of us have sufficiently large retirement nest eggs, so we strive to stay employed – to let our savings compound a little more, and to leave us with fewer years of retirement to fund. We want to keep working into our mid-sixties because of two other realities as well. If you...
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The Brexit Shakes Global Markets

A worldwide selloff occurs after the United Kingdom votes to leave the European Union. A wave of anxiety hit Wall Street Friday morning. Thursday night, the United Kingdom elected to become the first nation state to leave the European Union. The “Brexit” can potentially be finalized as soon as the summer of 2018.1 Voters in England, Scotland, Wales, and Northern Ireland were posed a simple question: “Should the United Kingdom remain a member of the European Union (E.U.) or leave the European Union?” Seventy-two percent of the U.K. electorate went to the polls to answer the question, and in the final tally, Leave beat Remain 51.9% to 48.1%.2,3 The vote shocked investors worldwide. The threat of a Brexit was supposed to have decreased. As late as Thursday, key opinion surveys showed the Remain camp ahead of the Leave camp – but at 10:40 pm EST Thursday, the BBC called the outcome and projected Leave would win.4 Why did Leave triumph? The leaders of the Leave campaign hammered home that E.U. membership was a drag on the U.K. economy. They criticized E.U. regulations that impeded business growth. They felt that the U.K. should no longer contribute billions of pounds per year...
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