Weekly Market Commentary – 12/26/2017
The Markets
The three major indexes slipped Friday in light holiday trading, but they all ended the week higher. The S&P has increased around 20 percent this year. For the week, the Dow rose 0.42 percent to close at 24,754.06. The S&P gained 0.30 percent to finish at 2,683.34, and the NASDAQ rose 0.34 percent to end the week at 6,959.96.
- New single-family home sales increased 17.5% in November, and up 26.6% from a year ago
- The median price of new homes sold was up 1.2% from a year ago
- Existing home sales increased 5.6% in November, up 3.8% versus a year ago
- Housing starts increased 3.3% in November, representing a gain of 12.9% versus a year ago
- Personal income rose 0.3% in November versus the consensus expected 0.4%, and is up 3.8% in the past year
- Personal consumption increased 0.6% in November, up 4.5% in the past year
- The headline PCE deflator rose 0.2% in November and is up 1.8% compared to a year ago
- The core PCE deflator gained 0.1% in November and was up 1.5% versus a year ago
- New orders for durable goods rose 1.3% in November, lower than the consensus expected 2.0%
- Real GDP growth in Q3 was revised to a 3.2% annual rate from a prior estimate of 3.3%
- The downward revision was due to weaker personal consumption
- U.S. consumer sentiment fell more than expected in December, hitting 95.9
| Returns Through 12/22/17 | 1 Week | YTD | 1 Year | 3 Year | 5 Year |
| Dow Jones Industrials (TR) | 0.42 | 28.28 | 27.28 | 14.12 | 16.25 |
| NASDAQ Composite (PR) | 0.34 | 29.29 | 27.77 | 13.33 | 18.17 |
| S&P 500 (TR) | 0.30 | 22.23 | 21.08 | 11.19 | 15.81 |
| Barclays US Agg Bond (TR) | -0.60 | 3.01 | 3.75 | 2.10 | 2.01 |
| MSCI EAFE (TR) | 1.25 | 23.87 | 24.64 | 7.17 | 7.67 |
Jobs, Jobs, Jobs — Each one-tenth of one percentage point increase in our GDP (e.g., 2 percent growth to 2.1 percent) due to a rise in manufactured goods translates into 80,000+ new American jobs (source: Commerce Department, BTN Research).
Personalized Medicine — Ten years ago, it cost $10 million and took several weeks to sequence a genome, i.e., map out a person’s entire genetic code. Today, the work can be completed for $1,000 in just a few hours (source: Financial Times, BTN Research).
Do I Really Need It? — Only 36 percent of all jobs in the United States require education beyond high school, i.e., 64 percent of American jobs require a high school diploma or less. Twenty-seven percent of jobs do not require any formal educational credential (source: Department of Labor, BTN Research).
WEEKLY FOCUS – What’s New for Social Security and Medicare?
Each new year brings changes to Medicare and Social Security. Here are highlights on what to expect in 2018.
Benefit changes:
Social Security (SS) recipients will see their biggest cost-of-living adjustment (COLA) since 2012 – 2 percent. Compared to last year’s meager 0.3 percent increase, the average monthly benefit will rise around $25 a month, from $1,258 to $1,283. The maximum SS monthly benefit at full retirement age will increase from $2,687 a month to $2,788.
However, the average SS recipient who has Medicare Part B premiums deducted from their check won’t see the increase. In the absence of a significant COLA in 2017, a “hold harmless” provision prevented last year’s Part B premium increases from reducing their SS benefits. In the presence of a bigger COLA, the increase will be deducted next year.
Individuals who turn 62 in 2018 must wait longer to draw benefits. Full retirement age for anyone born in 1956 is 66 years and four months and increases by two-month increments until it reaches 67 for everyone born in 1960 or later. Those with an older full retirement age will have less ability to boost their payments through delayed claiming since there will be fewer months to age 70.
Those who claim SS early can earn $17,040 before they start losing one dollar in benefits for every two earned. In the months of the year preceding full retirement age, SS recipients can earn up to $45,360 before losing one dollar in benefits for every $3 earned above the limit.
Tax and payment changes:
The amount of earnings subject to SS tax is going up from $127,200 to $128,400. ALL earnings are subject to Medicare tax (1.45 percent for employees; 2.9 percent for the self-employed). Individuals who earn more than $200,000 ($250,000 for married couples who file jointly) pay an extra 0.9 percent in Medicare taxes. Higher income Medicare beneficiaries pay higher Part B and D premiums; the thresholds for next year have changed to $133,500 for individuals and $267,000 for couples.
If you or a loved one has concerns about maximizing Social Security and Medicare benefits as part of your comprehensive retirement plan, please contact our office.