Market Commentary - Volatility is Back!

If you think Wall Street has become addicted to and dependent upon the Federal Reserve's quantitative easing efforts to boost stock prices, then what has occurred just recently supports this hypothesis.

The three major U.S. stock indices (Dow Jones Industrials, S&P 500 and NASDAQ) dropped an average of 1.36% yesterday. We're at a point where there hasn't been a lot of good news, and the level of concern regarding the Federal Reserve tapering off its bond buying is kind of overwhelming and has set up a modest tone consistent with a pullback.

As a result, we may be beginning to see a pullback in stock prices, which truthfully we have not seen in months. We've gone so long without three or more consecutive down days in the market, that I believe people are really surprised to see the stock market take a break and volatility coming back into focus. Hopefully, this is more of a breather for the market and better entry point for new money to be invested. These types of corrections could take place over the upcoming weeks or months and represent a more normal market, and not one acting as if it's on steroids. 

A Frustrating Labor Market 

Unfortunately, we are in a new period as it relates to the historic relationship of the unemployment rate and number of people employed in the United States. As the chart below, from today's Wall Street Journal, shows, in the past, as the unemployment rate (green line) has gone down the percentage of people employed (red line) has gone up. They have almost been polar opposites, which makes sense.                  

Labor Market

The current economic picture in the United States illustrates that yes the unemployment rate has decreased since the recession, but the percentage of people employed has as well, which is not good. This is why many believe the health of the U.S. economy is not accurately represented by the unemployment rate, and it could be more fragile than it appears. As such, some noted economists believe it will take more than a decade to get back to full employment as defined by prerecession standards.

The sad part about this is the fact that the Federal Reserve, similar to other central banks around the world, has taken steps to lower interest rates and has flooded the market with cheap funds for borrowers. This move has resulted in appreciated bond, stock and real estate prices, but really has not done much for getting people back to work and actually hurt fixed income investors looking for income from safe investments such as CDs.

To give you an idea on how tough it is for fixed income investors, I received a quote sheet with CD offerings. Locking in on a five-year CD would get you 1.30%/year, and a 10-year CD would get you 2.50%. This is horrific!

In my opinion, the Feds actions may have helped borrowers refinance loans or some investors, but it has done very little for those looking for work and has been terrible those individuals trying to live off no risk CDs or similar savings options. 

Why am I Receiving a Form 5498?  

Sally has received several phone calls from clients regarding the Form 5498 they received from TD Ameritrade.

The Form 5498 is a form required by the IRS. This form discloses the amount of IRA contributions, the fair market value of the IRA and other general information on the account. This allows the taxpayer to keep track of any taxes associated with their IRA and the IRS to keep track of the taxpayer's IRA account.

When issuing the form, the trustee or issuer (TD Ameritrade) should only disclose the final four digits of the taxpayer's tax identification number or social security number. This provides protection for the taxpayer from identity theft.

The trustee of an IRA must file a copy of the Form 5498 with the IRS each year by March 31st of each year and another copy must be sent to the account owner by May 31st of each year.

The copy of the Form 5498 you receive is only for your information and personal records. Do not attach it to your tax return. If you have any further questions regarding this matter, please don't hesitate to call the office. 

Career Advice: Manners Matter 

Unfortunately, in today's world, I see a trend toward bad or a complete lack of manners in society. I realize that most or all us at times have dropped the ball on this issue. However, and maybe I am showing my age, I was raised to use good manners and was corrected when I didn't. Needless to say, my orneriness created a real challenge for my parents and still does for my wife.   

That being said, it seems like society or at least some parts of the media make it appear cute, or celebrity-like to not use good manners. In addition, I have seen instances where those individuals using good manners are ridiculed or made to appear nerdy or out of touch.   

As a parent and business professional, I find a lack of manners a real turn off and possibly a deciding factor on whether to hire, purchase from or do business with a firm or individual.

Ironically, there is a May 29th article on regarding young people ages 16-34 that have been rejected for a job due to their social media profile. In this case they specifically referenced Facebook.

Yet even more troubling is the fact that the majority (two-thirds) of those surveyed are not concerned that their use of social media now, may harm their future career prospects and are not deterred from using it. 

In addition, the respondents noted that they are also more likely to have altered their social media profile to look good to their friends, as opposed to prospective employers. 

You would not think it necessary to educate these young adults regarding  the impact of social media, to ensure they are not making it even harder for themselves to get on the career ladder.

This article just validated my belief that many younger adults don't realize that a lack of manners could stifle their career. You may think manners are dead, and you may be right. However, if you think you can get ahead at the office while being a boor and a slob, you're wrong, says Dana May Casperson, author of Power Etiquette: What You Don't Know Can Kill Your Career (AMACOM). 

Here are some simple reminders to help fast-forward you on your career path: 

  • Speak and laugh softly.
  • Use the magic words "please" and "thank you."
  • Don't whistle or hum while you work.
  • Don't bang the keys on your keyboard.
  • Send cards and flowers to co-workers when appropriate.
  • Keep tissues on your desk.
  • Keep an extra chair close by for visitors.
  • Clean up after yourself in meetings and in the lunch area.
  • Avoid loud, obnoxious phone conversations.

                   Adapted from the St. Louis Post-Dispatch 

I realize that it may seem redundant or even intuitive to say that good manners are important. However, many of today's younger adults don't realize this and are under a false belief that if celebrities and athletes can get away with it (i.e., bad manners) then why can't  I. Well, that is just not reality, and we need to lead by example. 



" Good manners are just a way of showing other people that we have respect for them."

                   Bill Kelly

"Children are natural mimics who act like their parents despite every effort to teach them good manners."

                   Author Unknown

"Politeness is to human nature what warmth is to wax."

                   Arthur Schopenhauer


Tony Moeller, CPA


The information listed in this commentary is a compilation of various publicly available sources and is for informational purposes only. It is not a recommendation or solicitation of any particular investment or strategy. A risk of loss is involved with investments in the stock and bond markets.  

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