Brexit Shock – What’s Next

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MMM Newsletter and Website Header 10.2.15I hope you had a great weekend! This will be an interesting week for the markets as a result of the Brexit vote.

LRPC’s Monday Morning Minute for this week, “Brexit Shock — What’s Next” (presented below) comes to you courtesy of Schwab. As an independent, objective Registered Investment Advisory (RIA) firm, Lawton Retirement Plan Consultants, LLC has access to research from many sources. Be assured that I will share the most relevant information with you each week. If you are short on time, try to skim each section heading.

On Thursday of last week U.S. equity markets were up strongly, based on the perception that the citizens of the United Kingdom (U.K.) would vote to remain in the European Union (EU). When the votes were tallied, heavy voter turnout (72% of eligible voters) unexpectedly resulted in a mandate to exit the EU. The markets were shocked with the Dow plummeting more than 600 points on Friday. What’s next? Read what the experts from Schwab have to say below.

Have a wonderful week!

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Brexit Shock — What’s Next

By Liz Ann Sonders, Brad Sorensen, Jeffrey Kleintop, Charles Schwab

Key points

  • Britain shocked the financial community by voting to leave the European Union (EU).  Global equity markets plunged as traders searched for perceived safety in the midst of uncertainty. Short-term traders should be prepared for more downside, and the risk of a global recession has risen.
  • The U.S. economy is fairly healthy and should manage to stay out of recession territory in the near term, although risks have risen. Long-term investors should stay patient and disciplined.
  • The Federal Reserve seems highly unlikely to raise rates in foreseeable future and further economic stimulus cannot be ruled out. Across the pond, the Bank of England has made 250 billion pounds of liquidity available, with more action possible.

Brexit shock

Britain voted to leave the EU on June 23, referred to as “Brexit.” We would term this development a market and economic shock. International developed and emerging market (EM) stocks were up through yesterday in June, and over the 90 days leading up to the referendum, suggesting they were not pricing in a Brexit outcome. The initial shock of the unexpected outcome prompted a sharp decline in stock markets around the world and we believe it may take some time for the shock to fully work through the economic, financial, and political systems in the United Kingdom and Europe. With no visible catalyst to halt the slide, the decline in global stocks may continue, as the risk of a global recession increases. [Read more…]

Brexit: How Might Stocks Respond?

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MMM Newsletter and Website Header 10.2.15

I hope you had a great weekend! This is a big week for the United Kingdom (U.K.).

LRPC’s Monday Morning Minute for this week, “Brexit: How Might Stocks Respond?” (presented below) comes to you courtesy of Schwab. As an independent, objective Registered Investment Advisory (RIA) firm, Lawton Retirement Plan Consultants, LLC has access to research from many sources. Be assured that I will share the most relevant information with you each week. This is a short piece I believe everyone can read in less than 60 seconds.

Citizens of the U.K. will vote on June 23 on whether to exit the European Union (EU). You are probably thinking, why should I care? Well, many economists feel that if the U.K. exits the EU, other countries may depart as well. The eventual outcome could be a dissolution of the EU. That, many feel, could lead to a worldwide depression. Checkout what the experts from Schwab think may happen below.

Have a wonderful week!

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Brexit: How Might Stocks Respond?

From Charles Schwab & Co., Inc.

Should I stay or should I go? U.K. voters are mulling this critical question as they prepare to vote on whether to stay in the European Union in a referendum to be held on June 23. Lately, markets have been uneasy about the potential answer. Opinion polls show the desire to leave the EU is gaining momentum among voters. Stocks, particularly in international markets, have fallen as investors contemplate the real possibility of a British exit from the EU — a “Brexit.” As markets react to the headlines, here’s what we think you can expect from the vote’s potential outcomes. [Read more…]

How Low Could We Go? Negative Interest Rates Explained

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MMM Newsletter and Website Header 10.2.15I hope you had a great weekend! Spring is definitely here!

LRPC’s Monday Morning Minute for this week, “How Low Could We Go? Negative Interest Rates Explained” (presented below) comes to you courtesy of Schwab. As an independent, objective Registered Investment Advisory firm, Lawton Retirement Plan Consultants, LLC has access to research from many sources. Be assured that I will share the most relevant information with you each week. This is a short piece I believe everyone can read in less than 60 seconds.

You probably have heard a lot about negative interest rates and wondered why anyone would invest in something that guarantees a loss. This short piece does a nice job explaining negative interest rates and whether we might see them in the U.S.

Have a wonderful week!

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How Low Could We Go? Negative Interest Rates Explained

From Charles Schwab & Co., Inc.

One of the first times negative interest rates appeared on the radar for many investors was in 2012, when the Danish National Bank pushed its deposit rate below zero. It seemed like an outlier event at the time, but since then, central banks in the European Union, Sweden, Switzerland and Japan have sold trillions of dollars of debt offering below-zero interest rates.

With investors and banks buying this government debt at a nearly guaranteed loss, it seems like the world is turning upside down. It’s a trend that’s unprecedented, says Kathy Jones, senior vice president and chief fixed income strategist at the Schwab Center for Financial Research.

To understand the current global wave of negative rates — and whether it’s likely that the U.S. would embrace them — it helps to examine both their theoretical appeal and how they’re actually playing out in real life.

The intended upside of negative rates

[Read more…]

Why Are Stocks Moving In Sync With Oil Prices?

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MMM Newsletter and Website Header 10.2.15

I hope you had a great weekend. Happy leap year day!

LRPC’s Monday Morning Minute for this week, “Why Are Stocks Moving In Sync With Oil Prices?” (presented below) comes to you courtesy of ThinkAdvisor. As an independent, objective Registered Investment Advisory (RIA) firm, Lawton Retirement Plan Consultants, LLC has access to research from many sources. Be assured that I will share the most relevant information with you each week. This is a short piece I believe everyone can read in less than a minute.

Wondering why U.S. stocks and oil prices have been moving in the same direction? Many experts believe that selling of U.S. equities held by sovereign wealth funds (e.g.; Saudi Arabia and Russia) when oil prices fall is responsible for depressed U.S. equity markets. The experts ThinkAdvisor interviewed have additional thoughts, outlined below.

Have a wonderful week!

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Why Are Stocks Moving In Sync With Oil Prices?

By Bernice Napach, Senior Writer, ThinkAdvisor

Lower oil prices are supposed to be good for the economy and stock market because they provide consumers and businesses with more money to spend. But since early November, oil prices and stocks have been moving in lockstep, and there’s no telling yet when that might end. [Read more…]

Impact Of Higher Interest Rates On Your 401k Plan

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By Robert C. Lawton, AIF, CRPS, President, Lawton Retirement Plan Consultants, LLC

On Wednesday the Fed finally took the first step on the journey to normalizing interest rates by raising the discount rate by 1/4 percent (25 basis points). Thought long overdue by most economists, this interest rate increase, and the higher interest rates that will follow, are likely to have the following effects on your 401k plan and participants: [Read more…]

Five Global Trends That Investors Should Watch

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MMM Newsletter and Website Header 10.2.15
I hope you had a great weekend. The holidays are almost here!

LRPC’s Monday Morning Minute for this week, “Five Global Trends That Investors Should Watch” (presented below) comes to you courtesy of Schwab. As an independent, objective Registered Investment Advisory firm, Lawton Retirement Plan Consultants, LLC has access to research from many sources. Be assured that I will share the most relevant information with you each week. This is a short piece I believe everyone can read in less than 60 seconds.

World trends may impact your investing strategy more than trends here in the U.S. As our world becomes more integrated, what happens abroad becomes much more relevant. Outlined below are five major global trends that the experts at Schwab feel everyone should keep in mind.

Have a wonderful week!

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Five Global Trends That Investors Should Watch

From Charles Schwab & Co., Inc.

Demographic changes around the world are creating new opportunities for investors. Consider your portfolio in light of these global trends, and you may want to widen your horizons: [Read more…]

Three Reasons Not To Worry About The Fed’s First Rate Hike

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MMM Newsletter and Website Header 10.2.15
I hope you had a great weekend. We are at peak color here in southeastern Wisconsin!

LRPC’s Monday Morning Minute for this week, Three Reasons Not To Worry About The Fed’s First Rate Hike (presented below) comes to you courtesy of ThinkAdvisor. As an independent, objective Registered Investment Advisory firm, Lawton Retirement Plan Consultants, LLC has access to research from many sources. Be assured that I will share the most relevant information with you each week. This is a short piece I believe everyone can read in less than 60 seconds.

We all know a rate hike is coming soon. Should you be concerned? According to the panel of experts quoted below, probably not.

Have a wonderful week!

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Three Reasons Not To Worry About The Fed’s First Rate Hike

By Bernice Napach, Senior Writer, ThinkAdvisor

The first interest rate hike by the Federal Reserve in more than nine years will not be the big event that the market has been anticipating, according to a panel of fixed income strategists and portfolio managers who participated in a recent Envestnet Institute webinar.

Their reasons have nothing to do with the latest market rout, which, has more than erased any gains in the stock market this year, and could potentially delay a Fed rate hike. They relate instead to the context in which the Fed will be raising rates and the history of market performance when the Fed has tightened policy before.

The panelists were William Rodriguez, fixed income strategist at BlackRock; Mark Mowrey, senior vice president and portfolio manager at AFAM Capital and Innealta Capital; Scott Eldridge, director of fixed income product strategy at Invesco PowerShares Capital Management; and Frank Pape, director of consulting services at Russell Investments’ private client services business.

Here are their reasons why investors and advisors shouldn’t be overly concerned about an increase in the Fed funds rate, the short-term interest rate that the Fed directly controls and that banks use to lend funds to one another overnight. [Read more…]

Fed Punts And Keeps Rates Unchanged

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MMM Newsletter and Website Header 10.2.15
I hope you had a great weekend. I have neighbors that have Halloween decorations up already!

LRPC’s Monday Morning Minute for this week, Fed Punts And Keeps Rates Unchanged (presented below) comes to you courtesy of Schwab. As an independent, objective Registered Investment Advisory firm, Lawton Retirement Plan Consultants, LLC has access to research from many sources. Be assured that I will share the most relevant information with you each week. If you are short on time, make sure you review the “Key points” below.

The Fed decided to err on the side of caution and leave rates unchanged at its meetings last week. Was that the right thing to do? Read on below to find out what the experts at Schwab are thinking.

Have a wonderful week!

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 Fed Punts And Keeps Rates Unchanged

By Liz Ann Sonders, Charles Schwab & Co., Inc.

Key points

  • The lack of a rate hike was not the big surprise, but the still-dovish accompanying statement was.
  • Recent global economic and market turmoil appear to have been the proximate cause for the punt, although still-low inflation gave the Fed cover as well.
  • We believe the Fed will act this year; but that the pace of hikes will be very slow relative to recent history.

The Fed opted to stall on raising rates for the first time since 2006; primarily citing global turmoil and still-restrained inflation for its decision. In addition, the accompanying Federal Open Market Committee (FOMC) statement was not as hawkish as many expected (meaning, those who had been expecting no hike, were also expecting a more hawkish statement). [Read more…]

What’s Going On With The Markets? Seven Things To Keep In Mind

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MMM Newsletter and Website Header 10.2.15
I hope you had a great weekend. The college football season opens this weekend — fall is almost here!

LRPC’s Monday Morning Minute for this week, “What’s Going On With The Markets? Seven Things To Keep In Mind (presented below) comes to you courtesy of Schwab. As an independent, objective Registered Investment Advisory firm, Lawton Retirement Plan Consultants, LLC has access to research from many sources. Be assured that I will share the most relevant information with you each week. If you are short on time, be sure you scan each of the seven points below.

Wondering how to react to all of the recent market volatility? Outlined below are seven suggestions from Schwab that all investors should consider.

Have a wonderful week!

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 What’s Going On With The Markets? Seven Things To Keep In Mind

From the Schwab Center for Financial Research

Global markets may have swung wildly in recent weeks, but we think the recent selloff in stocks and commodities is not a sign of imminent global recession. However, it may prompt the Federal Reserve (Fed) to postpone raising U.S. interest rates for a while longer. In the meantime, the basics of successful investing remain the same: Sticking to your long-term investment plan and maintaining a well-diversified portfolio should help you weather the market storm. Read on for more of our perspective on the current market environment: [Read more…]

What’s Going On With The Stock Market?

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MMM Newsletter and Website Header 10.2.15
I hope you had a great weekend. Make sure you enjoy these last few weeks of summer!

LRPC’s Monday Morning Minute for this week, “What’s Going On With The Stock Market?” (presented below) comes to you courtesy of JP Morgan Asset Management. As an independent, objective Registered Investment Advisory firm, Lawton Retirement Plan Consultants, LLC has access to research from many sources. Be assured that I will share the most relevant information with you each week. This is a short piece I believe everyone can read in less than 60 seconds.

Why did the U.S. equity markets crash late last week? The experts from JP Morgan Asset Management have some thoughts which are shared below.

Have a wonderful week!

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What’s Going On With The Stock Market?

From JP Morgan Asset Management

The last several years have been relatively calm for the U.S. stock market. Notably, this bull market has gone 1,418 calendar days without a 10% correction — the third longest such streak in the last half-century. But recent market moves may have some investors concerned. Below are a few key observations: [Read more…]