Stocks Mixed, Data Up–Weekly Update for November 20, 2017

Domestic stock performance varied last week, with the S&P 500 and Dow losing ground for the 2nd straight week, while the NASDAQ posted gains. By Friday, the S&P 500 had dropped 0.13%, the Dow gave back 0.27%, and the NASDAQ gained 0.47%. International stocks in the MSCI EAFE stumbled, dropping 0.67%.

Tax reform remained a key focus in the markets, as investors questioned whether changes will happen by the end of 2017. The markets have largely priced in expectations that tax reform will move forward, a belief that has helped drive this year’s record prices. Treasury Secretary Mnuchin expects the President to receive a bill by Christmas, but despite his update, concerns about meeting this deadline remain. This uncertainty—combined with questions about differences between the House and Senate plans—has contributed to the market volatility we’ve seen in recent weeks.

While tax reform may be impacting stocks right now, going beyond the geopolitical debate reveals various positive economic updates.

An Overview of Last Week’s Economic Insight

From housing to industrial production, last week gave us a variety of economic updates for October. Overall, the data indicates that the economy is on solid ground.

• Retail sales grew
Hurricanes are still affecting retail sales, but October’s reading shows decent performance—and analysts expect the holiday season to drive strong results through year’s end.

• Consumer prices increased slightly
Inflation remains relatively low and slow, yet this month’s report shows it moving in the right direction toward the Fed’s goal of a 2% level.

• Industrial production surged
A large jump in manufacturing helped drive industrial growth and indicates a strengthening sector—good news for our economy.

• Housing starts beat expectations
The housing industry experienced strong growth in new permits, construction starts, and completed homes.

What Is Ahead
Tax reform will likely continue to be a hot topic in Washington and the markets. We will follow any changes or updates as they occur, and understanding the economy’s underlying strength will remain our key focus.

As a reminder, with Thanksgiving on Thursday, the markets will only be open for 4 days this week. During this season of gratefulness, we want to thank you for your ongoing trust and reinforce that we are always here to support you on your financial journey.

ECONOMIC CALENDAR
Tuesday: Existing Home Sales
Wednesday: Durable Goods Orders, Consumer Sentiment
Thursday: Markets Closed for Thanksgiving
Friday: PMI Composite Flash

Health Insurance Simply Unaffordable–New Study of 50 US Metro Areas by eHealth.com

According to a study released in September, 2017 by eHealth, Inc.(NASDAQ:EHTH), which operates eHealth.com, the average family of three earning slightly too much to qualify for subsidies in 2018 would need to increase its household income by nearly $29,000 before health insurance became “affordable” based on Obamacare criteria.
The Affordable Care Act (ACA or Obamacare) considers health insurance to be “unaffordable” when annual premiums for the lowest-priced plan in a market cost more than 8.16% of a household’s modified adjusted gross income (or MAGI). When health insurance is unaffordable by this standard, individuals and families may qualify for an exemption from Obamacare’s individual mandate to buy health insurance.
Government subsidies are available to people earning up to 400% of the federal poverty level, but middle-income households earning 401% or more of the federal poverty level are not eligible for subsidy assistance. If you fall into this group that isn’t eligible for government subsidies, we can help you.
In preparing its analysis, eHealth reviewed the lowest-price 2017 plan available for families of three comprised of two adults age 35 and one child. The same family model was analyzed using data from Healthcare.gov in 40 cities, data from eHealth.com in 9 cities not utilizing Healthcare.gov, and data from the New York state exchange for New York City.
After applying a relatively modest annual rate increase of 10% to 2017 rates to project 2018 rates, eHealth discovered the following:
In 47 of 50 cities surveyed, the lowest-priced plan would be officially unaffordable under Obamacare affordability standards for families earning 401% of the federal poverty level (about $82,000 per year in the contiguous US, making them ineligible for Obamacare subsidies).
Among these, the average three-person household would need to earn an additional $28,939 per year before the lowest-cost plan becomes affordable according to Obamacare rules.
These figures are based on a uniform, conservative 10% increase in health insurance premiums between 2017 and 2018. In fact, some independent projections for 2018 have estimated that premiums may increase 20% or more on average. There will likely be significant variability in the actual rate increase in 2018 for each plan and each market.
Specific findings for surveyed cities are found below. A detailed analysis providing additional context may also be reviewed as an appendix prepared by eHealth which pairs the findings here with demographic data describing each city’s median age, median household size, and median income.
“Coverage under the Affordable Care Act is becoming seriously unaffordable for many families, even by Obamacare’s own rules,” said eHealth CEO Scott Flanders. “I find it hard to believe that the framers of the law ever intended the cost of family health insurance to rival that of a second mortgage. Without the introduction of lower-cost options into the market or expanded government subsidies, many middle-income Americans are in danger of being priced out of the health insurance market entirely.”

We offer affordable health insurance with $0 deductibles.
Our plans pay defined benefits up-front up to $1million/year up to a $5million/maximum lifetime total. Our plan are accepted everywhere, because they pay at least 200% of the approved medicare rate for each treatment class. So, you choose providers. Alternatively, you can stay In-Network and get an average 43% discount on providers rates. We also have a rider that provides Critical Event protection of $50,000 lump sum cash benefit for diagnosis of cancer, heart attack, stroke, kidney failure, etc. Our plans are for middle-income individuals and families who don't qualify for ACA subsidies.
So stop wasting money on insurance that doesn't pay! Stop self-insuring! Schedule a 15-minute conversation to see if one of our alternatives is right for you and your family.


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Stocks End Up After Busy Week

Weekly Update – November 6, 2017
Once again, the markets ended the week in positive territory—and all 3 major domestic indexes hit new record highs. The S&P 500 added 0.26%, and the Dow was up 0.45%, with both indexes notching their 8th straight week of growth. The NASDAQ was up for the 6th week in a row with a 0.94% gain. International stocks in the MSCI EAFE joined in the growth, posting a 0.90% increase.

Why did markets continue to perform well last week? In part, economic data, political developments, and policy decisions gave investors a variety of details to digest.

Perspectives We Gained Last Week

1. Tax Reform
The House of Representatives released a long-awaited tax-reform bill on November 2, which included a number of changes to current laws. If passed, this legislation would reduce the corporate tax rate to 20% while cutting in half the mortgage-interest deduction. The markets responded positively to the bill, in part because of the level of detail it included.

Key Takeaway: This tax reform could be significant, but it must pass through several steps ahead before becoming law.

2. Monetary Policy
The Federal Reserve opted to keep interest rates at their current level for now. In addition, President Trump nominated Jerome Powell to be the new Fed Chair when Janet Yellen’s term ends next February.

Key Takeaway: Many people expect one more interest rate increase this year. And if the Senate confirms Powell’s nomination, the Fed may stay with the same centrist approach to monetary policy as in recent years.

3. Jobs
After hurricanes contributed to disappointing jobs data for September, the most recent reading showed improvements in hiring. October saw the economy add 261,000 new jobs—below the predicted 313,000—but positive growth, nonetheless. In addition, we received revised data for September, which indicated the economy gained 18,000 jobs during that month, rather than losing the previously reported 33,000.

Key Takeaway: Hurricanes continue to affect jobs data, but unemployment is now lower than it has been since 2001.

4. Business
The most recent ISM non-manufacturing data shows that many businesses in the service sector are growing. In October, these industries—which range from construction to agriculture—grew at the fastest rate since 2005.

Key Takeaway: With business activity and new orders on the rise, we may expect to see service-sector expansion continue in future months.

After last week’s wealth of data and developments, this week’s schedule is relatively quiet. We will continue to monitor incoming details and determine how they may affect our clients’ financial lives. In the meantime, if you have any questions, we are always here to talk.

Economic Calendar
Tuesday: JOLTS
Wednesday: EIA Petroleum Status Report
Thursday: Jobless Claims
Friday: Consumer Sentiment

DATA AS OF 11/3/2017 1 WEEK SINCE 1/1/17 1 YEAR 5 YEAR 10 YEAR
STANDARD & POOR’S 500 0.26% 15.59% 23.90% 12.85% 5.54%
DOW 0.45% 19.11% 31.28% 12.45% 5.64%
NASDAQ 0.94% 25.66% 33.73% 17.80% 9.18%
INTERNATIONAL 0.90% 19.27% 21.54% 5.58% -1.54%
DATA AS OF 11/3/2017 1 MONTH 6 MONTH 1 YEAR 5 YEAR 10 YEAR
TREASURY YIELDS (CMT) 1.02% 1.31% 1.49% 1.99% 2.34%

Notes: All index returns (except S&P 500) exclude reinvested dividends, and the 5-year and 10-year returns are annualized. The total returns for the S&P 500 assume reinvestment of dividends on the last day of the month. This may account for differences between the index returns published on Morningstar.com and the index returns published elsewhere. International performance is represented by the MSCI EAFE Index. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly.

Sources:
https://www.cnbc.com/2017/11/03/us-stocks-apple-earnings-jobs-report.html
http://performance.morningstar.com/Performance/index-c/performance-return.action?t=%21DJI&region=usa&culture=en-US
http://performance.morningstar.com/Performance/index-c/performance-return.action?t=SPX&region=usa&culture=en-US
http://performance.morningstar.com/Performance/index-c/performance-return.action?t=@CCO
https://www.msci.com/end-of-day-data-search
https://www.cnbc.com/2017/11/03/us-stocks-apple-earnings-jobs-report.html
https://finance.yahoo.com/news/stock-market-news-nov-3-140402004.html
https://www.edwardjones.com/market-news-guidance/recent-news/weekly-recap.html
https://www.edwardjones.com/market-news-guidance/recent-news/weekly-recap.html
http://www.ftportfolios.com/Commentary/EconomicResearch/2017/11/3/the-ism-non-manufacturing-index-rose-to-60.1-in-october
http://wsj-us.econoday.com/byshoweventfull.asp?fid=477894&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top