Financial Insights

Retirement Plan Contribution Limits Increasing for 2019

November 19, 2018 | posted in: Blog, Financial Insights | by

The IRS recently announced its updated retirement plan contribution limits for 2019, and they’re going up.  For a chart detailing all the changes, including comparisons to years prior, please click here. Technical guidance is available in IRS notice 2018-83.

The Bright Side

LPL Research writes that “October was one of the worst months we’ve seen in years for stocks, but we see a much brighter future. The next two months could have a nice year-end rally thanks to historically bullish seasonal patterns during midterm years and the extreme buying strength we saw last week.” Key takeaways include: October was one of the worst months for stocks in years. Stocks have historically turned bullish into year-end following midterm elections. Within the four-year presidential cycle, this quarter and the following two quarters next year are historically the best for stocks To read more from John Lynch Chief Investment Strategist, and Ryan Detrick, CMT Senior Market Strategist, LPL Financial, click here.

A Tough Week, But There Are Positive Signs Ahead

LPL Research points out that it has been another tough week for stocks…but that there are reasons to “encourage long-term investors to embrace this volatility, not fear it, especially against a backdrop of solid fundamentals.” Key takeaways include: The S&P 500 fell about 4% last week amid a myriad of concerns, among them possible peak earnings and a potentially overly aggressive Federal Reserve. Historical market patterns suggest solid prospects for a late-year rally remain in place. We see several positives that may help stocks make another run higher, including moving past the upcoming midterm elections, the solid U.S. economic backdrop, and a still-strong earnings outlook To read more from John Lynch Chief Investment Strategist, Jeffrey Buchbinder, CFA Equity Strategist, and Ryan Detrick, CMT Senior Market Strategist, LPL Financial, click here.

Earnings Update: So Far, So Good!

LPL Research reports that “Earnings season off to a good start. Third quarter earnings season is rolling and, so far, results have been quite good overall, supported by strong U.S. economic growth, robust U.S. manufacturing activity, tax cuts, and big increases in energy and financials sector profits. Below we recap the results of earnings season thus far, discuss why we expect strong results to continue throughout the reporting season, and highlight several keys we are watching.” Key takeaways include: With about one-fifth of third quarter earnings results in, the numbers have been solid thus far despite tariffs and increasing wage pressures. We expect the good results to continue based on the favorable U.S. macroeconomic environment, including robust manufacturing activity and strong nominal GDP growth. We’ll be keeping an eye on profit-margin pressures, an eventual peak in earnings growth, and China-U.S. trade tensions, plus possible slower growth in Europe. To read more from John Lynch Chief Investment Strategist, and Jeffrey Buchbinder, CFA Equity Strategist, LPL Financial, click here.

Perspective on Market Volatility

From LPL Research:  “After several months of historic calm, stocks sold off sharply last week. Rising interest rates and trade war fears were cited as the primary causes of the sell-off that caused the Dow Jones Industrial Average to drop more than 1300 points on Wednesday and Thursday combined. Concerns about corporate profit margins peaking and a potentially overcrowded tech trade also likely played a role in upsetting a market that had been extraordinarily calm over the past six months. The S&P 500 Index did manage to pare losses, thanks to solid gains on Friday, but still ended the week down over 4%, for the worst week since March. Here we share some perspective on the latest bout of market volatility, which is not particularly unusual, and share our thoughts on where stocks may go from here.” Key takeaways include: Stocks fell sharply late last week amid a plethora of concerns, primarily rising interest rates and trade. We share our perspective on the sell-off and discuss where stocks may go from here. Technical analysis and sentiment measures indicate stocks may be near a bottom To read more from John Lynch Chief Investment Strategist, Jeffrey Buchbinder, CFA Equity Strategist, and Ryan Detrick, CMT Senior Market Strategist, LPL Financial, click here.

Global Equity Market Outlook: Favor U.S.; Stick With ‘Em

LPL Research says, “We continue to favor the United States and emerging markets (EM) over developed foreign markets for global equity allocations. We see the U.S. economy as the primary driver of our forecast for 3.8% global gross domestic product (GDP) growth in 2018, supported by new fiscal policies, while Europe and Japan may lag.* The United States remains a global earnings standout as well. Despite under-performance this year, we continue to see upside potential in EM due to attractive valuations, recent economic growth, favorable demographics, and the potential for resolution to the U.S.-China trade dispute later this year.” Key takeaways include: U.S. economic and earnings growth continue to stand out globally and support our positive view of U.S. equities. We continue to see upside potential in emerging markets due to attractive valuations, recent economic growth, and potential U.S.-China trade resolution. Our cautious outlook for international developed equities is driven primarily by a lackluster economic growth outlook and structural concerns in Europe. To read more from John Lynch, Chief Investment Strategist, and Jeffrey Buchbinder, CFA Equity Strategist, LPL Financial, click here.