March 3, 2015
TDG News: Protect Yourself from Fraud this Tax Season
You may have heard over the past weeks of a number of scams with regard to the income tax filing season. Tax payers have had their refunds stolen and software companies have had to suspend their online filing. Taxpayers are also being deceived by hackers through fake emails, known as phishing scams, where a user is coerced into providing personal information such as names, addresses and Social Security numbers.
Remember the IRS will never email you asking for information. They always correspond via paper mail. If you receive emails from the IRS DO NOT click anything. It is a scam. If you get a phone call from a taxing authority you can ask their name and badge number then tell them you will call them back. Do not take down the number from the caller. Independently verify the phone number yourself before calling back.
At The Dowling Group we take client privacy and data security very seriously . We have implemented privacy and security measures for our clients that goes well beyond the minimum required standards. If you have any questions about our security protocols please don't hesitate to call us.
Europe Slides Down the Rabbit Hole
"Well, I never heard it before," said the Mock Turtle; "but it sounds uncommon nonsense."
It was an Alice in Wonderland week. European countries, companies, and entrepreneurs were getting paid to borrow money, and ordinary Joes with money in some European banks got letters saying the banks would be charging to hold their money. The New York Times reported:
"The most profound changes are taking place in Europe's bond market which has been turned into something of a charity, at least for certain borrowers. The latest example came on Wednesday when Germany issued a five-year bond worth nearly $4 billion with a negative interest rate. Investors were essentially agreeing to be paid back slightly less money than they lent.
Bonds issued by Switzerland, the Netherlands, France, Belgium, Finland, and even fiscally challenged Italy also have negative yields. Right now, roughly $1.75 trillion in bonds issued by countries in the eurozone are trading with negative yields which are equivalent to more than a quarter of the total government bonds..."
At the end of February, many European stock markets were showing high single-digit to low double-digit gains for the year.
Meanwhile, back in the United States, the background report that supported Fed Chair Janet Yellen's semi-annual testimony before Congress highlighted the effects of the Fed's EAT ME cake — also known as quantitative easing — which left its balance sheet at about $4.5 trillion (up from about $1 trillion in 2008). Barron's speculated the effect of an unexpected rise in interest rates could negatively affect the Fed's bond holdings with maturities greater than 10-years. "If long-term rates do rise faster than anyone now anticipates, the Fed may run into difficulties of navigation that could prove a tad destabilizing to the economy."
|Data as of 2/27/15||1-Week||Y-T-D||1-Year||3-Year||5-Year||10-Year|
|Standard & Poor's 500 (Domestic Stocks)||-0.3%||2.2%||13.5%||15.5%||13.5%||5.8%|
|10-year Treasury Note (Yield Only)||2.0||NA||2.6||1.9||3.6||4.4|
|Gold (per ounce)||0.5||1.2||-8.9||-11.8||1.7||10.8|
|Bloomberg Commodity Index||0.7||-0.9||-22.4||-11.5||-4.9||-4.1|
|DJ Equity All REIT Total Return Index||-1.2||2.9||22.8||15.0||17.2||9.2|
S&P 500, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT Total Return Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance, Barron's, djindexes.com, London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
Industry Returning Home
A manufacturing renaissance in America... really? In the 1950s, manufacturing accounted for 30 percent of America's gross domestic product (GDP), which is the value of all goods and services produced in the United States. Today, it comprises about 12 percent of GDP. That's a big change and it was accompanied by a big shift in employment. In its heyday, manufacturing companies employed about 20 million people in America. Today, that number has fallen to about 12 million.
For decades, companies moved production facilities away from the United States to countries like China which offered lower manufacturing costs. Now, the trend is beginning to reverse. Lower energy prices and rising wages in emerging countries have companies moving manufacturing back to the United States. However, they're running into a stumbling block - a shortage of skilled labor. A BBC report asked:
"...will Americans really contemplate going back to work on the factory floor? The companies all worried about a shortage of skilled workers. So, I went to meet students from the University of Tennessee. They told me they didn't see their future in manufacturing. Some wanted to finance those plants while others said that they weren't good enough at mathematics to work in advanced industries."
The 2015 Manufacturing Institute and Deloitte Skills Gap study confirmed the shortage of skilled manufacturing labor here in the United States and reported little is expected to change during the next decade. Through 2025, close to 3.5 million manufacturing jobs are likely to open but just 1.4 million will be filled because there are not enough workers with the right skill sets. The study found:
- 60 percent of available skilled production positionsremain open
- 80 percent of manufacturing companies are willing to pay more than the going rates to attract skilled workers
- 82 percent of executives believe the skilled labor shortage will affect their ability to meet customers' needs
The Economist was skeptical about a renaissance in U.S. manufacturing. It reported for the industry to flourish, America needs investment in research and development, improved schools and colleges, and changes to the tax system.
Weekly Focus - Think About It
"Learn from yesterday, live for today, hope for tomorrow. The important thing is not to stop questioning."
—Albert Einstein, Theoretical physicist
Sean M. Dowling, CFP, EA
President, The Dowling Group Wealth Management
- Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
- Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
- This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named broker/dealer.
- The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
- The Standard & Poor's 500 (S&P 500) is an unmanaged index. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.
- The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
- Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
- The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
- The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
- Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
- Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
- Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
- Past performance does not guarantee future results. Investing involves risk, including loss of principal.
- You cannot invest directly in an index.
- Consult your financial professional before making any investment decision.
- Stock investing involves risk including loss of principal.
http://www.nytimes.com/2015/02/28/business/dealbook/in-europe-bond-yields-and-interest-rates-go-through-the-looking-glass.html?ref=business&_r=0 (or go to http://peakclassic.peakadvisoralliance.com/app/webroot/custom/editor/03-02-15_NYTimes-In-Europe_Bond_Yields_and_Interest_Rates-Footnote_2.pdf)
http://online.barrons.com/mdc/public/page/9_3063-economicCalendar.html (Click on U.S. & Intl Recaps, then "Equities rally in February," and scroll down to Global Stock Market Recap) (or go to http://peakclassic.peakadvisoralliance.com/app/webroot/custom/editor/03-02-15_Barrons-Chart-Global_Stock_Market_Recap-Footnote_3.pdf)
http://online.barrons.com/news/articles/SB51367578116875004693704580479953380031666 (or go to http://peakclassic.peakadvisoralliance.com/app/webroot/custom/editor/03-02-15_Barrons-Shedding_Light_on_the_Feds_Brave_New_World-Footnote_4.pdf)
http://www.economist.com/news/united-states/21645198-talk-renaissance-american-manufacturing-overblown-not-quite-what-it-seems?zid=293&ah=e50f636873b42369614615ba3c16df4a (or go to http://peakclassic.peakadvisoralliance.com/app/webroot/custom/editor/03-02-15_TheEconomist-Not_Quite_What_It_Seems-Footnote_6.pdf)
IRS Circular 230 Disclosure: Pursuant to requirements imposed by the Internal Revenue Service, any tax advice contained in this communication (including any attachments) is not intended to be used, and cannot be used, for purposes of avoiding penalties imposed under the United States Internal Revenue Code or promoting, marketing or recommending to another person any tax-related matter. Please contact us if you wish to have formal written advice on this matter.
ADV & Investment Objectives: Please contact The Dowling Group if there are any changes in your financial situation or investment objectives, or if you wish to impose, add or modify any reasonable restrictions to the management of your account. Our current disclosure statement is set forth on Part II of Form ADV and is available for your review upon request.
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