published: June, 27th 2017
2017: The Xanax Year
By: Tommy Williams, President and Founder, Williams Financial Advisors, LLC
Stock market historians may dub 2017 the Xanax year. Traditional historians will probably choose a different name.
Stock markets in many advanced economies have been unusually calm during 2017, reported Schwab’s Jeffrey Kleintop in a May 15, 2017 commentary. The CBOE Volatility Index, a.k.a. the Fear Gauge, which measures how volatile investors believe the S&P 500 Index will be over the next few months, has fallen below 10 on just 15 days since the index was introduced in 1990. Six of the 15 occurred during 2017. The average daily closing value for the VIX was 19.7 from 1990 through 2016. For 2017, the average has been 11.8.
Investors’ calm is remarkable because 2017 has not been a particularly calm year. We’ve experienced significant “non-calming” geopolitical events. For example, the U.S. launched a military strike on Syria, and dropped its biggest non-nuclear bomb on Afghanistan. There have been terrorist attacks in Europe, along with discord in the Middle East. The European Union has been unraveling. The U.S. government has shown unusual levels of disarray, and the U.S. President’s passion for Tweets has stirred the pot.
On June 8th, the future of Brexit was thrown into question when Britain’s snap elections produced a hung Parliament (no political party has a majority). How did investors react? Barron’s reported the European markets shrugged off the election results and moved higher the following day, offsetting some losses from earlier that week.
That same week, Former FBI Director James Comey provided his testimony, which didn’t have much effect on stock markets, according to Barron’s.
While stock markets have remained calm, the pressure is mounting for American employers. According to the Department of Labor, there are 6.9 million out-of-work citizens and 6.0 million job openings nationwide as of the end of April – representing the largest number of openings since the statistic started being reported in 2000. Bloomberg recently reported:
“Unemployment reached a 16-year low of 4.3 percent in May and payrolls have increased by more than 15 million since the end of the last recession in June 2009. As a tighter job market leaves more and more companies unsuccessful in their bid to fill slots with skilled laborers, the pace of hiring is cooling. The reduced availability of available workers, along with limited pricing power, may explain why wage growth has been modest. The so-called skills gap is front and center on Trump’s radar as he readies a plan to expand apprenticeship opportunities and build on years of labor-market progress.”
The article pointed to three industries with especially high numbers of unfilled positions – hospitality, construction trade and manufacturing.
According to Bloomberg, President Trump’s initiative to improve the Labor Department’s apprenticeship program, “…may appeal to both sides of the aisle on Capitol Hill in that it provides enhancement of skills desired by employers, and could help boost pay.” The program offers participants a starting salary while they’re training. The article continued:
“Apprenticeships could also reopen the door to more employment of America’s prime-age workers. ‘Americans want to work. American companies want to hire. The issue is a mismatch between available jobs and prospective employees’ job skills,’ [said] Labor Secretary Alexander Acosta.”
Perhaps apprenticeships will become “the new normal” for career starters. The advantages of apprenticeships seem quite clear from the perspective of both the employer and the apprentice. Regardless, let’s hope to see a major decline in the gap between the unemployed and job openings.
Meanwhile, as you think about your personal wealth plan or strategy, I encourage you to ask yourself this meaningful question: What do you need to develop, improve or change in order to maximize your family’s financial well-being.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The economic forecasts set forth in the presentation may not develop as predicted and there can be no guarantee that strategies promoted will be successful. This material was prepared in part by Peak Advisor Alliance.
Visit us at www.williamsfa.com. Tommy Williams is a CERTIFIED FINANCIAL PLANNER™ Professional with Williams Financial Advisors, LLC. Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through RFG Advisory Group, a registered investment advisor. RFG Advisory Group, Williams Financial Advisors, LLC, and Peak Advisor Alliance are separate entities from LPL Financial. Branch office is located at 6425 Youree Drive, Suite 180, Shreveport, LA 71105.