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YOUR FINANCIAL FUTUREYour Guide to Life Planning
August 2016
Luther J. Hagen CFP, MarkReichowInfinity Wealth
AlliancePresident & Wealth Advisor14811 Energy WayApple Valley,
MN 55124952-431-2224Fax:
[email protected]
In This Issue
Quotes for the Week of August 15, 2016Quotes for the Week of
August 15, 2016
Date Night and Fun Family List of Events - August 15,2016Date
Night and Fun Family List of Events - August 15, 2016
Weekly Market Commentary | Week of August 15, 2016Macroeconomics
and geopolitics are interesting to discuss, but earnings are what
drivemarkets.
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2 Your Guide to Life PlanningQuotes for the Week of August 15,
2016
Quotes for the week of August 15, 2016
Laughter is an instant vacation. - Milton Berle
Setbacks are bumps in the road; they are not the end of the
road. - Bob Greene
Success is nothing more than a few simple disciplines practiced
every day. - Jim Rohn
Don't be afraid of silly ideas. - Paul Arden
Decisions are best made by the people affected by them. - Gloria
Steinem
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3 Your Guide to Life PlanningDate Night and Fun Family List of
Events - August 15, 2016
Date Night and Fun Family List of Events
Athletic Events
August
8/22/16 to 8/24/16 Wichita Wingnuts at St. Paul Saints
8/23/16 to 8/25/16 Twins vs Detroit Tigers
8/28/2016 Lynx vs Seattle
8/28/2016 Vikings vs San Diego Chargers
8/30/16 to 8/31/16 Winnipeg Goldeyes at St. Paul Saints
September
9/1/2016 Gophers vs Oregon State Beavers
9/1/2016 Winnipeg Goldeyes at St. Paul Saints
9/1/2016 Los Angeles Rams vs Vikings
9/2/16 to 9/4/16 Twins vs Chicago White Sox
9/2/16 to 9/5/16 Lincoln Saltdogs at St. Paul Saints
9/2/2016 Lynx vs Washington
9/3/2016 United FC vs Rayo OKC
9/4/2016 Lynx vs Connecticut
9/5/16 to 9/7/16 Twins vs Kansas City Royals
9/9/16 to 9/11/16 Twins vs Cleveland Indians
9/10/2016 Gophers vs Indiana State Sycamores
9/17/2016 United FC vs Ottawa Fury SC
9/17/2016 Lynx vs Atlanta
9/18/2016 Vikings vs Green Bay Packers
9/20/16 to 9/22/16 Twins vs Detroit Tigers
9/23/16 to 9/25/16 Twins vs Seattle Mariners
9/24/2016 Gophers Football vs Colorado State Rams
9/27/2016 Colorado Avalanche vs MN Wild
9/27/2016 2016 Ryder Cup Practice Round
October
10/1/2016 United FC vs Jacksonville FC
10/2/2016 Carolina Hurricanes at MN Wild
10/3/2016 Vikings vs New York Giants
10/8/2016 Winnipeg Jets at MN Wild
10/8/2016 Gophers vs Iowa Hawkeyes
10/8/2016 Miami Heat vs Timberwolves
10/9/2016 Vikings vs Houston Texans
10/9/2016 Kellogg's Tour of Gymnastics Champions
10/15/2016 Winnipeg Jets at MN Wild
10/15/2016 United FC vs FC Edmonton
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4 Your Guide to Life Planning
10/15/2016 Miami Heat vs Timberwolves10/18/2016 Los Angeles at
MN Wild
10/20/2016 Toronto Maple Leafs at MN Wild
10/22/2016 Gophers vs Rutgers Scarlet Knights
10/29/2016 United FC Vs New York Cosmos
10/29/2016 Dallas Stars at MN Wild
Art Events
August
8/18/2016 La Dance Fatale Ballet Co, Lake Harriet Bandshell
8/19/2016 Movie: Moonrise Kingdom, Lake Harriet Bandshell
8/19/16 to 8/20/16 Jack & the Beanstalk Lakeville Area Arts
Center
8/20/2016 The Melvilles, Lake Harriet Bandshell
8/19/2016 "Weird Al" Yankovic: The Mandatory World Tour Orpheum
Theatre
8/19/2016 Luke Bryan: Kill the Lights Tour U.S. Bank Stadium
8/19/16 to 8/20/16 Power Balladz: '80s Sing-A-Long Chanhassen
Dinner Theater
8/20/2016 Har Mar Superstar MN Zoo
8/20/2016 Metallica U.S. Bank Stadium
8/21/2016 Dustin Hatzenbuhler, Lake Harriet Bandshell
8/21/2016 Bluedog Band, Lake Harriet Bandshell
8/22/2016 Zuhrah Shrine Band, Lake Harriet Bandshell
8/23/2016 Marimba Bullies, Lake Harriet Bandshell
8/25/2016 Standing Waves, Lake Harriet Bandshell
8/26/2016 Movie: The Parent Trap, Lake Harriet Bandshell
8/27/16 to 8/28/16 Dixie Chicks DCX World Tour MMXVI Minnesota
State Fair
8/27/2016 Jerry Jeff Walker MN Zoo
8/27/2016 Vaudeville, Lake Harriet Bandshell
8/27/2016 The Andrews Sisters: Music and Memories Chanhassen
Dinner Theater
8/28/2016 First Things First, Lake Harriet Bandshell
8/28/2016 Mystic Funk, Lake Harriet Bandshell
8/29/2016 Happy Together Tour 2016 Minnesota State Fair
8/29/2016 Minnesota Mandolin Orchestra, Lake Harriet
Bandshell
8/30/2016 FireFlyForest, Lake Harriet Bandshell
8/31/2016 Demi Lavato & Nick Jonas Future Now Minnesota
September
9/1/2016 Kerns & the Hemispheres, Lake Harriet Bandshell
9/2/2016 Codesweat Entertainment, Lake Harriet Bandshell
9/3/2016 Liam Gerard, Lake Harriet Bandshell
9/3/2016 Weezer, MN State Fairground
9/4/2016 Dan Schwartz, Lake Harriet Bandshell
9/4/2016 Katy Vernon, Lake Harriet Bandshell
9/5/2016 Free Fallin, Lake Harriet Bandshell
9/5/2016 Bonnie Raitt, MN State Fairground
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5 Your Guide to Life Planning
9/6/2016 Jenny Lewis with the Watson Twins, State
Theatre9/8/2016 Blink 182, Xcel Energy Ctr
9/8/2016 Australian Pink Floyd Show, State Theatre
9/9/16 to 9/10/16 The Johnny Cash Story, Chanhassen Dinner
Theatre
9/9/16 to 9/11/16 St Paul Chamber Orchestra, Ordway
9/10/16 to 10/29/16 Sense and Sensibility, Guthrie Theater
9/10/16 to 10/1/16 100 Years of Sinatra, Chanhassen Dinner
Theatre
9/11/2016 Butch Walker, Varsity Theater
9/12/2016 Tegan and Sara, State Theatre
9/15/2016 MN Orchestra, Orchestra Hall
9/16/16 to 9/17/16 Blake Shelton, Xcel Energy Ctr
9/16/16 to 9/25/16 Home Street Home, Guthrie Theater
9/16/16 to 9/17/16 St. Paul Chamber Orchestra, Ordway
9/17/2016 Tribute to "MTV Unplugged", Chanhassen Dinner
Theatre
9/22/16 to 9/24/16 A Tribute to the Eagles, Chanhassen Dinner
Theatre
9/22/16 to 9/23/16 Osmo Vanska and Joshua Bell, Orchestra
Hall
9/23/2016 Zeppelin Experience, Fine Line Music Café
9/23/2016 Broadway Songbook, Ordway Center
9/23/16 to 9/30/16 Avenue Q, Ames Center
9/16/2016 Death and the Maiden, Ordway Center
9/23/16 to 9/30/16 Broadway Songbook, Ordway
9/24/2016 Beth Hart, The Fitzgerald Theater
9/24/16 to 10/2/16 MN Opera: Romeo & Juliet, Ordway
9/28/2016 Leon Bridges, Orpheum Theatre
9/28/16 to 10/2/16 Cirque Du Soleil, The Target Center
9/29/2016 Warpaint, Varsity Theater
9/29/2016 Sigur Ros, Orpheum Theatre
9/29/16 to 9/30/16 Vanska Conducts Paulus Mass, Orchestral
Hall
9/30/2016 Celtic Thunder, State Theatre
October
10/1/16 to 11/6/16 The Parchman Hour, Guthrie Theater
10/1/16 to 10/16/16 Avenue Q, Ames Center
10/1/2016 Vanska Conducts Paulus Mass, Orchestra Hall
10/1/2016 The Jazz MN Orchestra, Ordway
10/2/2019 Brian Wilson, Orpheum
10/3/2016 Cantus and Chanticleer in Concert, Orchestra Hall
10/4/2016 Kongos, Varsity Theater
10/5/2016 Def Leppard with REO Speedwagon, Excel Energy Ctr
10/5/2016 NF, Varsity Theater
10/6/2016 DJ Shadow Live, Varsity Theater
10/7/2016 Twin Cities Comedy Festival, Target Center
10/7/16 to 10/8/16 An Evening with Martin Zellar, Chanhassen
Dinner Theatre
10/7/16 to 10/8/16 St Paul Chamber Orchestra, Ordway
10/8/2016 Bill Maher, State Theatre
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6 Your Guide to Life Planning
10/8/2016 Martha Redbone, Ordway10/9/2016 Kellogg's Tour of
Gymnastics Champions, The Target Center
10/10/2016 Kanye West, Xcel Energy Ctr
10/13/2016 Miguel, Target Center
10/14/16 to 10/15/16 Power Balladz, Chanhassen Dinner
Theatre
10/14/16 to 10/15/16 Bruckner Symphony No. #8, Orchestra
Hall
10/14/2016 Travis Wall's Shaping Sound, Ordway
10/16/2016 Gordon Lightfoot, State Theatre
10/16/2016 Frankie Ballard, Varsity Theater
10/17/2016 Carrie Underwood - Easton Corbin and Swon Brothers,
Excel Energy Ctr
10/17/2016 Colbie Caillat, Just Young, The Fitzgerald
Theatre
10/18/2016 Cabaret, Orpheum Theatre
10/18/16 to 10/23/16 Stomp, Ordway
10/19/2016 Loreena McKennitt, State Theatre
10/22/2016 Symphony on the Rocks, Ames Center
10/22/16 to 11/12/16 The Baker's Wife, Bloomington Ctr for the
Arts
10/22/2016 I Love the 90's, Target Center
10/23/2016 Ben Rector, State Theatre
10/25/2016 Widespread Panic, Orpheum Theatre
10/26/2016 Pentatonix & Us, Xcel Energy Ctr
10/26/2016 Joan Baez, State Theatre
10/27/2016 Needtobreath & Parachute, Roy Wilkins
Auditorium
10/28/16 to 10/29/16 Pink Floyd: Dark Side of the Moon,
Chanhassen Dinner Theatre
10/28/16 to 10/29/16 St. Paul Chamber Orchestra, Ordway
10/29/2016 Step Afrika!, Ordway
10/30/2016 The Sphinx Virtuosi, Ordway
To Order Tickets
Ames Center, Burnsville Performing Art Center -
www.ames-center.com
Artistry, Bloomington Center for the Arts -
centerstageticketing.com
Chanhassen Dinner Theatre - www.chanhassendt.com
Gopher Sports - www.gophersports.com
Lakeville Area Arts Center - www.ci.lakeville.mn.us
Minnesota Lynx - www.lynx.wnba.com
Minnesota Orchestra Hall - www.minnesotaorchestra.org
Minnesota State Fair Grandstand - www.mnstatefair.org
Minnesota Twins - www.twinsbaseball.com
Minnesota United FC - www.mnunitedfc.com
Minnesota Vikings - www.mnvikings.com
Minnesota Wild - www.wild.nhl.com
Mystic Lake Casino - www.mysticlake.com
Ordway - www.ordway.org
Orpheum Theatre, State Theatre, Pantages Theatre -
www.hennepintheatretrust.org
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7 Your Guide to Life Planning
Rosemount Area Arts Council - www.rosemountarts.comRoy Wilkens
Auditorium at St. Paul River Centre - www.theroy.org
St. Paul Saints - www.saintsbaseball.com
Target Center - www.targetcenter.com
Timberwolves - www.nba.com
University of Northwestern-St. Paul -
www.unwsp.edu/web/music-theatre-dept/
U.S. Bank Stadium - www.usbankstadium.com
Varsity Theater - www.varsitytheater.org
Xcel Energy Center - www.xcelenergycenter.com
Minnesota Zoo - www.mnzoo.org
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8 Your Guide to Life PlanningWeekly Market Commentary | Week of
August 15, 2016
KEY TAKEAWAYS
Corporate earnings, the most important factor in market
performance, were poor in developed foreignmarkets last
quarter.Forecasts for future earnings have been improving in
emerging markets and Europe, but have declineddramatically for
Japan.Strength out of the German DAX could be one clue that better
times are ahead for Europe.
OVERSEEING POOR EARNINGS OVERSEAS
Macroeconomics and geopolitics are interesting to discuss, but
earnings are what drive markets. We tend toforget that truism when
dealing with international markets. The recent Brexit vote and
discussions on how,and even if, the United Kingdom will eventually
leave the European Union have dominated the news, andespecially
social media. However, the biggest problems facing developed
foreign markets are not politics oreconomics, but the inability of
non-U.S.-based companies to grow earnings and revenue. In Europe,
earningsare falling faster than revenue, though expectations have
been improving for growth in both metrics. Theearnings picture in
Japan remains very troubled. Overall, we are looking for a
turnaround in earnings andearnings expectations before becoming
optimistic on developed foreign equities.
AMATEURS VS. PROFESSIONALS
There is an old expression in the military that "amateurs
discuss strategy, professionals discuss logistics." Forinvestors,
we can translate that to "the macro matters, but ultimately markets
move on earnings." Earningsseason is, for the most part, over in
the U.S., but we are still in the tail end of earnings for
developedinternational stocks, with 76% of firms reporting as of
August 11, 2016. Emerging markets (EM) earningsseason is just
beginning, with less than half the companies releasing earnings as
of this date. We will providean update on EM earnings in September
after more companies have announced results.
Unfortunately, revenue and earnings in developed foreign markets
are in reverse [Figure 1]. If the U.S. isexperiencing an "earnings
recession," then overseas stocks are in an "earnings depression."
The decline in bothrevenue and earnings is surprising. Though both
Europe and Japan have economies that are sluggish at best,they have
managed to avoid recession. There are many possible culprits for
such poor corporate performance,most recently, the uncertainty
created by late June's Brexit vote. The true reasons likely run
deeper. The twobiggest problems in developed markets are
demographics and rigid labor markets, which make hiring andfiring
workers difficult.
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9 Your Guide to Life Planning
LOOKING THROUGH THE NUMBERS
What matters most to financial markets are not historical
earnings, but forecasts for future earnings and howthese forecasts
evolve over time. Wall Street analysts tend to be overly optimistic
about future earnings,reducing forecasts as earnings season
approaches. There are two data points related to earnings: the
release ofcurrent earnings and revisions to future earnings. The
current earnings reporting season is following thetypical pattern,
with forecasts coming down since the beginning of the year [Figure
2]. Two things are strikingabout this chart. Earnings estimates for
emerging market equities in the third quarter of 2016 have
increasedin the past few months, and the outlook for next year's
earnings are essentially unchanged. However, fordeveloped
international markets, estimates for both next quarter and next
year have fallen--dramatically.
The investment industry has historically considered Europe and
Japan together, classified as developedforeign markets and included
in the MSCI EAFE Index, which most asset allocators use as a
primary assetclass. Investors typically use diversified
international strategies with EAFE as their benchmark to
implementthis allocation. However, the two regions have very
different economies and market systems and should beevaluated
separately. For example, expectations for next year's earnings
growth for Japan were reduced from19.2% as of the end of March
2016, to 9.3% as of August 11, 2016. Much of this decline comes
from reducedexpectations for automobile and industrial equipment
companies, companies that are heavily impacted by thestronger
Japanese currency, the yen. Expectations for growth in European
earnings for 2017 were reducedfrom 20.1% to 16.2% over the same
period. Most significantly negatively impacted are financial
stocks, whichare potentially the most directly impacted by Brexit,
as well as by negative interest rates. Conversely,expectations for
energy companies have been improving with higher oil prices. We use
local currency figures,not U.S. dollars when examining earnings.
Currency movement matters, as it affects the actual earnings andmay
be an investment consideration for those outside the country. But
the earnings in local currency are whatinvestors in that country
will be looking at when making their decisions.
CLOSER LOOK AT GLOBAL RETURNS
Taking a step back from earnings and looking at various country
stock market returns shows a mixed backdropin Europe, while Japan
continues to lag. Japanese earnings continue to disappoint,
contributing to the Nikkei225, down 11%, being one of the worst
performing stock indexes in 2016. What would come in as one of
thebigger surprises of 2016 though is that since the Brexit vote,
the British FTSE 100 is up 9.1% to a new 52-weekhigh--making it one
of the top performing stock markets in the world [Figure 3]. These
returns would havebeen hard to predict the morning after the vote
to leave, with global markets declining sharply. Sparking thesurge
in the British equities was a huge drop in the British pound, which
helps the export-heavy U.K. economy.
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10 Your Guide to Life Planning
POSITIVE TECHNICAL DEVELOPMENT?
Germany continues to be one of the most (if not the most)
important countries for the overall health of Europe.Some of the
recent German economic data have been strong, led by last week's
(August 8-12, 2016) secondquarter report on gross domestic product
(GDP), which showed a better than expected 0.4% gain. As Figure
4shows, since the Brexit vote, the German DAX has been a leader--a
potential sign that the largest economy inEurope could be signaling
future strength for Europe in general.
Last, there is a very positive technical development looking at
the German DAX, as it recently broke above abearish trend line
going back 16 months. Many times we have seen markets lead economic
data by as much assix to nine months, and this recent improving
price action out of Germany could be another clue that animproving
German economy, and likely European economy, could be coming later
this year.
CONCLUSION
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11 Your Guide to Life Planning
Financial markets were clearly overly optimistic regarding both
European and Japanese earnings earlier thisyear. Earnings have been
very disappointing, and near-term estimates have been reduced. But
looking to nextyear, analysts are still positive overall on these
markets. The market is already looking to the future, beyondrecent
earnings weakness, though some uncertainty remains, particularly
around Brexit. Should the GermanDAX continue to lead, it may be a
step in the right direction for European markets in general. While
reasonsfor optimism on foreign equities exist, we want to see some
of these potential points of improvement come tofruition before we
can recommend increasing investment overseas.
IMPORTANT DISCLOSURES
The opinions voiced in this material are for general information
only and are not intended to provide specificadvice or
recommendations for any individual. To determine which
investment(s) may be appropriate foryou, consult your financial
advisor prior to investing. All performance referenced is
historical and is noguarantee of future results.
The economic forecasts set forth in the presentation may not
develop as predicted and there can be noguarantee that strategies
promoted will be successful.
Investing in stock includes numerous specific risks including:
the fluctuation of dividend, loss of principal,and potential
liquidity of the investment in a falling market.
All investing involves risk including loss of principal.
International investing involves special risks such as currency
fluctuation and political instability and maynot be suitable for
all investors. These risks are often heightened for investments in
emerging markets.
INDEX DESCRIPTIONS
The Standard & Poor’s 500 Index is a capitalization-weighted
index of 500 stocks designed to measureperformance of the broad
domestic economy through changes in the aggregate market value of
500 stocksrepresenting all major industries.
The MSCI EAFE Index is recognized as the pre-eminent benchmark
in the United States to measureinternational equity performance. It
comprises the MSCI country indices that represent developed
marketsoutside of North America: Europe, Australasia, and the Far
East.
The MSCI Emerging Markets Index captures large and mid cap
representation across 23 emerging markets(EM) countries. With 822
constituents, the index covers approximately 85% of the free
float-adjusted marketcapitalization in each country.
The DAX (Deutscher Aktienindex (German stock index)) is a blue
chip stock market index consisting of the 30major German companies
trading on the Frankfurt Stock Exchange. Prices are taken from the
Xetra tradingvenue.
The FTSE 250 Index is a capitalization-weighted index consisting
of the 101st to the 350th largest companieslisted on the London
Stock Exchange. The FTSE 100 is a subset, comprised of the 100
largest companiestraded on the London Stock Exchange.
The Nikkei Index is short for Japan’s Nikkei 225 Stock Average,
the leading and most-respected index ofJapanese stocks. It is a
price-weighted index comprised of Japan’s top 225 blue-chip
companies on the TokyoStock Exchange. The Nikkei is equivalent to
the Dow Jones Industrial Average Index in the United States.
Infact, it was called the Nikkei Dow Jones Stock Average from 1975
to 1985.
This research material has been prepared by LPL Financial
LLC.
To the extent you are receiving investment advice from a
separately registered independent investmentadvisor, please note
that LPL Financial is not an affiliate of and makes no
representation with respect tosuch entity.
Not FDIC or NCUA/NCUSIF Insured | No Bank or Credit Union
Guarantee | May Lose Value | NotGuaranteed by Any Government Agency
| Not a Bank/Credit Union Deposit8
Tracking #1-526044 (Exp. 08/17)
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The opinions voiced in this material are for general information
only and are not intended to provide specificadvice or
recommendations for any individual. To determine which
investment(s) may be appropriate foryou, consult your financial
advisor prior to investing. All performance referenced is
historical and is noguarantee of future results. All indices are
unmanaged and cannot be invested into directly.
LPL Financial, Member FINRA/SIPC
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