Market Commentary 1st QTR 2023
March 31, 2023
For the three-month period, the S&P 500 Total Return Index increased 7.5% while the Bloomberg U.S. Aggregate Intermediate Bond Index rose 2.4%.
After a difficult 2022, most financial markets recovered in the first three months of 2023. It might be more accurate to say that the markets recovered sharply in January, with the combination of hawkish jawboning from the Fed and a mini-financial crisis erasing those gains by mid-March, followed by a recovery during the last two weeks of the quarter.
For another quarter the Federal Reserve dominated the headlines, as it continued to raise interest rates as inflation, while moderating, remained stubbornly elevated. An unintended consequence of the fastest rate increases in history was a decline in the value of the Treasury securities held by financial institutions, contributing to the failure of three of those institutions during the quarter. Prompt response by government agencies with the assistance of the big healthy banks alleviated the concerns of financial contagion and restored confidence in the markets. Looking forward, investors will focus on corporate earnings and banks will likely continue to dominate the headlines as information on the health of other financial institutions remains in flux. Corporate earnings are expected to decline mid-single digits for the second consecutive quarter, with substantial earnings growth anticipated in the back half of the year.
Previous periods of market volatility have also demonstrated that trying to time the market is a difficult and typically underperforming pursuit. For long term investors, simply staying invested is the most prudent investment strategy. In addition, we encourage investors to manage risk by staying in their asset allocation range and maintaining a diversified portfolio.
Market Commentary 4th QTR 2022
December 31, 2022
The S&P 500 Total Return Index increased 7.6% for the quarter but finished down 18.1% for the year. The Bloomberg U.S. Aggregate Intermediate Bond Index increased 1.9% during this period and finished down 13.0% for 2022. The yield on the 10-year Treasury remained in a relatively narrow band, essentially finishing the quarter at the same level as it started. Short-term rates, on the other hand, steadily increased leading to the largest yield inversion on record.
Inflation’s surge to a 40-year high in the first half of 2022 led the Federal Reserve to rapidly raise interest rates, leading to a historic selloff in bonds and a bear market for stocks during the first three quarters. The Markets remained volatile during the final quarter, but finished higher as many of the storm clouds dissipated, even though investors continued to focus on future rate increases and the likelihood of a recession. On a positive note, the inflation data for the fourth quarter showed that the dramatic deceleration of inflationary pressures that began in July had continued, with the month-over-month CPI actually declining in December.
Unlike the first three quarters of 2022, when all four major indices saw quarterly declines, performance was mixed during the fourth quarter as the Dow Jones Industrial Average rose sharply, while the S&P 500 and Russell 2000 were solidly higher. Like most of 2022, however, the Nasdaq lagged and fell slightly in the fourth quarter. Expectations for higher rates, slowing economic growth and underwhelming earnings weighed on the tech sector in the fourth quarter, which was the case for much of 2022.
Small-cap stocks showed some resilience in the fourth quarter with the Russell 2000 index registering a solid gain as investors’ hopes for a peak in inflation and ultimately interest rates, led to some buying in the segment. We continue to see tremendous opportunities in small caps with the Russell 2000 trading at a significant discount to its historic P/E multiple.
Value stocks dramatically outperformed growth all year and that trend continued in the fourth quarter. Softening earnings weighed on tech stocks in the final three months of the year, while concerns about slowing economic growth combined with rising interest rates hit the high multiple tech stocks. Value stocks, on the other hand, were viewed as more attractive in the market environment of 2022 due to lower valuations and exposure to business sectors that are considered more resilient than high-growth parts of the market.
On a sector level, 10 of the 11 S&P 500 sectors finished the fourth quarter with a positive return, although only 2 of the 11 ended 2022 with gains. The Energy sector posted a 22.7% gain for the quarter, followed by the Industrial sector with a 19.1% rise. Those two sectors were bolstered by progress on the post-Covid economic reopening in China which increased demand expectations, while a falling dollar was an added tailwind for commodities including oil and gas.
The high-growth sectors, such as tech and communication services lagged in the fourth quarter, with communication services being only fractionally positive while the consumer discretionary sector posted a negative return on concerns about an impending recession and plummeting consumer confidence.
Sector selection proved to be of the utmost importance during the quarter, as markets were extremely sensitive to the macro environment.
With interest rates and stock valuations back to more normal levels, the stage seems to be set for healthier markets in 2023.
Market Commentary 3rd QTR 2022
September 30, 2022
The S&P 500 Total Return Index fell 4.9% for the quarter and is down 23.9% for the year. The Barclays U.S. Aggregate Bond Composite Index fell 3.8% during this period and is down 11.0% for 2022. This is the first time since 1976 that both stocks and bonds have been down for the first three quarters of a year.
Hopes faded during the quarter that inflation would moderate and that the Federal Reserve would slow the pace of interest rate increases. At this point, US stocks are on track for their worst year since the 2008 financial crisis. The yield on the 10-year Treasury note climbed above 4% for the first time in more than a decade. International markets fared worse, as the U.S. Dollar continued to appreciate against almost every major currency. For the final three months of the year, market participants will be focused on the Federal Reserve’s response to corporate earnings, inflation, and employment reports.
Previous periods of market volatility have demonstrated that trying to time the market is a difficult and typically underperforming pursuit. For long term investors, simply staying invested is the most prudent investment strategy. In addition, we encourage investors to manage risk by staying in their asset allocation range and maintaining a diversified portfolio.
The following are some technical indicators and themes that North Star tracks to get a sense of the health of the economy.
The US ISM Manufacturing Purchasing Managers Index (PMI) slowed to 50.9 in September. Its lowest reading since May 2020.
Consumer Price Index and Producer Price Index readings were the highest in 40 years, but CPI only increased a total of 0.5% for the three months ending in September.
The St Louis Fed’s Financial Stress Index remains low, as it did during the onset of the pandemic.
The US Dollar is at a multi-decade high and remains the global reserve currency.
Commodity Prices (food and energy prices) have stabilized or retreated, after skyrocketing last fall and winter.
Jobs are strong, but recent data suggests softening, with September Nonfarm payrolls gain of 231,000 the lowest of the year, and the JOLTS showing one million fewer job openings in September. Weekly new unemployment claims have started to rise modestly, with 228,000 in the latest period.
Consumer Sentiment has remained at very depressed levels, although slightly higher than in the early summer months.
Housing trends are reversing as mortgage rates have doubled and inventory shortages drove home prices higher. Single family housing starts have turned down, as prices have declined modestly. Multifamily construction remains healthier.
Corporate Profits have remained strong, but growth has slowed in the Q2 to just under 7%, with the consensus for Q3 being around 3%.
Disposable Personal Income/Spending/Savings are being impacted as the $1T in government transfer payments that occurred in 2021 will not reoccur in 2022. Overall, government transfers created a surge in disposable personal income which translated into more saving than spending. This data has trended lower as those cash balances slowly gets depleted.
Market Commentary 2nd QTR 2022
June 30, 2022
During the period, the S&P 500 Total Return Index fell 16.10% for the quarter and is down 19.96% for the year. The Barclays U.S. Aggregate Bond Composite Index fell 2.93%% during this period and is down 7.48% for 2022. The 10Y finished the quarter at 2.97%, up from 2.34%.
This has been the worst six month start for the stock and bond markets in over 50 years, caused by rising inflation and interest rates as well as increased recession fears. Investors lost their appetite for risk in 2022, as the most speculative areas of the markets showed the largest declines while traditionally safer investments, such as bonds, also experienced declines. During the quarter, the economy experienced the most rapid increase in inflation and the most dramatic decline in consumer confidence in four decades. At the same time, the Fed started its process of rapidly raising short-term interest rates and reducing its balance sheet. We are concerned that economic conditions may deteriorate further but feel the market has already priced in that downturn.
The focus will soon turn to corporate earnings and the outlook for the second half of the year. While we believe that current conditions favor steady corporate earnings and stable interest rates, we are concerned that economic conditions may deteriorate further.
Previous periods of market volatility have demonstrated that trying to time the market is a difficult and typically underperforming pursuit. For long term investors, simply staying invested is the most prudent investment strategy. In addition, we encourage investors to manage risk by staying in their asset allocation range and maintaining a diversified portfolio.
Market Commentary 1st QTR 2022
March 31, 2022
During the period, the Dow Jones Industrial Average returned -4.57%, the S&P 500 returned -4.95%, the Russell 2000 returned -7.80% and the Nasdaq 100 returned -9.08%. The U.S. 10Y Treasury Yield ended the quarter at 2.338%.
For the first time in two years, the pandemic was not the primary factor impacting the markets: in March, the Federal Reserve raised interest rates (the first increase since late 2018) in an effort to combat rising inflationary pressures. As a result, bond prices fell, leading to one of the worst quarters for fixed income securities. The Fed has been very transparent in their shift toward raising rates several times this year – the question now is whether a more aggressive policy needs to be considered. The Russian invasion of Ukraine has complicated these decisions, as it is unclear what impact this will have on rising energy and commodity costs. We believe that current conditions favor steady economic growth, stable corporate earnings, and slowly rising interest rates.
Previous periods of market volatility have demonstrated that trying to time the market is a difficult and typically underperforming pursuit. For long term investors, simply staying invested is the most prudent investment strategy. In addition, we encourage investors to manage risk by staying in their asset allocation range and maintaining a diversified portfolio.
The following are some technical indicators and themes that North Star tracks to get a sense of the health of the economy.
The US ISM Manufacturing Purchasing Managers Index (PMI) slowed, but is still considered expansionary, with a reading of 57.1.
Consumer Price Index and Producer Price Index readings were the highest in 40 years and March’s rate of 8.5% represented the seventh straight month of year-over-year increases. We believe this rate of increases is transitory.
The St Louis Fed’s Financial Stress Index remains low, as it did during the onset of the pandemic.
The US Dollar is at a multi-year high and remains the global reserve currency.
Commodity Prices (food and energy prices) have skyrocketed. According to our ECON 101 notes, “The cure for high commodity prices is high commodity prices.”
Jobs are strong. Total nonfarm employment rose by 431,000 jobs in March with January and February job numbers revised up by net 95,000 jobs for the two-month period. Over the past 12 months, the U.S. economy has added almost 6.5 million jobs. Unemployment rate fell to 3.6% in March, back at pre-pandemic lows. The labor force participation rate of 62.4%, despite gaining 0.1% in March, is still a full percentage point below its pre-pandemic level. Weekly new unemployment claims were at a record low of 202,000 by the end of the quarter.
Consumer Sentiment was trending lower than at the height of the pandemic (similar to the Financial Crisis of 08-09. Although it was announced two weeks after the end of the first quarter, March consumer sentiment unexpectedly jumped up 10% to a reading of 65.7 with the future expectations reading contributing largely to the increase.
Housing trends could be reversing after a period with very low mortgage rates and inventory shortages drove home prices higher. The impact of the recent jump in mortgage rates remains undetermined. Our research indicates historically that housing prices have held up even during periods where mortgage rates increased.
Corporate Profits dramatically exceeded expectations during the fourth quarter of 2021 and estimates for the first quarter of 2022 suggest a 10% year-over-year increase.
Disposable Personal Income/Spending/Savings are being impacted as the $1T in government transfer payments that occurred in 2021 will not reoccur in 2022. Overall, government transfers created a surge in disposable personal income which translated into more saving than spending.
Market Commentary 4th QTR 2021
Dec 31, 2021
The market was able to overcome the emergence of the highly contagious Omicron variant of the Coronavirus, rising inflation expectations, labor shortages and supply chain bottlenecks during the final quarter of 2021. Despite those headwinds, corporate earnings dramatically exceeded forecasts for the fourth consecutive quarter, and the jobs market continued to improve. In response to that strength in the economy, the Federal Reserve began reversing its pandemic stimulus programs, reducing its monthly purchases of government securities by $15 billion in November, and further reducing those monthly purchases by an additional $15 billion in December. The Ten-Year Treasury yield finished the year at 1.51%, essentially its same level from the beginning of the fourth quarter.
The S&P 500 outperformed the Russell 2000 by almost 1000 basis points, although small cap value stocks fared better than small cap growth stocks, with dividend paying companies performing reasonably well. The mega cap tech companies were the top performers, followed by the Utility sector, a somewhat odd combination. The Financial sector struggled, as the yield curve flattened during the quarter.
Despite remaining relatively constant during the fourth quarter, the Ten-Year rate did increase by 60 basis points during the year. We anticipate an even higher increase in 2022 with less accommodative monetary policy and persistent inflation. Companies trading at lower valuation multiples with higher and rising dividends should fare well in the environment. Value stocks are not being priced based on future growth expectations, so are less vulnerable to rising interest rates. Companies that can raise their dividends greater than their inflation rate provide a nice hedge to those rising costs. During periods of lower overall stock market returns, historically a very high percentage , sometimes 100%, of equity returns come from the dividend stream.
Market Commentary 3rd QTR 2021
Sept 30, 2021
The S&P 500 Total Return Index gained 0.6% for the quarter and is up 15.9% for the year. The Barclays U.S. Aggregate Bond Index
was basically unchanged during this period and remains down 0.8% for the year.
The virus remains in focus and the success of our country in addressing this issue will largely determine the near-term direction of
the markets. During the quarter, investors focused on rising inflation expectations, labor shortages and the impact of supply chain
bottlenecks on corporate earnings. As for the bond market, investors will continue to monitor the Federal Reserve as it determines
if it is ready to begin reversing its pandemic stimulus programs and will start raising interest rates.
Previous periods of market volatility have demonstrated that trying to time the market is a difficult and typically underperforming
pursuit. For long term investors, simply remaining invested is the most prudent investment strategy. In addition, we encourage
investors to manage risk by staying in their asset allocation range and maintaining a diversified portfolio.
Market Commentary 2nd QTR 2021
June 30, 2021
The S&P 500 Total Return Index gained 8.55% for the second quarter and is up 15.25% for the year. The Barclays U.S. Aggregate
Bond Index gained 0.8% during the same quarter and is down 0.8% for the year.
The stock market’s strength during the latest quarter was driven by signs of robust economic growth and a return to more normal
economic activity. The Federal Reserve Policy is now in focus as investors are expressing concern about rising interest rates and
inflation.
Previous periods of market volatility have demonstrated that trying to time the market is a difficult and typically underperforming
pursuit. For long term investors, simply staying invested is the most prudent investment strategy. In addition, we encourage
investors to manage risk by staying in their asset allocation range and maintaining a diversified portfolio.
Market Commentary 1st QTR 2021
March 31, 2021
The S&P 500 Total Return Index gained 6.2% for the quarter while the Barclays U.S. Aggregate Bond Index declined 1.6% during this
period.
The stock market’s strength during the quarter was driven by more hopeful expectations for the economy in 2021. Small stocks, typically more economically sensitive, outperformed larger stocks. Bond yields increased (and prices decreased) due to heightened inflation expectations. The markets will continue to be focused on the trajectory of the pandemic as well as the effectiveness of the government stimulus plans.
Previous periods of market volatility have demonstrated that trying to time the market is a difficult and typically underperforming pursuit. For long term investors, simply staying invested is the most prudent investment strategy.
Market Commentary 4th QTR 2020
December 31, 2020
The S&P 500 Total Return Index gained 12.1% for the quarter and finished up 18.3% for the year. The Barclays U.S. Aggregate Bond
Index gained 0.4% for the quarter and ended up 5.6% for the year.
2020 was one of the most eventful years in recent memory. Pandemic related news has been the focus of market participants and this will continue into the beginning of 2021. Many investors question the rebound in stock prices, wondering if the stock market is disconnected from the havoc in the economy. Clearly, investors are looking forward, anticipating a return to a more normal level of economic activity in 2021. We will be watching corporate earnings, consumer spending and interest rates as key drivers of the markets.
Previous periods of market volatility have demonstrated that trying to time the market is a difficult and typically underperforming pursuit, compared with simply staying invested. Our experience leads us to believe that it is usually best to stick to the investing plan developed with your advisor when markets were calm.
Medicare Options 2021
November 5, 2020
Now is the time to review and consider your Medicare choices for 2021. Seniors currently enrolled in Medicare can reconsider their choices from October 15 through December 7, 2020. This is called the Open Enrollment Period and coverage can start on January 1, 2021.
The below link directs you to an article by Sharon Egan, North Star’s Director of Financial Planning, which outlines a number of the issues surrounding these decisions. If you or anyone you know is currently enrolled in Medicare, please take the time to read this article.
If there is anything we can do to help you with this, please let us know.
North Star is proud to announce the sponsorship of the Chicago North Stars. They are the first all women’s team to play in an adult men’s league. Please view the article in the Chicago Sun-Times featuring one of our own — Anna Lurie. We wish the team success in their debut season!
North Star Announces New Additions to Team
May 7, 2020
We are excited to announce two new members to North Star. Eric Papenhagen and Harry Petruleas each have over 20 years of serving the financial needs of families. They will be joining the North Star Family Office, which provides a wide range of services, including:
- Asset Allocation & Investment Oversight
- Retirement, Tax and Insurance Planning
- Cash Flow Analysis, Budgeting and Bill Pay
- Estate Planning and Administration
- Trust Administration
- Philanthropy
The links above provide more detail about Eric and Harry.
We welcome Eric and Harry to the North Star family!
Eric Papenhagen
Harry Petruleas
North Star Weekly Update 4.30.2020
NORTH STAR OFFERS FREE FINANCIAL COUNSELING TO THOSE IN NEED
We appreciate the people who support our lives right now – first responders and hospital workers, food preparers and deliverers, city workers who keep our city going, teachers conducting classes online, and the myriad of others who are on the front lines in the battle with COVID-19.
At North Star, we would like to do our part too by offering free financial counseling to those in need with one of our Certified Financial Planners.
If there is someone you know – a family member, friend, co-worker – who would like to talk to a financial professional regarding their finances, we are here to help. We can assist with changing a budget, understanding details about college loan repayment changes for 2020, creating projections, understanding the CARES Act and a wide range of additional topics.
We are offering this free counseling with the intention of finding those people who may not be typical North Star clients but have no one else to turn to. Please let us know and we will provide the contact information for one of our planners.
North Star Weekly Update 4.23.2020
While many are using this unique time to reflect and evaluate, this may be an appropriate time to review existing life insurance policies.
Whether life insurance is for personal reasons, such as:
Family or income protection
Estate planning
Wealth accumulation
…or business purposes, funding:
Buy sell agreements
Key person protection
Succession planning
Deferred compensation programs
…policies should be regularly reviewed.
As life changes, coverage should be evaluated. Depending on when a policy was issued, needs may have changed. Here are some considerations:
How long? The need for coverage may be for a longer or shorter period than expected. A policy’s premium and benefit provisions should match the need. Changes can often be made.
How much? The amount of coverage needed may also be different than current values. There are ways to increase or decrease policy benefits. There are also formulas to assist in determining the appropriate amount of protection.
Analyzing policies for cost effectiveness could yield savings
Alternate ideas. Some policies have cash values. These policies tend to have higher premiums. Some clients have successfully used existing cash values to fund a new policy that may better suit current needs, while eliminating future premiums.
No longer needed. Maybe coverage is no longer needed. There are multiple options to consider. Cash values could be used to fund other sorts of insurance, like Long Term Care or annuities, while maintaining tax benefits. There also exists the opportunity to sell an existing insurance policy. Even term policies without cash may be valuable.
What else? Some policies, based on interest rate calculations, have under-performed and will not fulfill their promises. New policies with guarantees are available, and in many cases are less costly than older plans.
New coverage. Should new coverage be needed, many carriers are underwriting without the need for an in-person exam. This is especially relevant in these times.
Changes. Finally, you may want to review policy beneficiary and ownership designations.
Please contact us if you are interested in a review of your policies or have concerns related to you, your family or your business’ need for life insurance.
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Watch out for COVID-19 scams
Scammers are trying to get your private information while Americans are most vulnerable during the coronavirus pandemic. Protect yourself and your finances by learning how to spot these scams and report the fraudsters.
We’re seeing the following scams unfolding:
• Phishing emails claiming to be sent from national or global health authorities trying to trick victims into providing personal or payment information, often including an attachment containing malware.
• Criminals posing as government workers asking for Social Security, bank account or credit card numbers to “start the process for receiving the federal stimulus check.” We are also seeing a rise in fraudsters calling to ask for a personal address to send the stimulus check.
• People imitating healthcare workers or healthcare billing departments trying to collect money for “a loved one who has fallen ill with coronavirus, who doesn’t have funds for treatment.”
• Scammers claiming to be from Falcon or other fraud monitoring tools inquiring about debit card transactions and then asking for personal information like Social Security number, date of birth or debit card PIN numbers.
• Government or healthcare workers will never reach out to you and ask for your Social Security number, bank account, credit card information, or personal address. The government will never ask you to pay anything up front to get a federal check or direct deposit, and hospitals would never call a relative to demand up-front money to treat their loved one.
Never hesitate to reach out to North Star if something seems fishy regarding any calls, letters or emails you receive about your North Star accounts.
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Reminder Regarding Financial Planning
North Star has Certified Financial Planners and Insurance Professionals on staff that can help guide you through financial issues and evaluate current and future goals appropriate to your situation or for a family member or friend.
Read more regarding financial planning in last weeks update: https://nsinvest.com/weekly-update-4-16-2020/
North Star Weekly Update 4.16.2020
Reminder regarding 1st Quarter Performance Reports:
We are suspending mail copies of this Quarter’s Performance Reports. If you would like to receive an electronic version of your report, please let us know. For those who receive these reports electronically, you will be receiving notification next week when they are posted to your portal. Monthly statements from your custodian will continue to be issued.
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It has been said that people spend more time planning their vacation than planning their retirement. Since vacation planning might not be your main focus right now, perhaps this is a good time to think about financial issues and evaluate current and future goals appropriate to your situation. North Star has Certified Financial Planners and Insurance Professionals on staff that can help guide you through a wide range of topics, including:
General Financial Planning
1. Retirement Projections – these will show you, based on various assumptions, how well you are positioned to retire, and what you can do to strengthen your position.
2. Investment Analysis – see how your assets are allocated and understand how changes in markets might affect you.
3. Risk Assessment – understand what your “risk number” is – how to invest so you are comfortable with the securities you choose.
4. Socially Responsible Investing – learn how your portfolio scores against ESG investing (Environmental., Social, and Governance) guidelines, to assess the sustainability and societal impact of your investments.
5. Estate Planning – IRAs cannot be “stretched” by beneficiaries anymore – all money must come out in 10 years. This might make you decide to change your strategy in leaving your wealth. Make sure your Will reflects your wishes. Check beneficiaries on retirement accounts. Be sure you have Powers of Attorney for Health Care and Assets. Remember digital assets – keep records so your executor knows where things are and can get to them.
6. Insurance Review – assess the risks you take and decide how to mitigate those risks. Disability, Long Term Care, Homeowners and Auto, Term or Whole Life, Annuities, and Directors Insurance can be valuable safeguards. As your life changes, your risks change, and you should review your insurance annually to be sure you are covered for the risks with most potential cost. You also may no longer need some insurance you are holding.
7. Budgeting – learn how to build a spending plan to ensure you spend less than you make.
8. Debt Repayment – various resources can help you identify your debt, consolidate it, and help you create a plan to exit debt as soon as you can.
9. Goal Setting – if you have a life-long goal, we can put this in your projections, and using “what if” scenarios, show you how you can achieve the goal – and if other changes need to be made or not.
10. Social Security Claiming Strategies – be sure you understand your benefits and those of your spouse, and plan your claiming strategy to maximize your benefit.
11. Medicare – once you are eligible, let us help you navigate the process.
12. Avoid scammers – we’ve assisted clients in identifying scams and hackers, and shown them how to sidestep any involvement.
If you are interested in discussing any of the above, please contact us.
North Star Weekly Update 4.9.2020
North Star will be closed on Friday, April 10, 2020
In recognition of Good Friday, April 10, 2020, all domestic equity and bond markets, as well as North Star, will be closed. The bond market will also close at 2:00 PM ET on Thursday, April 9. Please note that the banking system is open on Good Friday.
Money Movement:
– No outbound cashiering items (checks, wires, EFTs) will be processed on
Friday, April 10th.
– Incoming wires and direct deposits received on Good Friday will receive
Friday’s value date.
– Check deposits, using Remote Check Deposit or Mobile Check Deposit, submitted after cutoff Thursday, April 9 will post Monday, April 13.
– Debit Cards: On-line debits and authorizations will shadow post on Good Friday. Clearing times may vary and could be after Monday, April 13.
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1st Quarter Performance Reports:
We are suspending mail copies of this Quarter’s Performance Reports. If you would like to receive an electronic version of your report, please let us know. For those who receive these reports electronically, you will be receiving notification next week when they are posted to your portal. Monthly statements from your custodian will continue to be issued.
North Star Weekly Update 4.2.2020
April 2, 2020
As you know, our offices are closed and all North Star employees are working remotely. We have not encountered any interruption of services and we can still be reached at our normal phone numbers and email addresses. As a reminder, PLEASE DO NOT PLACE TRADE INSTRUCTIONS IN VOICEMAIL AS THEY WILL NOT BE EXECUTED.
Please keep us updated and informed about any changes regarding your personal situation. We are here to help.
These are difficult times for all of us and our thoughts are with those directly impacted by this pandemic.
Below is some new information about the CARES Act as well as updated instructions about depositing checks.
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CARES Act
The CARES (Coronavirus Aid, Relief and Economic Security) Act was signed into law late last week. This is a $2 trillion stimulus bill that is broad based: it covers various areas, industries, businesses, and individuals. The aim is to offer relief to those affected by the restrictions placed on all of us as we fight the spread of viral contagion. Very few areas of our society are unaffected.
Understanding all details of this total bill will take some time to analyze. However, we thought you would like to see the areas we think are important for individuals and families.
1. Stimulus Checks – also called recovery payments. All US residents with adjusted gross income of up to $75,000 ($150,000 for joint filers) are eligible for a payment of $1,200 per person, plus an additional $500 per child (under age 17).
– No minimum income requirements
– Based on either your 2018 or 2019 tax filings, payment not dependent on whether you have filed taxes for 2019
– As your adjusted gross income increases, your stimulus amount will go down and is phased out at $99,000 for single filers and $198,000 for joint filers with no children
2. Tax Filing Delayed – deadline is moved from April 15th, 2020 to July 15th, 2020
– Check your state’s tax filing date to ensure that it also has been moved to July 15th, 2020
– Includes tax payment due – moved to July 15th
3. Unemployment – increases benefits and broadens who is eligible
– Adds $600 per week on top of what is being paid by the state, for four months
– Adds 13 weeks of unemployment insurance
– Gig workers – normally cannot apply for unemployment insurance, but now are able if work is lost as result of public health emergency
4. Student Loans
– Employers can contribute up to $5,250 to a student loan, and the employee does not have to report this as income
– Suspends payments due until Sept. 30, 2020 with no penalties or accrued interest
-Contains provisions for students sent home mid-semester like universities can pay students who were unable to complete work-study programs
5. Required Minimum Distributions
– Waived for 2020, (not delayed)
-Can stop taking distributions at any time
-Includes inherited Traditional IRAs and inherited Roth IRAs
6. Elimination of Early Withdrawal Penalty
– Waives the 10% penalty for those under the age of 59 ½ who take a withdrawal up 100,000 from their IRA and who qualify for COVID-19 relief
– Can reconstitute over 3 years without affecting their contribution limits
7. Increase in Retirement Plan Loan Amount
– Loans can be taken from qualified accounts up to $100,000 in 2020
– Amount increased to 100% of the account balance
8. Mortgages
– Requires servicers of federally-backed mortgages to postpone mortgage payments if the borrowed attests to financial hardship due to COVID-19. Postponement must be for 180 days, and then an additional 180 days at request of borrower.
– Foreclosure Moratorium – Prevents federally-backed mortgage loan servicers from foreclosing for at least 60 days starting on March 18
– Eviction Relief for Renters – For 120 days after CARES Act is made law, mortgages backed by Federal Agencies cannot pursue eviction, or charge fees or penalties
9. Charitable Gifts
– $300 deduction for a charitable contribution regardless of whether you itemize deduction
– For corporations, the 10% limit on charitable contribution is raised to 25% of taxable income
There are many additional details to these provisions, and we encourage you to work with your tax professional before making any decisions. If you have any questions or would like to discuss anything, please let us know, we are here to help.
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Important Information:
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IRA Contribution Information:
According to the IRS Code, contributions are considered to be made in a taxable year as long as they are made by the filing deadline. This would imply that contributions are OK until July 15th.
COVID-19 Information page:
We will continue to provide you updates such as these via email as warranted. Additionally, we have established a special page on our website with all notices posted, which can be viewed by clicking here.
Reminder of our safe practices for preventing Fraud:
– Be aware of suspicious phone calls, emails, and texts from persons you do not know asking you to send money or disclose personal information.
– Keep us informed regarding changes to your personal information.
– Expect us to call you to confirm email requests to move money, trade, or change account information.
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Check Deposits:
Please send your check deposits directly to the custodian of your brokerage account:
For Deposit to NFS Brokerage Account:
National Financial Services
Attention: Check Processing
Mail Code: KY10
100 Crosby Parkway
COVINGTON KY 41015-4325
You must indicate the NFS account number on the front of the check. (this is your NTR#)
For IRA, SEP contributions you must indicate the year on the front of the check by the acct number.
If your check is not payable to NFS but made payable to you, you must write the account number on the front of the check. And on the back of the check it must be endorsed by you and you must write on the back “payable to NFS”.
If you have a Wealthscape Investor Mobile App on your phone you can deposit checks easily thru the App.
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For Deposit to Fidelity Brokerage Account:
Overnight delivery:
Fidelity Investments
100 Crosby Parkway, Mailzone KC1H
Covington, KY 41015
US Mail:
Fidelity Investments
P.O. Box 770002
Cincinnati, OH 45277-0074
You must indicate the Fidelity account number on the front of the check. (This is a 9 digit account number)
For IRA, SEP contributions you must indicate the year on the front of the check by the acct number.
If you have a Wealthscape Investor Mobile App on your phone you can deposit checks easily thru the App.
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For Deposit to Charles Schwab Brokerage Account:
Charles Schwab & Co.,
Chicago Metro Team
1958 Summit Park Drive, Suite 500
ORLANDO, FL 32810-5936
You must indicate the Charles Schwab account number on the front of the check. (This is an 8 digit account number)
For IRA, SEP contributions you must indicate the year on the front of the check by the acct number.
If you have a Schwab Mobile App on your phone you can deposit checks easily thru the App.
North Star Weekly Update 3.25.2020
To our Valuable Clients and Friends, as you most likely know on Friday, March 20th, Illinois Governor Pritzker issued a “stay at home” order for the entire state. Complying with this order, North Star employed our Business Continuity Plan and instructed all employees to work in a remote capacity for their safety. During this time we are continuing to focus on providing the superior client service you have come to expect from us. With our employees working remotely we have not encountered any interruption to service and you can still contact us at our normal email addresses and phone numbers.
Since we are operating under a remote status, we have had to enable our phone system’s automated attendant at all times rather than have a receptionist answer your calls at the Chicago office. You will need to dial an employee’s direct extension or utilize our employee directory function. All employee extensions are being forwarded to alternate phones of those team members.
PLEASE DO NOT PLACE TRADE INSTRUCTIONS IN VOICEMAIL AS THEY WILL NOT BE EXECUTED.
We realize these are difficult times for all of us. Please keep us updated and informed about any changes regarding your personal situation. We are here to help.
Important Information:
U.S. extends tax filing deadline to July 15:
The U.S. government will give individuals and companies an extra three months to file their 2019 tax returns, extending the deadline to July 15, 2020 amid the coronavirus outbreak.
Check with your State as most are also extending state filings.
IRA Contribution Information:
According to the IRS Code, contributions are considered to be made in a taxable year as long as they are made by the filing deadline. This would imply that contributions are OK until July 15th.
COVID-19 Information page:
We will continue to provide you updates such as these via email as warranted. Additionally, we have established a special page on our website with all notices posted, which can be viewed by clicking here.
Reminder of our safe practices for preventing Fraud:
• Be aware of suspicious phone calls, emails, and texts from persons you do not know asking you to send money or disclose personal information.
• Keep us informed regarding changes to your personal information.
• Expect us to call you to confirm email requests to move money, trade, or change account information.
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Please send your check deposits directly to the custodian of your brokerage account:
For deposit to NFS account:
National Financial Services
Attention: Check Processing
Mail Code: KY10
100 Crosby Parkway
COVINGTON KY 41015-4325
You must indicate the NFS account number on the front of the check. (this is your NTR#)
For IRA, SEP contributions you must indicate the year on the front of the check by the acct number.
If your check is not payable to NFS but made payable to you, you must write the account number on the front of the check. And on the back of the check it must be endorsed by you and you must write on the back “payable to NFS”.
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For Deposit to Fidelity Brokerage Account:
Overnight delivery:
Fidelity Investments
100 Crosby Parkway, Mailzone KC1H
Covington, KY 41015
US Mail:
Fidelity Investments
P.O. Box 770002
Cincinnati, OH 45277-0074
You must indicate the Fidelity account number on the front of the check. (This is a 9 digit account number)
For IRA, SEP contributions you must indicate the year on the front of the check by the acct number.
___________________________________________________
For Deposits to Charles Schwab Brokerage Account:
Charles Schwab & Co.,
Chicago Metro Team
1958 Summit Park Drive, Suite 500
ORLANDO, FL 32810-5936
You must indicate the Charles Schwab account number on the front of the check. (This is an 8 digit account number)
For IRA, SEP contributions you must indicate the year on the front of the check by the acct number.
All inquires should be directed to your North Star Advisor.
From our family to yours, please be safe and know that we are here to help in any way we can.
North Star Weekly Update 3.13.2020
To safeguard our employees from the coronavirus outbreak, we have asked our employees to work from home as a precautionary measure. Effective today, Friday March 13, we will not be working in the office. We will still have uninterrupted access to email, and we can still be reached by calling us at our office numbers. Callers who call the main line will be asked to press 1 for the directory and then the first 3 letters of the first or last name of the person you are trying to reach.
Please let us know if you have any questions or concerns.
North Star Coronavirus Preparation
Due to the recent and growing concerns regarding the spread of COVID-19 (Coronavirus) we wanted to assure you that we are taking extra steps to keep our staff and visitors to our office safe and healthy. Currently, the risk to residents in Chicago still remains low even though the governor has declared a state of emergency in the State of Illinois.
Since the precautionary COVID-19 measures are beginning to impact daily life across the U.S., including workplace closures, we are keeping a close eye on the changing environment. We do not expect any interruptions to our continuity of service. Our Business Continuity Plan includes a Pandemic Preparedness Plan which has been thoroughly tested. We have extensive remote access technologies that will allow each employee, advisor, and portfolio manager to work outside of the office in a secure environment.
In the event we are forced to close our offices and work remotely, we will still have uninterrupted access to email and we can still be reached by calling our main numbers. For the Chicago office, 312-580-0900, or 847-831-8831 for our Highland Park office. You will be prompted to our directory where you can enter the extension of the person you would like to speak with.
Please let us know if you have any questions or concerns.
Special Market Commentary 2.28.2020
Concerns over the coronavirus have led to the fastest correction in stock market history. As of the opening of trading Friday morning the S&P 500 has declined from 3393 to 2880, or over 15%, from the all-time record high set last Wednesday. Meanwhile the yield on the Ten-Year Treasury has set record lows at 1.17%. This decline is painful and this outbreak unnerving, however it remains important to keep things in perspective. Let’s look at the growth in the S&P 500 over the last five years:
The market has given back the gains made in the 4th quarter of 2019. The future is uncertain, but today’s prices reflect an efficient pricing of all the information available. In the short-term the odds are even between a continued decline or bounce back rally. The swift decline reflects that the optimism of a resumption of growth in corporate earnings in 2020 has evaporated, although some forecasts have simply pushed out that growth to the back half of 2020. At this point everyone is just guessing because we are confronted with a global outbreak of a disease that is not well understood. The data so far suggests it is very contagious, but not particularly lethal except for people in more challenging health conditions. Be prepared for the headlines on the spread of the virus to get worse before it gets better.
Stocks were trading at historically high P/Es prior to this decline, supported by extraordinarily low interest rates that made the earnings yield attractive versus the risk-free rate. We take some comfort in that the recent decline in both equity prices and interest rates have widened that spread to historically high levels.
This episode serves to remind one to keep their allocation to equities consistent with one’s risk tolerance. Regardless of the absolute level of the market, it would make sense to target your equity allocation consistent with your risk tolerance. That might imply either buying or selling equities at these current levels. Please let us know if you would like to discuss whether the current amount of risk in your portfolio is appropriate.
Fear and greed are always the enemies of rational investing. Don’t panic. If history is a guide, this crisis will pass. Over the last 100 years we have had world wars, terrorist attacks, a global financial crisis, and numerous global epidemics of infectious diseases.
If you would like to discuss anything in greater detail, please do not hesitate to contact us.
North Star may only transact business in a jurisdiction if first registered, excluded, or exempted from state investment adviser registration requirements and follow-up, individualized responses to persons in a specific jurisdiction by the Firm will not be made absent compliance with state investment adviser registration requirements, or an applicable exemption or exclusion therefrom.
The information provided in this commentary is not an offer to sell or the solicitation of an offer to purchase any security, product, or brokerage service.