YOUR FINANCIAL FUTURE€¦ · 2€ € Your Guide to Life Planning Quotes for the Week of August...

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.

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

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


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


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


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.


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.


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


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)

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

This newsletter was created using , powered by Wealth Management Systems Inc.Newsletter OnDemand
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