The Dog days of summer are here!
Notes from Sandy:
My holiday weekend was full of biking, ocean swimming and golf so I am out enjoying the summer- I hope all of you are too. I am facing my big race on July 30- a 1.2 mile swim and 56 mile hilly bike ride in Santa Rosa. My long bike rides and long hours of training are coming to an end- then back to golf!
We upgraded to new powerful contact software and I would love to have a picture of you in your file. Please send a jpg file via email or we will take a photo of you the next time we see you in the office.
Debt Ceiling and the S&P
I expect some market volatility over the next month until we resolve our debt ceiling and solidify our rating. Before we can meet the August 2nd deadline, we must endure the Democrats verses Republicans in the blame game and posturing of each party. As we grow closer to the deadline, the market may react in a more volatile manner. Standard and Poor’s, the credit rating agency, stated they will drop the credit rating of the United States from AAA to D if the debt payments are not made in time- due August 4th. July is also corporate earnings season, when a company can exceed their estimates and the stock will decline for no other reason than a higher expectation. The market does not always trade on rational estimates, fundamentals, cash flow projections and PE ratios. It could be a bumpy third quarter.
We are all faced with a series of great opportunities brilliantly disguised as impossible situations. Charles R. Swindoll
Notes from Carol:
I just returned from a vacation to Walt Disney World in Florida. The place was bustling – no sign of a down economy. The only thing I did notice was there weren’t as many foreigners, especially Europeans. I used to come to Wald Disney World on business trips when I worked for Disney and there were always many Europeans. I think they are facing the new reality of the recent austerity government cuts that are now in place in most of the euro countries.
Social Security Statements
Since 1999, the Social Security Administration office has automatically mailed you an annual Social Security projected benefit statement. In an effort to save money, these statements will no longer be mailed, at least from April 2011 through September 2011. In October 2011, they will resume mailing annual statements, but only to those who are age 60 or older. This is estimated to save the government $30 million dollars.
You can still access your benefit statement on-line. You can get a personalized estimate of your future benefits at www.ssa.gov/estimator or you can request the information over the phone or in person at a social security office.
New ADV Part II requirements
I had mentioned in the last newsletter that we were revising our annual disclosure brochure (ADV part 2) to meet the new requirements of the Dodd-Frank Wall Street Reform Act. One of the requirements is that we have to deliver it to you via mail or email. You will find a copy of the ADV part 2 in this mailing. From now on, we will only send you the material changes on an annual basis. You can always request a complete copy at any time and you can always find information about our firm on the SEC’s website at: www.adviserinfo.sec.gov.
Save the Date - Gail Moreno Memorial Golf Tournament
Asset Planning will be hosting the 2nd annual Gail Moreno Golf Tournament to help raise money for the Breast Cancer Angels charity. The tentative date for this event is Saturday, October 22. We will be sending you more information as plans are finalized. Please mark this on your calendar!
Notes from Erin:
Large mortgages will be harder to get
Come September 30th, the government sponsored entities Fannie Mae, FHA, and Freddie Mac will no longer finance conforming mortgages up to $729,750 in L.A. and Orange County. Prior to the credit crisis, the conforming limit was $417,000. However, in 2008, in effort to slow the real estate decline in high cost areas, a stimulus bill allowed the government sponsored entities to finance loans up to $729,750. The temporary measure is set to expire and the new limit will be $625,500 beginning October 1st, 2011.
The market is already beginning to react to this impending deadline as major banks such as Bank of America and Chase have already halted funding mortgages over $625,500. The banks that are still doing new loans and refinancing up to $729,750 will probably follow Bank of America and Chase’s lead very shortly. Private enterprise will likely fill the void of the government backed mortgage market; but almost certainly at higher rates and with stricter underwriting standards. Another thing to consider is the effect the changes will have on the housing market. Homes in the $800,000 plus market could see sharper declines depending on how difficult and or expensive it will be to get loans above $625,500.
Have a wonderful and relaxing summer!
Sandy, Carol, and Erin
