Barbara Shapiro 333 Elm Street Suite 210 Dedham,MA 02026 [email protected] 781-251-2655 Welcome to HMS Financial Group We are a full-service financial planning and investment firm located in Dedham, Massachusetts. Life brings many opportunities and challenges and we are here to help our clients navigate through both the positive and negative times. HMS Financial Group works closely with our clients to create a personalized plan to fit their current and future needs. Our willingness to listen, educate and empathize with our clients sets us apart from other firms. Barbara Shapiro, President EdM2 MSF CFP® CFS CMC CDFA CeFT®

December 31, 2019

Happy New Year -- A Look Forward

As we come to the end of the year, we can look back and see plenty of pot holes the economy had to overcome. But the economy did overcome the challenges and we had a very good year -- for stocks, bonds and real estate. Of course, that is all old news. What we all want to know is what 2020 will look like. As in any year, there are a modicum of predictions. And none of these highly paid economists or analysts are likely to really be able to predict the future. But it is all interesting to see what they say.

For the U.S. economy overall, Kiplinger expects growth of 1.8% in 2020, compared with an expected 2.3% in 2019 and 2.9% in 2018. Business spending in the U.S. has been subdued by uncertainty about a trade deal, the fallout from Brexit and angst over the presidential election. But with unemployment at decades-long lows, consumers, who account for the bulk of the U.S. economy, remain a strong underpinning. Kiplinger expects the unemployment rate to inch up to 3.8% in 2020 from 3.6% in 2019, and the Fed to cut rates at least once early in 2020. “The economy is in a tug-of-war between geopolitical risk and the underlying resilience of the American household, plus the Fed,” says Mike Pyle, global chief investment strategist at BlackRock.

As far as real estate, sales of new homes probably will rise to a 13-year high in 2020 as the U.S. dodges a recession, according to Lawrence Yun, chief economist of the National Association of Realtors®. New-home sales probably will jump 11% to 750,000, according to Yun’s new forecast, which would be the highest reading since 2007. Sales of existing homes likely will increase 3.7% to 5.56 million in 2020, the highest tally since 2017, Yun said. “Some loosening in inventory will happen in 2020, and so we expect home sales to rise,” Yun said. “We’ll see an increase in inventory, but not any oversupply, so home prices should continue to move higher – our hope is in a much tamer fashion.”

It was a shortened trading week and the question was whether the Santa Claus rally would continue.  It was a good start on Monday and the party continued through the end of the week. Oil prices continued to follow stocks up, staying over the $60 per barrel level. Long-term interest rates were slightly lower and gold moved higher. The holiday week was very light for data, with new home sales and orders for durable goods both lower than expected, though new home sales were still much higher than last year. This week readings on consumer confidence will highlight a quiet week. Next week we will see factory orders and the jobs report.  

Current Financial Indices
Updated December 27, 2019

 Low inflation has been a key component of the low interest rates that have supported the economy this year. Now, the Federal Reserve is considering a policy change that could result in higher inflation and higher interest rates. As part of its yearlong review of monetary policy tools, the Fed is considering a promise to respond to sub-par inflation by boosting its inflation target, currently set at 2%. “The central bank is considering a promise that when it misses its inflation target, it will then temporarily raise that target, to make up for lost inflation. The idea would be to avoid entrenching low U.S. price growth which has consistently undershot its goal.” Fed policymakers are frustrated by the failure of prices to hit their target even with U.S. unemployment near 50-year lows, the story said. Fed governor Lael Brainard told reporters that she preferred a more flexible “make up” rule, such as suggesting a target range of 2% to 2.5% inflation after a period of misses. Janet Yellen, former chair of the Fed, said the discussion was “a worthwhile thing” and the policy would be similar to the “forward guidance” the Fed used during the early days of the recovery, when it signaled to markets that it intended to keep short-term interest rates low well into the future. Source: The Financial Times

Homeowners with adult children have been more than generous in assisting their offspring with money, according to a new survey released by Unison. In a poll of 2,000 working adults who have been homeowners for at least 10 years and make at least $50,000, 92 percent of respondents admitted that they have supported their adult children financially and 53 percent are currently providing some form of financial support. The majority of the support is covering tuition costs, with 70 percent of respondents acknowledging their input on school-related expenses. The survey also found almost 60 percent of homeowners have shared or are sharing their home with their adult children, with 36 percent having an adult child currently living with them and 53 percent having an adult child that lived with them for five years or longer. Twenty-two percent of respondents said they provided financial assistance for their adult children’s pursuit of homebuying, with 18 percent of parents with a Millennial child providing such aid. “Of course, parents want to help their children, but it's worrisome that so many are putting their own retirement security at risk by doing so, especially considering that most American baby boomers are already severely undersaved for their own retirement,” Unison CEO Thomas Sponholtz said. “These results are yet another example that we need to present consumers with new solutions that enable to buy and own homes while meeting their other financial goals, including a secure retirement.” Source: Unison

OPEC, Russia and other oil producing nations have agreed to deeper production cuts in an attempt to support crude prices in the face of a looming supply glut mainly due to booming US output. Following a meeting in Vienna, OPEC said the producer group would reduce supplies by an additional 500,000 barrels per day, bringing the total cuts to 1.7 million barrels daily. Led by Saudi Arabia, OPEC and its allies have been limiting their production since 2017. Their existing agreement aimed to remove 1.2 million barrels per day from world markets and is due to expire in March 2020. OPEC's statement made no mention of extending the cuts through June or even December 2020, as some analysts had expected. "This additional adjustment would be effective as of 1 January 2020 and is subject to full conformity by every country," OPEC said. Reuters reported that OPEC countries would shoulder 340,000 barrels per day of fresh cuts, with other producers taking the remaining 160,000 barrels per day. Source: CNN/Money 

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