In The Media

FOX BUSINESS segments with Schatz:
  • Schatz on FOX Business
  • Schatz on FOX Business

  • Schatz on FOX Business
  • Schatz on FOX Business
  • Schatz on FOX Business
  • Schatz on FOX Business

  • Schatz on FOX Business
  • Schatz on FOX Business
  • Schatz on FOX Business
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CNBC segments with Schatz:

Read more Paul Schatz interviews & commentary with:

Author/Anchor: Matt Scott
Date: Jul 11, 2018
Publication: FOX 61
Link to Article

Financial experts weighs in on mid-year budget check
Author: Carolyn Freundlich
Date: July 02, 2018
Publication: WTNH - NEWS 8
Link to Article

(WTNH) - We are already into the second half of the budget year and we are speaking with a financial expert weighing in on why now is a good time to take a look at your budget.

President of Heritage Capital LLC in Woodbridge Paul Schatz says now is the time to plan out how you are going to spend your money for the rest of 2018.

Schatz advises to keep on top of your credit report and to consolidate your debt. He also says that its time to rebalance investments accounts and 401Ks because both stocks and bonds have swing wildly this year.

Advisers take a short-term view of trade skirmishes
Author: Jeff Benjamin
Date: June 29, 2018
Publication: Investment News
Link to Article

Some advisers voice worries about repercussions, but say clients are calm

Heading into a week that includes the July Fourth celebration, it would be easy to overlook or ignore the impact of a potential trade war between the United States and several global trading partners.

But savvy financial advisers are paying attention.

"We've done a lot of research on the status of trade negotiations, and our clients are concerned about it because it has already had an impact on market volatility," said John DeSimone, chief financial officer at Dakota Wealth Management.

While Mr. DeSimone is careful not to describe the situation as an official trade war just yet, he is communicating to clients that the advisory firm is prepared to move client portfolios into more defensive positions if things escalate.

The potential for a global trade war, which would see nations and regions of the world introduce taxes on imports in retaliation for tariffs being threatened by the Trump administration, was the main topic of a raft of midyear economic outlooks from financial services firms over the past week.

Douglas Cote, chief market strategist at Voya Investment Management, said the "direct effects of a trade war" are placing a drag on an otherwise solid economy.

"Rumors of trade wars are always problematic since they slow growth and capital flows and exacerbate problems," Mr. Cote said. "So, it's important to see how the world economy is faring as the situation develops."

Barring fresh negotiations between the United States and China, a trade war could kick off as early as July 6, when the U.S. is scheduled to introduce a 25% tariff on $34 billion worth of goods imported from China.

To put that into perspective, the U.S. imported about $500 billion worth of goods from China last year. But the initial round of tariffs on China is just the first one on the Trump administration's agenda.

The U.S. exported $130 billion worth of goods to China last year.

"We have to look at each negotiation separately," Mr. DeSimone said. "I'm not too concerned about a trade war with the European Union. The situation with Mexico and Canada is a bit more complex."

Matt Forester, chief investment officer at BNY Mellon's Lockwood Advisors, said it will be up to investors and the markets to distinguish between "political rhetoric and serious trade policy."

While both consumer and business sentiment levels are currently hovering at record highs, Mr. Forester said the slight pullback in consumer sentiment this week reflects concerns over a potential trade war.

"The size of the impact now is somewhat limited, but it could be extremely damaging," he added. "The risks of a trade war are higher prices and lower output, neither of which is good."

Kashif Ahmed, president of American Private Wealth, said he is more concerned about short-term market gyrations than he is about the long-term impact of the international trading negotiations.

"These skirmishes, while they heighten volatility in the short term, are unlikely to develop into full-fledged trade wars," he said. "Despite the rhetoric from individual leaders, governments are more than one person, with varying levels of checks and balances."

Mr. Ahmed is confident that "plenty of cooler heads will work behind the scenes to prevent this, because no one will be left unscathed on the other end."

John Lynch, chief investment strategist at LPL Financial, said in the case of China, the U.S. has the advantage.

"With far fewer goods exported to China than imported from China, the U.S. retains a structural advantage in a trade dispute," he said. "Consequently, China is going to run out of direct reprisals quickly should it try to match U.S. tariffs."

But as most market watchers and analysts have argued, there are no real winners in a trade war.

"China loses more than the U.S., but the U.S. also loses," said Paul Schatz, president of Heritage Capital.

Asked how worried he is about a possible trade war, Mr. Schatz said his concern is high but not yet keeping him up at night.

"If it was anybody other than President Trump, I'd say the tariffs are coming to fruition, but given his pattern of unusual behavior, I'm counting on them not coming to fruition," Mr. Schatz added. "I'm hopeful for a compromise."

Italy's woes spread to U.S. markets — and advisers' clients
Author: Jeff Benjamin and John Waggoner
Date: May 29, 2018
Publication: Investment News
Link to Article

Some advisers voice worries about repercussions, but say clients are calm

Worries about Italy's political turmoil sent U.S. stocks falling like a Ferrari on a ski jump, and some advisers warned that the situation could become more serious in the short term.

The Dow Jones Industrial Average fell 505 points at its low Tuesday before finishing the day down 391.64 points, or 1.58%. Of the 30 Dow stocks, only one – Coca-Cola – rose. The yield on the 10-year Treasury note fell to 2.77%.

The proximate cause of the downturn was political turmoil in Italy, as the government blocked the formation of a coalition government between the ultra-right League party and the antiestablishment 5-Star party, raising the prospects of new election and, ultimately, withdrawal from the Eurozone.

"The markets are tumbling today due to the worrisome political situation in Italy," said Phil Shaffer, founder of Halite Partners. "This is just another chapter in the European debt crisis contagion saga. The impact of austerity measures taken after the credit crisis have led to the rise of European populism. The situation has the making of a potential European collapse as the story unfolds, but the story is currently far from over."

Christian Thwaites, chief strategist at Brouwer & Janechowski, agreed. "We absolutely should be concerned about the situation," he said. "Greece and Cyrpress were small and containable. Italy is the third-largest country in the European Union, and that's including the United Kingdom. The fear here is that the two parties are talking openly about exiting the Eurozone and the same kind of reforms that the new Greek governmetn was talking about."

And Italy isn't the only thing to worry about. "Italy's dysfunctional political system is being blamed, but the seeds for this decline were sown a week ago when market internals began to deteriorate as prices went higher," said Paul Schatz, president Heritage Capital. "The news today just accelerated the pullback."

Sam Stovall, chief investment strategist for U.S. equity strategy at CFRA, noted that increased volatility is common in the second and third quarter of a midterm election year. "It looks like the market is looking for a reason to go down, and it's saying, 'Let's blame Italy,'" he said. "But the volume wasn't great, and how excited can you be about a downturn if the volume isn't there to confirm it?"

Leon LaBrecque, managing partner and chief executive at LJPR Financial Advisors, agreed that Italy may just been a convenient excuse. "The Italians have been having political crises as long as there have been Italians," he said. "And, if political crises did have lasting effects, then what about Greece, Brexit and Trump? More likely the market overreacted, and this is a buying opportunity. Stay calm, this opera has just started, and [the fat lady] hasn't even started to sing. "

Advisers said that being proactive during the year has helped soothe clients. "We've told clients we're not in any foreign bonds at all," Mr. Thwaites said. "But we have some sophisticated investors who wanted to know what all this means. "

Others said that clients have been extremely calm. "I have not heard from any clients today," said Tim Holsworth, president of AHP Financial Services "My clients rarely react to a bad day or week. Overall, I think they are far more optimistic since the presidential election."

An indicator that's '90% accurate' suggests hidden strength in the stock market
Author: Ryan Vlastelica
Date: May 14, 2018
Publication: MarketWatch
Link to Article

The U.S. stock market may feel particularly risky right now, as major indexes have been volatile throughout 2018 and there are a number of headwinds that investors are monitoring, but things may not be as bad as they seem.

There are multiple signs of equity strength going on below the surface of the major indexes, which could be a signal that the recent uptrend in stocks is justified and could continue.

One positive signal looks at the ratio of rising stocks on the New York Stock Exchange to the number of falling ones over time. Paul Schatz, the president of Heritage Capital, referred to this as "the one indicator that's 90% accurate" for forecasting moves.

Currently, the NYSE's advance/decline line is at an all-time high, as seen in the following graphic from StockCharts, which Schatz included in an email.

NYSE AD line
    StockCharts data, courtesy Heritage Capital

"When the major stock market indices make new highs but the NYSE A/D Line does not, that's where bulls should begin to worry," he wrote, adding that “the exact opposite is happening," which he said was “typically a good sign for further strength in stocks over the medium-term.”

Both the Dow Jones Industrial Average DJIA, +0.37% and the S&P 500 SPX, +0.17% are more than 5% below their records, and they have been in their longest stretch in correction territory since the financial crisis.

The improving A/D line is an encouraging signal for the investors who have been worried about market breadth, especially as some of the market's biggest names — notably the FAANG group of large-capitalization internet and technology stocks — have been leading the overall advance. Because the market's biggest companies have been seeing the biggest gains, those leaders can mask weakness in smaller companies. Schatz compared it to a building where the foundation "is full of cracks and is crumbling but the penthouse looks flawless with million dollar art and furniture."

The improving breadth is helping to support equities, which can be seen in the broader indexes themselves. The Dow Jones Industrial Average, for example, is coming off seven straight positive sessions, while the Nasdaq Composite Index COMP, -0.03% has risen in five of the past six. The Cboe Volatility Index VIX, -4.38% fell for a fifth straight week last week, a sign that anxieties are leaving the market.

"We found good support at the low end of the trading range we've been in, and now all of a sudden we're getting a breakout. We haven't made a new high since January, which is a long time, but the pattern is starting to change. The highs we're making are getting higher," said Donald Selkin, chief market strategist at Newbridge Securities.

Both the Dow and the S&P have shown signs of maintaining their longer-term positive momentum. Both broke below their 200-day moving averages on an intraday basis twice earlier this month, but they subsequently rebounded to close above it each time. Ending below that level, a closely watched gauge for long-term price trends, is seen as a bearish signal, but holding it could be a sign of support for equity prices. Since testing the level, the Dow and S&P have returned above their 50-day moving averages, which is used as a proxy for short-term momentum trends.

NYSE AD line

Again, this isn't simply a matter of the market's biggest names leading the overall indexes higher. According to StockCharts, 61.1% of the S&P's components are now above their 200-day, up from just 50% last week, and back above the 59.55% average over the past 50 sessions (the 200-day average for S&P 500 components above their 200-day moving average is 69.44%).

For the 50-day moving average, 61% of the S&P's components are above this level. That's above this ratio's 50-day and 200-day averages, as well as up from 47% last week.

Ari Wald, head of technical analysis at Oppenheimer, added that the number of net new lows — the number of stocks making 52-week highs minus the number making 52-week lows — had been dropping, a trend that suggests “the selling in stocks is getting less bad.”

He added, “This means that we've been holding up well in periods of consolidation and that the market has been finding a base. This is setting us up for the next move higher in the bull market.”

Pain at the pump possible with pulling out of Iran nuclear deal
Author: Amy Hudak
Date: May 08, 2018
Publication: WTNH - NEWS 8
Link to Article

NEW HAVEN, Conn. (WTNH) -- - Gas prices are climbing in Connecticut and are now more than $3 a gallon in some places.

"It seems like every time you come you just don't know what you're going to get," Rachel Cooper said.

"I fill up once a day for work so about $80 a day right now," Tyler Tucker told News 8.

The next time you fill up, the prices might be even higher. The U.S. pulling out of the Iran Nuclear Deal means the pinch we are feeling at the pump could get even tighter.

"It's one of those things that's just kind of a necessary evil and you deal with it," Eric Urbineti said.

Senator Richard Blumenthal (D-CT) says gas prices will rise. He staunchly opposed President Trump's decision to pull out of the deal on several fronts, calling it a shot in our own foot.

"Americans are less safe because of this self destructive step," Sen. Blumenthal said. "Not only does it undermine our national security, it undercuts our credibility in trying to reach any sort of agreement with the North Koreans on their nuclear deal and it divided us from allies when we need them on our side."

Financial planner, Paul Schatz says the markets were already anticipating the decision.

"It's the worst kept secret in Hollywood that Trump was going to pull out," Schatz told News 8. "Oil has already had a significant rally in part due to the expectation."

Schatz is not so convinced the global economy is going to feel any detrimental effects, saying Americans can rest easy.

"A lot of geo-political loudness, noise, non sense and beating of the chest, but the global economy remains in growth mode," Schatz added.

Pulling out of the Iran Nuclear Deal was a campaign promise President Trump made and has now fulfilled.

Stocks struggle to gain steam, financials lag, economic reports in focus
Author: Seana Smith
Date: May 03, 2018
Publication: Yahoo! Finance
Link to Article

Stocks (^DJI, ^GSPC, ^IXIC) are in the red as major economic reports roll in. All the sectors are in the red with the financial (XLF) sector getting hit the hardest. Yahoo Finance's Jared Blikre joins us live from the floor of the New York Stock Exchange to talk markets. To discuss the other big stories of the day, Yahoo Finance’s Seana Smith is joined by Paul Schatz, President of Heritage Capital, Dan Roberts and Ethan Wolff-Mann.

Last minute tax tips with Financial Expert Paul Schatz
Author/Anchor: Tim Lammers
Date: Apr 11, 2018
Publication: FOX 61
Link to Article

Dow doesn’t let early loss get in way of big rebound
Author: Adam Shell Contributing: Kevin McCoy
Date: Apr 05, 2018
Publication: USA Today
Link to Article

The Dow on Wednesday rebounded from a more than 500-point plunge to close 231 points higher on another rocky trading day.

Wall Street bet that tariff threats and tough talk on trade from China and the Trump administration was likely a negotiating tactic and that the sides would eventually reach a deal to avoid a trade war.

The Dow Jones industrial average, down 510 points at its low, finished the day up 230.94 points, or nearly 1%, at 24,264. The wild price swings came after China struck back against the U.S. with threats to levy tariffs on more than 100 Americanmade goods ranging from autos to airplanes. Traders' initial takeaway was that it signaled an escalation in the trade fight between the world's two biggest economies. But the stock market’s ability to mount a rebound was due in part to investors' bet that neither country wants a full-out trade war despite the tit-fortat tariff threats.

"I think the market is beginning to understand and remember that Trump's bark is much bigger than his bite," says Lindsey Bell, investment strategist at CFRA, a Wall Street research firm. "The trade implications between the U.S. and China are far from complete. Investors are hopeful that the final trade agreement will be much more lenient than what has been discussed in the last 12 hours."

China on Wednesday targeted 106 U.S. goods for import tariffs — includ- ing important agriculture exports such as soybeans — after the Trump administration released a list of 1,300 categories of Chinese goods the U.S. plans to impose tariffs on. Both countries are targeting $500 billion in goods.

Investors were aggressively selling stocks such as airplane maker Boeing and heavy-equipment maker Caterpillar. These large, global U.S. companies do a lot of business in China and overseas, which makes their sales and profits vulnerable if the two countries can't work out a deal before the threatened tariffs, which are still under review, go into effect. Boeing (BA) closed 1% lower, after an early drop of more than 6%. Caterpillar (CAT) erased a 5% drop to finish 0.1% higher.

Paul Schatz, president of Heritage Capital, a moneymanagement firm in Woodbridge, Conn., said the strong finish to the day for stocks would be viewed positively.

The big worry on Wall Street is that corporate profits and sales will be hurt if trade restrictions are put in place, which would be negative for stock prices. Analysts expect strong results from corporate America when companies start reporting quarterly results next week. Profit growth of more than 18% is expected for companies in the Standard & Poor's 500 stock index, up from a forecast of around 12% at the start of the year, according to earnings tracker Thomson Reuters.

Most investors agree that tariffs are bad for business and the economy.

"Tariffs and trade wars are just plain bad," Schatz says. "I don’t care what the president tweets, no one wins."

"I think the market is beginning to understand and remember that (President) Trump's bark is much bigger than his bite." Lindsey Bell Investment strategist at CFRA, a Wall Street research firm.

We've got more downside before we hit all time highs says expert
Author: Kelly Evans - Closing Bell
Date: Apr 02, 2018
Publication: CNBC
Link to Article

Stocks plunge, advisers tell clients to hang tight
Author: Jeff Benjamin and John Waggoner
Date: Mar 22, 2018
Publication: Investment News
Link to Article

Though planners encourage calm, some are preparing investors for a correction

The Dow Jones Industrial Average plunged 724 points Thursday, and advisers are glad they have prepared clients for a more volatile market.

"I don't get a lot of calls on days like this," said David Rae, president of DRM Wealth Management. "I'm always talking about how these things are to be expected."

Mr. Rae said he regularly reminds clients via blog entries and television appearances about what to do when the market drops.

"It makes my life easier," he said.

The nearly 3% decline Thursday, sparked by fears of a trade war and worries about Facebook data breaches, was to be expected, given the stock market's massive rise: 322% since March 2009 and 17.8% in the past 12 months. Nevertheless, the blue-chip index's recent plunge puts the Dow down more than 10% from its late January high, and into official correction territory.

The market "was so non-volatility for so long, and historically long periods of low volatility lead to long periods of high volatility," said Paul Schatz, president of Heritage Capital. "Once the volatility genie came out of the bottle in early February, you had to expect more volatility. But the volatility is moving in both directions."

Mark Bass, financial planner with Pennington, Bass & Associates, said he had no calls about the market Thursday.

"Not a one," he said. "We've been saying for a year or more that we'd like to see the market drop 15%. When people ask, 'What should we do?' we say that we're not going to do a thing but watch it go back up."

Advisers agree that this year's market is dramatically different from last year's, which had less volatility than a napping bunny.

"This isn't the new normal, it's the old normal back again," Mr. Schatz said. "The markets should be moving 1% a few times per week, up or down, although we all prefer up."

And, they say, investors — and advisers — should be prepared for a broader correction.

"You don't want to be selling the rosy returns from last year," Mr. Rae said. "If you take credit for all the up markets, you take the blame for all the down markets."

Mr. Bass noted that, while the start of corrections always vary, the underlying cause is usually the same: an overvalued market.

"You can have something that elicits an emotional reaction that begins a decline, but the fundamentals determine how long a decline continues," he said.

In short, asking why a decline happens might not be the best use of your time.

"The markets don't care about Trump's musical chairs White House," Mr. Schatz said. "Nobody really cares about Facebook.

"You have the Fed conducting a grand experiment of raising rates and cutting its balance sheet while increasing borrowing needs," he said. "Those and Trump's tariffs are moving us toward recession. We will be in recession by mid-2019 or mid-2020."

And sometimes, clients don't hold their advisers responsible.

"My client base skews liberal," Mr. Rae said. "They blame Trump more than me."

From Apple to Lockheed Martin, 9 stocks to buy this spring
Author: Adam Shell
Date: March 16 2018
Publication: USA TODAY
Link to Article

Spring isn't just about cleaning out closets or shopping for your dream home. It's also a good time to freshen up your stock portfolio.

How? By jettisoning stocks you no longer like and buying ones with potential to bloom.

And with the U.S. stock market back on stronger footing after a rocky period early in February and the start of spring coming Tuesday, now's a good time to re-energize your investments.

If picking winning stocks isn't your strong suit, consider these nine from Wall Street fund managers and stock strategists. They say these picks have good upside potential as the 9-year-old bull market, which many pundits say is entering its final stage, chugs on.

The stock gurus named the following:

The Pick: J.P. Morgan Chase

The Pro: Thorne Perkin, president, Papamarkou Wellner, New York.

The bank, the nation's biggest by market value and headed by well-respected CEO Jamie Dimon, should fare well in an aging bull, Perkin says, because at this stage of the rally the economy is gaining strength and interest rates tend to rise. Both trends are good for J.P. Morgan's (JPM) profits. "The bank is well-managed, growing, diversified, disciplined, and future impacts of tax cuts bolster the buy case," says Perkin, adding that its annual dividend of about 2% is a bonus.

The Pick: Apple

The Pro: Brian Belski, chief investment strategist, BMO Capital Markets, New York.

Belski says the bull market could run 10 more years. And what better way to play it than to buy shares of Apple (AAPL). The world's most-valuable company, which is currently valued at roughly $906 billion, is within striking distance of becoming the first stock with a market value of $1 trillion. "Apple is the premier consumer staples company," says Belski, highlighting a crucial reason why the gadget maker will keep prospering as Americans' pay and job prospects improve with the economy. The key investment math related to Apple, he says, is simple: "Cash plus innovation."

The Pick: U.S. BankCorp

The Pro: Paul Schatz, president, Heritage Capital, Woodbridge, Conn.

The Minneapolis-based bank should also benefit from stronger growth and rising borrowing costs for people taking out loans. Another plus, according to Schatz, is that the bank regularly sets aside bigger reserves than they need for bad loans. The upshot to that conservative strategy is U.S. Bancorp's (USB) quarterly earnings turn out to be better than promised, Schatz says. "It's a good bank for the buck," he says.

The Pick: Lockheed Martin

The Pro: Ray Hare, director of equity research, Huntington Private Bank, Cincinnati.

The defense contractor, which posted sales of $51.05 billion last year, should generate high-single-digit revenue growth over the next three years, according to Hare. Bolstering Lockheed Martin's (LMT) sales is the increased spending on defense to "rebuild and modernize the military" laid out in President Trump's 2019 fiscal year budget. Lockheed's business will get a lift, Hare says, as its F-35 fighter jet program ramps up and its missile sales remain healthy.

The Pick: Western Digital

The Pro: Barry James, manager, James Balanced Golden Rainbow Fund, Alpha, Ohio.

The digital world is awash in data. And Western Digital (WDC) is an American computer data storage provider with an array of products that allow customers ranging from gadget lovers to data-intensive businesses to store all that information, whether its in hard drives or the cloud. In the fiscal year ending June 2017, its sales jumped 47% to $19.1 billion according to FactSet. "The innovation in technology continues to create exponential storage growth needs," James says.

The Pick: Cognizant Technology Solutions

The Pro: Robert Stimpson, portfolio manager, Oak Associates, Akron Ohio.

Cognizant, which helps companies save money through efficient and cost-effective information technology, is a perfect stock to own late in a bull run, when the economy could eventually slow and companies become more cost conscious. The IT company has a diverse group of customers, from tech firms to financial companies. That sets them up to "do well in most market environments," Stimpson says.

The Pick: AptivV

The Pro: Adam Abelson, chief investment officer, Stralem & Co., New York.

Aptiv is a Gillingham, England-based auto supplier that specializes in the fast-growing electric-car segment. In short, it's a bet on transportation's future. "It is a play on the powerful long-term trend of electrification and autonomous (driving) that will continue regardless of any short-term economic or market downturn," Abelson says.

The Pick: Westrock

The Pro: Bob Doll, chief equity strategist, Nuveen Asset Management, New York.

The paper and packaging solutions company isn't a sexy stock. But with demand high thanks to the solid economy and strong pricing power, WestRock (WRK) is well-positioned to "expand profit margins, grow sales and cash flow," Doll says. The stock is selling at a price-to-earnings ratio below 10, compared with the broad stock market's P-E of more than 17 times earnings, according to Thomson Reuters. "It's trading at very attractive valuation levels," Doll adds.

The Pick: Donaldson Co

The Pro: Michael Farr, president, Farr, Miller & Washington, Washington, D.C.

Donaldson Co. (DCI), the global maker of filtration systems and products that go into heavy-duty engine and industrial applications, is another stock lacking the buzz of more popular names. But the company has "dominant market share" in many of the areas where it does business, and it has "attractive" long-term growth potential, Farr says. The company also has broad global reach, with nearly two-thirds of its profits coming from outside the U.S., which will allow it to benefit from the ongoing global economic upturn.

Stock market 10-month win streak ends in February after correction
Author: Adam Shell
Date: Feb 28, 2018
Publication: USA TODAY
Link to Article

Stock investors' hearts skipped a beat in February.

It wasn't cupid messing with their emotions, but a sudden and sizable dive in stock prices that caused the U.S. market to finish the month with a loss, snapping a streak of 10 straight monthly gains.

The Standard & Poor's 500 index, a broad gauge of stocks, ended February down 3.9%, its first monthly loss since March 2017, which left it just shy of an 11-month streak in 1958, according to S&P Dow Jones Indices. The fall was also its biggest monthly decline since January 2016, when investors stepped back from stocks because of concerns that China's economy was in danger of a major contraction.

This February was a turbulent period, which saw the return of wild price swings for stocks after a long period of calm. The volatility — including two days in which the Dow Jones industrial average suffered record point drops of more than 1,000 points — was set in motion by fears that borrowing costs would spike more than expected this year, threatening to slow growth for the economy and stocks.

The stock market decline at the start of the month was swift and startling, a 10.16% fall in the S&P 500 over a nine-session span ending on Feb. 8, resulting in the market's first correction — defined as drop of 10% or more — in two years.

To be sure, the market has recouped a big chunk of its losses and has climbed back into positive territory for the year. A 401(k) investor that started the year with $100,000 invested in the S&P 500 would have seen his or her account balance swell to $107,453 by late January's peak, only to sink to $96,536 at the low for the year. At the end of February, that initial investment was still showing a gain of about $1,500.

The shift in the market's tone is viewed by many as a sign of change in financial markets.

So what changed?

Return of volatility Overall, the stock market has been on a steady rise for more than a year with few hiccups along the way. Big market drops were absent, as was investor fear. But volatility came roaring back recently as rate-hike worries intensified.

The S&P 500's longest-ever period without a 3% drop, dating to November 2016, was snapped Feb. 3, according to Bespoke Investment Group. The large-company stock index also suffered its first 5% drop since late June 2016 when stocks tanked after the surprise vote by Britain to exit the European Union. The S&P 500's first correction in two years followed Feb. 8.

Similarly, the VIX, a closely watched Wall Street fear gauge that also measures how much volatility investors think there will be in the future, shot up more than 100% in a single day during the market panic in February, its biggest jump ever.

"We saw a tsunami of volatility," said Paul Schatz, president of Heritage Capital, a Woodbridge, Conn., investment firm.

Rising borrowing costs

After years of support from record low interest rates since the 2008 financial crisis, the market is now coming to grips with the reality that an improving economy and job market will lead to higher inflation — and higher borrowing costs. Higher interest rates slow consumer spending and crimp growth, making stocks less desirable.

The 10-year Treasury note, a benchmark borrowing rate that determines the cost of mortgages and other consumer-related debt, has spiked from around 2.40% at the end of 2017 to about 2.90%. The recent run-up in long-term bond yields gained speed on Feb. 2 after the government reported that average hourly wages grew at their fastest pace since 2009.

"Investors said, 'Oh gosh, rates are going to start rising,'" explains Brian Jacobsen, senior investment strategist for Wells Fargo Asset Management.

Investors also worry that the Federal Reserve will raise short-term rates too aggressively this year. That concern gained credence Tuesday when the new Fed chief, Jerome Powell, told a congressional panel that he believes the economic outlook has improved since the central bank last met in December. Powell's words were interpreted by Wall Street as a sign that the Fed might hike rates four times this year, not the three they have already signaled.

Reminder: Stocks go down

When stocks go up pretty much in a straight line, like they did in 2017 when the S&P 500 rose 19.4%, and early this year, when it rose another 7.5%, investors forget they can be risky and can actually go down.

The February swoon dissuaded them of that erroneous notion.

"It was the first time the latest generation of investors realized that they can lose money and lose it quickly," Schatz says.

Stretch Your Dollar: What to do with tax refunds, bonuses
Author: Laura Hutchinson, News 8 Anchor
Date: Feb 22, 2018
Publication: WTNH - NEWS 8
Link to Article

(WTNH) — It's the time of year to put a little money back in your pocket, if you're lucky.

Tax refunds are coming in and in some cases paychecks are getting fatter in the New Year.

Some companies are even giving out bonuses as a result of the president's Tax Cut and Jobs Act.

"Employees are getting anywhere from a $1,000 to $2,500 in bonuses," said Paul Schatz.

It's good news for you and even better if you spend it wisely.

Heritage Capital’s Paul Schatz says there's one place it should go first.

"Pay down that credit card debt before going on the trip, before you put in your savings account, before you put in your 401K," said Schatz.

After you pay down debt, Money Crashers says increase your emergency fund, your retirement contributions and anything you need, like that dental work you've been putting off or the new appliance at home.

While it is okay to splurge on some fun, after all, you have worked hard for it. You may find you have more money for that stuff later after you have taken care of some of life's necessities.

Author/Anchor: Tim Lammers
Date: Feb 15, 2018
Publication: FOX 61
Link to Article

Given the stock market’s correction, we can focus on my short, intermediate and long-term forecast outlook along with what individual investors should be doing, etc. interest rates as they relate to mortgages, credit cards etc.

Dow plunges over 600 points
Author: Kelly Evans - Closing Bell
Date: Feb 09, 2018
Publication: CNBC
Link to Article

As Dow plunges, some investors get their buy lists ready
Author: Kellie Ell
Date: Feb 08, 2018
Publication: CNBC
Link to Article
  • Analysts give their top picks on what to buy as the Dow drops below 1,000 points.
  • Financials, Mid-cycle industrials and chips are bargains.
The stock market continues its nearly week-long trek downward and investors are searching for reasons. That's not stopping many from breaking out their buy lists and adding to their favorite stocks and sectors in this downturn.

An uncertain bond market is one possible trigger. Negative implications on the job market after wage increases and uncertainty over whether the U.S. Federal Reserve will raise interest rates are more fear factors leading investors to sell, said Scott Wren, senior global equity strategist for Wells Fargo Investment Institute, a subsidiary of Wells Fargo Bank N.A.

Here's what we do know: the Dow Jones Industrial Average closed 1,032.89 points lower on Thursday.

"It doesn't matter what the causes are," said Art Hogan, managing director and chief market strategist at B. Riley Financial, a financial service company. "You've got some great buying opportunities," he told CNBC.

"We're selling everything because we're so concentrated in our ownership of stocks and ETFs that we're creating dislocations that are going to be massive opportunity for active managers and stock pickers," Hogan said.

Here are some hot picks while the market is in distress.

1. Financials

Increased volatility, or uncertainty in the size and direction of market changes, is good for banks, Hogan said Thursday during "Power Lunch." Add that to rising interest rates and net interest margins and what Hogan called a "lighter regulatory touch" and financials are a bargain.

"And not just in the big names," said Barry James, president and portfolio manager at James Investment Research, an investment firm. "But on down the line as well in terms of size in the financial area. When rates go up they tend to increase their rates faster than the overall market and they increase their spread."

James, who was also on Thursday's Power Lunch, cautioned investors that the "pain" is not yet over and to search for "bargain-type stocks," such as gold, short and floating-rate notes and to put money into cash.

2. Mid-cycle industrials

"They're being sold like there is no economy or no economic growth going on," Hogan said. "They're being thrown out with the bath water."

3. Semiconductor stocks

The technology stocks have been less expensive in February, Paul Schatz, president and chief investment officer of Heritage Capital told CNBC during "Closing Bell" on Thursday. He expects market highs to return during the next quarter and said the prime buying time is in the next three to eight months.

Dow plunges more than 1,000 points, falls into correction territory
Author: Adam Shell
Date: Feb 08, 2018
Publication: USA TODAY
Link to Article

The Dow Jones industrial average plunged 1,033 points Thursday, its second-worst drop in history, extending its losses in the recent selloff to more than 10% and putting it officially into correction territory.

The blue-chip stock average’s recent drubbing, which follows its record 1,175-point drop Monday, has been fueled by fears that a long period of low interest rates and tame inflation that have boosted the economy and fueled a rapid rise in stock prices may be nearing an end as economic conditions improve.

“The Dow has been hit by a tsunami of volatility,” says Paul Schatz, president of Woodbridge, Conn.-based investment management firm Heritage Capital. “The market is repricing in a lot of factors at once. And rates have run up fast. The market always has a tough time when things happen in a linear fashion.”

The Standard & Poor's 500 stock market, a broader market gauge that is a core holding in 401(k) plans, also fell into correction terrritory. It's 10.2% drop since its Jan. 26 record high is its biggest since a 14.2% decline ending in February 2016.

The double-digit percentage stock decline has occurred even though Wall Street stresses that the health of the economy, labor market and U.S. businesses remain strong.

On Thursday, the yield on the 10-year Treasury note again ticked up to a recent four-year high of 2.88%, sparking fears that rates could quickly top the key 3% level.

The stock market has also been upended by an unwinding of a popular trade that relied on market volatility to remain calm. But that trade has turned bad amid wild price swings that have turned suddenly violent since the market's peak.

Sparking the turbulence was a report released last week showing that hourly wage growth rose at its fastest pace since 2009. That strong pay data sparked fears of coming wage inflation, which intensified worries that the Federal Reserve could hike rates more often this year than the three times they have originally signaled.

“The market has undergone a psychological change,” says Doug Ramsey, chief investment officer at The Leuthold Group in Minneapolis. “The mystery now is what level on the 10-year Treasury will, if not break the bull market’s back, at least knock it back a few steps.”

While Wall Street has been calling for a correction for some time, given the market’s euphoric rise, the fall has been more violent and quicker than anticipated.

What market woes mean for your 401K, interest rates
Author: Amy Hudak, News 8 Reporter
Date: Feb 06, 2018
Publication: WTNH - NEWS 8
Link to Article

NEW HAVEN, Conn. (WTNH) — It was a jaw-dropping day on Wall Street Monday, as the Dow Jones plunged nearly 1,600 points in the worst single day point decline in history.

Paul Schatz, President of Heritage Capital LLC, says the sticker shock is worse than what this means for your bottom line.

“People are more freaked out now because they see the large numbers,” Schatz told News 8. “I think this is a short-term panic and not anything that’s going to impact the economy for at least the next 6 to 9 months.”

As for why we saw the drop? Schatz says the last 24 months were the least volatile in market history, with a growing national and global economy, wage increases and rock bottom interest rates.

“The market is a little bit scared about interest rates, the market is a little scared about wage growth,” Schatz continued. “Historically this is all very normal. I’m going to put quotes around “healthy and routine” because nobody feels healthy and routine when you live through it.”

Mel Twiest says he’s not overly concerned, but says it certainly doesn’t feel good seeing the numbers.

“It’s not pleasant, but what goes up comes down and nobody complained when it went up in such a spectacular and really ridiculous way,” Twiest said.

Imran Kassam says this is just what the market does.

“Volatility is just part of what happens and I think over the next few months everything with even out and another cycle will begin,” Kassam added.

As for your investments and 401K, Schatz says don’t do anything rash.

“The average 401K investor should do absolutely nothing,” Schatz said. “Don’t compound a problem with a problem and emotionally panic-sell then look back and see the market is back and say ‘what to do now.'”

As for interest rates, they’re expected to rise.

“If you’re going to borrow money for a car or borrow money on your credit card, those interest rates are going to go up and remain that way until at least the other side of the recession,” Schatz continued.

Financial experts say they expect stocks to bounce around volatily for the next two to four weeks before settling down and evening out. Schatz says we could see all-time highs by the second quarter of 2018.

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