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Jim: Hi everyone, today is Wednesday, July 19, 2017 and this is our midweek, market update call. Each Wednesday, we look to inform you of our investment thinking and decisions we are making on your behalf.

I am representing our team at the Raymond James national conference in Washington DC. Every summer the company invites financial advisors like me to exchange ideas to foster growth with you, our clients and friends. I am commenting today on the second part of the Bitcoin story we started 2 weeks ago.

But first here are some thoughts from Bernice Murff on College Costs. Bernie, what’s on your mind today?

Bernie: Thanks Jim.

As I was looking on my calendar to see when my son’s next tuition payment was due for college, I figured that everyone else who has kids in college was in the same boat. So, I thought I’d focus on a few areas around college funding and payments for the remainder of this month.

This week I’ll discuss – Rates, Payment Schedules for Loans, and Credit Scores. Next week I’ll highlight How to Finance Graduate School?

Where do rates on student loans currently fall? Well you may find it interesting that after 2 consecutive years of interest rates decreasing on federal student loans – they are now rising. The rates for direct subsidized and unsubsidized undergraduate loans are increasing from 3.76% to 4.45%. As a side note for those of you in grad school that rate is going from 5.31% to 6%; WOW is all that I can say. (Source: RJ Forefield – Interest Rates Rise on Federal Student Loans for 2017/2018)

When I got out of college, over 25 years ago, you had two choices to repay your loans – both choices are still around and the fastest way to repay your loan which is over a 10 year period – you could choose either a fixed monthly amount or what is called a graduated repayment – which starts out a little less in the early years when you are earning less and then the monthly payment increases slightly in the later years. Now you have extended repayment, income-based repayment, and loan consolidation plans. We’ll attach an article which high lights all of these options. Our advice goes back to the budget; understand what your cash flow is in order to pick the best payment option for you.

The reason that the budget is so important is your Student Loans can impact your credit score both in a positive and negative way. If you are making your payments on time, this will help your credit score. If you can’t make your payments, you should look at solutions that can help you improve or change your situation. I’ll have another article posted with the transcript on this which gives you options that can help you.

If you know of anyone that has questions regarding their student loans and how to navigate paying them back, feel free to have them call us and we’ll help them through the analysis process.

I’ll now turn the call over to Jim for his weekly comments.

Jim:

Whether Bitcoin the currency survives—the bubble it may be in—or not, it’s very likely its structure will. As far as the currency is concerned, the IRS considers it an asset, the Commodity Futures Trading Commission says it’s a commodity and the Treasury Department has described it a virtual currency. The Federal Reserve claims no authority over it and the SEC has no comment.

Janet Yellin, the Federal Reserve Chair says that banks should study it, but for the time being that’s the extent of their point of view. Investing in Bitcoin is nearly impossible outside of owning the currency itself. There is an over the counter security that supposedly mimics the rise and fall of the currency, it’s called the Bitcoin Investment Trust. Elsewhere the SEC has rejected application for an Exchange traded fund however the application is supposedly being reviewed.

An offshoot with similar DNA is Ethereum. Like Bitcoin it is extremely volatile, trading in a range from 10 cents to $300 just this year.

But it is what’s called the blockchain network that is the buzz in the financial services world. This structure, which to me seems complicated, allows people to embed complicated information including smart contracts that turn contractual terms into computer code and govern how they are executed. These smart contracts are conditional agreements that only come alive, so to speak, when certain conditions are met, for example. A coded term might look like this I will loan you $5000, but only when you have paid off the other debt that is on your books.

Wall Street and Main Street can no longer ignore technologies whose legality and purpose isn’t immediately clear. The financial institution that seems the most interested in experimenting with Bitcoin is Fidelity Investments. Fidelity allows their employees to use the currency in its cafeteria and in what I think are a bold move—and perhaps a head on challenge to the IRS—Fidelity Charitable helps clients turn their Bitcoin into donations. Fidelity also allows individuals who own Bitcoin through a company called Coinbase; actually view their balances on their Fidelity site.

We have more in weeks ahead as we explore the way currency is changing.

*Our indicators? The attributes we follow continue to act favorably. The **Large Groups of stocks we follow,

• the 2000+ on the New York Stock Exchange: That indicator is still locked in the 61% range and has been for 4 or 5 months. It is bullish but cautious. Same situation exists for the 3000 stocks found in the Optionable Universe. The Over the counter indicator is still bullish.

Asset Class Rankings? Domestic Equities, International and Fixed Income are the top asset classes with cash commodities and currencies at the bottom of the list.

Sector Rankings? Drugs and Healthcare have fallen back, mostly I believe because of the failure to replace the Affordable Care Act. Steel/iron and non-ferrous metals are strangely leading all sectors.

Interest rates?

• The short term 13 week treasury bill: hitting new 9 year high yields as we speak
• The 5 year Treasury Note: the yield has pulled back from its surge last week; the 10 year has done the same. Meanwhile the 30 year treasury seems the least impacted by the recent movement in interest rates overall.

FOOTNOTES:

1. Our indicators? The [New York Stock Exchange] [Over-the-Counter Market] [Optionable Universe] BULLISH PERCENTS measure the % number of stock price charts whose most recent signal has been a BUY signal.

2. Large Groups? If that % is increasing or decreasing, it may be helpful in making investment decisions to buy, sell or hold.

Opinions expressed are not necessarily those of Raymond James & Associates. The author's opinions are subject to change without notice. Information contained was received from sources believed to be reliable, but accuracy is not guaranteed. Diversification and asset allocation do not ensure a profit or protect against a loss. Past performance is not indicative of future results. Investing always involves risk and you may incur a profit or loss. No investment strategy can guarantee success. There is no assurance these trends will continue or that forecasts mentioned will occur.

Information provided is general in nature, and is not a complete statement of all information necessary for making an investment decision, and is not a recommendation or a solicitation to buy or sell any security.

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