Today I'd like to tell you about an excellent way for you to support your ministry of choice: to make a bequest in your will, living trust,or with a codicil.
There are several different types of bequests.
Specific Bequest. A specific bequest involves making a gift of a specific asset such as real estate, a car, other property or a gift for a specific dollar amount. For example, you may wish to leave your home or $10,000 to your chosen ministry.
Percentage Bequest. Another kind of specific bequest involves leaving a specific percentage of your overall estate to charity. For example, you may wish to leave 10% of your estate to your chosen ministry.
Residual Bequest. A residual bequest is made from the balance of an estate after the will or trust has given away each of the specific bequests. A common residual bequest involves leaving a percentage of the residue of the estate to charity. For example, you may wish to leave 30% of the residue of your estate to your chosen ministry.
Contingent Bequest. A contingent bequest is made to charity only if the purpose of the primary bequest cannot be met. For example, you could leave specific property, such as a vacation home, to a relative, but the bequest language could provide that if the relative is not alive at the time of your death, the vacation home will go to your chosen ministry.
Please contact us if you have any questions about how to make a bequest to your chosen ministry or to request any additional information that might be helpful to you and your attorney as you consider your estate planning options. You can reach us at 913.577.2983or info@nazarenefoundation.org. To learn more about the Church of the Nazarene Foundation, visit our website, www.NazareneFoundation.org.
Blessings,
Kenneth R. Roney, J.D.
President
PERSONAL PLANNER
Helping Children Tomorrow
Parents and children often have a different perspective on saving and spending. Parents of retirement age today were born during the Great Depression or during the 1940s and have a strong desire to save and invest in order to increase economic security.
Some of their children may have a different perspective. Because their children did not grow up during adverse economic times, they tend to consume more and save less. Understandably, many of these parents hope that their children could have greater economic security during retirement.
Mike and Kristi are recently retired. They have two children, John and Mary. Mike and Kristi bought a lot on an inland waterway when they were in their 40s. But the next year, Mike accepted a position in a state that was quite a distance from the waterfront lot. They've owned the lot for more than 20 years, but never built on the property because of the distance.
Mike and Kristi recently retired at age 65. They have good retirement income, a home that is paid for and good savings. Recently, Mike received a very good offer from a person who would like to purchase the waterfront lot. After receiving the offer, Mike and Kristi contacted their attorney, Steve, to discuss the best way to maximize benefits for them and their children.
Mike: "We have been very fortunate. Kristi and I have just retired and we have good income. We both get Social Security and also have two pensions. With that retirement income and our house paid for, we're doing fine."
Kristi: "You might remember that we mentioned buying this lot on the intracoastal waterway years ago. But after we moved south for Mike's new job, it was just too far to travel. We never ended up building our vacation home on that property. Now we've had an offer to buy that property at a great price. We told the person that we weren't quite ready to sell yet, but he still seems to be very interested."
Steve: "That sounds like a good offer and a good opportunity. It may be the right time to sell that lot. But you know that there is a lot of appreciation and you will pay a large capital gains tax."
Mike: "Yes, I know. We were doing some research and a friend of ours who is a gift planner for a charity said that we could save a bundle with a special trust. He called it a charitable remainder trust. We did some reading online and it seems like a good idea. But we don't actually need the income ourselves."
Kristi: "Mike and I like the tax savings. But we thought that maybe what we should do is give the income to John and Mary. They just don't save the way we have. I am very concerned about them. If they don't save more, they are going to need added income during their retirement. With all the financial uncertainty in America today, we would like to see if there is a way to help them."
Steve: "Many parents share your desire to provide some added retirement income for their children. You mentioned that charitable trust. Let me show you how a special version of that trust could help John and Mary."
"That trust is usually called a unitrust. I am going to explain how a retirement version of that unitrust could work for them. With your offer of $400,000, we could transfer the lot into the trust and after it is transferred, accept the offer. I suggest the $400,000 in the trust be invested for 20 years. With growth over those 20 years, it could increase to perhaps $1.2 million in value. That's of course depending on how the investments would be during that time, but that's quite possible. If we are able to grow to that level, the trust then would pay approximately $2.5 million to John and Mary during their retirement years. In addition, you would receive a tax deduction today of about $42,000 that could save another $14,000 in tax."
Mike: "So if we use that special retirement version of the unitrust, we sell tax free, get a deduction, and the trust grows until John and Mary retire. Then it pays a very good amount to John and Mary. That will very nicely supplement their other retirement income."
Kristi: "This sounds like a great use of that lot. It will answer my question on how to provide added retirement income for the children. Let's move forward with this trust."
Mike: "Plus, while it's a very long time into the future, there eventually will be a good gift to our favorite charity."
SAVVY LIVING
When and How Social Security Checks are Delivered
My mom recently retired and applied for Social Security benefits. It is taking longer for her to receive her benefit than expected. When will the first payment come? Also, is direct deposit her only option for receiving the monthly benefit payment?
Generally, Social Security retirement benefits (as well as disability and survivor benefits) are paid one month after the benefit is due. So, if your mom's first benefit payment is due in September then she should receive her September benefit in October.
Date of Benefit Payment
The specific day of the month that a beneficiary can expect to receive his or her benefit payment, however, will depend on the birth date of the person from whose work record a beneficiary is collecting the benefit. If a beneficiary is applying for benefits as a retiree, the benefit payment day will be determined by the retiree's birth date. If a beneficiary is applying for spousal or survivor benefits based on either a spouse’s work history or, if married at least 10 years, an ex-spouse’s work history, the benefit payment date will be determined by the spouse's birth date. Here is a schedule of when a beneficiary can expect to receive the monthly check:
Birth date is 1st through 10th of month, payment will be second Wednesday of each month.
Birth date is 11th through 20th of month, payment will be third Wednesday of each month.
Birth date is after the 20th of the month, payment will be fourth Wednesday of each month.
There are, however, a few exceptions to this schedule. For example, if the day the Social Security check is supposed to be deposited happens to be a holiday, that check will be deposited on the prior day. And, if someone is receiving both Social Security benefits and SSI payments, the benefit check will be deposited on the third day of the month. While this is not applicable to recent retirees, Social Security beneficiaries who started receiving benefits before 1997 will have their Social Security checks paid on the third day of the month. To get a complete schedule of 2015 payment dates, visit ssa.gov/pubs/EN-05-10031-2015.pdf.
Direct Deposit Delivery
There are two ways someone can receive Social Security benefits today. Most beneficiaries choose direct deposit into their bank or credit union account because it’s simple, safe and secure. But, if a beneficiary doesn’t like this option, or he or she doesn’t have a bank account that payments can be deposited into, a beneficiary can get a Direct Express Debit MasterCard and have the benefits deposited on to the card’s account.
This card can then be used to get cash from ATMs, banks or credit union tellers. It can be used to pay bills online and over the phone, make purchases at stores or locations that accept Debit MasterCard and provide cash back when making purchases. It can even be used to purchase money orders at the U.S. Post Office. The money spent or any withdrawals will be automatically deducted from the card account and a card holder can check his or her account balance at any time by phone, online or at ATMs.
There’s also no cost to sign up for the card, no monthly fees and no overdraft charges. There are, however, a few small fees for optional services that may apply, such as in the case where a card user is making multiple ATM withdrawals. Currently, cardholders get one free ATM withdrawal per month, but additional monthly withdrawals cost $0.85 for each transaction which does not include a surcharge that may apply when using non-network ATMs. To learn more about the Direct Express Debit MasterCard, visit usdirectexpress.com or call 800-333-1795.
Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of "The Savvy Living" book. Any links in this article are offered as a service and there is no endorsement of any product. These articles are offered as a helpful and informative service to our friends and may not always reflect this organization’s official position on some topics. Jim invites you to send your senior questions to: Savvy Living, P.O. Box 5443, Norman, OK 73070.
YOUR PLANThe Egg Endowment
Let me tell you about a big egg business. Coming out of the military service at the close of the Korean war, Randall decided to put his agriculture degree to work, so he went into the chicken business. Randall and his wife, Janet, put it all on the line. For several years they struggled to make ends meet and finally, during one real desperate business cycle, they decided to turn their chicken business over to God. Janet said they prayed, "Lord, this is your business, do what you will with it."
God heard their prayers. Over the years, He prospered their labor. They eventually built a very large chicken business with over 16 million chickens housed in various states. They continued to honor God's faithfulness by becoming generous givers and teaching the principles of generous giving to their four children. In 2007, Randall, Janet and some of their family established a substantial endowment fund with the Church of the Nazarene Foundation. This endowment fund will generate income to the local Church of the Nazarene for use in family and children's ministries. The pastor says, "This gift will enable our church to reach into the homes and lives of countless people without negatively impacting our daily operational needs."
The eggs they gathered over a lifetime will produce far more than a wonderful breakfast.
WASHINGTON NEWS
Bipartisan Tax Reform Efforts
On July 8th Senate Finance Committee Chairman Orrin Hatch (R-UT) and Ranking Member Ron Wyden (D-OR) released the reports of the five Senate bipartisan working groups. These Senate Finance Committee Members devoted six months to reviewing and analyzing proposed tax reform in five major areas.
The five areas were individual income tax, business income tax, savings and investment, international tax and community development and infrastructure.
The Senators in each of the five groups received input from a wide segment of American taxpayers and professional advisors as they were developing their reports. Sen. Hatch stated, “Any remake of the U.S. tax code should work to lower the rates and broaden the base. We need to simplify the code and make it easier for families and create a system to keep American job-creators competitive around the globe.”
Ranking Member Wyden continued, “I am very appreciative of the time and effort my colleagues put into this exercise. Their constructive feedback and ideas are essential as we push ahead toward our shared goal of modernizing the tax.”
Editor’s Note: The bipartisan Senate groups were an initial step by Hatch and Wyden to pave the way for a major tax reform bill. Both recognize that there are a diversity of ideas in these five areas. However, the exercise enabled Senators to focus on specific planning options. The report gives a good indication of potential tax reforms that are likely to have broad support. Because the Senate generally acts in a bipartisan manner on major tax reform bills, this collective effort is quite important. While the election in 2016 makes it probable that major tax reform is now deferred until 2017, this effort by Hatch and Wyden to move the process forward is an important step.
Individual Giving Group Highlights IRA Rollover
The Bipartisan Senate Individual Income Tax Group is likely to be of greatest interest to taxpayers and their professional advisors. This group focused on three major areas – charitable giving, higher education and tax administration. The charitable giving topics included the IRA charitable rollover and expanded deductions for conservation easements.
Since 2006, IRA owners over age 70½ have been permitted to transfer up to $100,000 per year directly from the IRA custodian to charity. This provision has been extended since 2006 in one or two year increments. It awaits Congressional action for 2015, but is expected to be passed prior to the end of this year. All of the bills have been retroactive to January 1 of the year of passage.
There were four specific IRA rollover proposals discussed by the Senate group. First, there is strong bipartisan support for making permanent the $100,000 current IRA rollover. Second, many community and religious foundations have proposed that the IRA rollover should be permitted for gifts to donor advised funds and supporting organizations. Third, the Charitable IRA Initiative, Inc. and other organizations have been promoting an expansion to include IRA rollovers to life income gifts. Fourth, the possibility of increasing the $100,000 limit on the current IRA rollover was discussed.
Conservation easements were the second focus of the group discussions. Senators generally approve of the goal of using conservation easements to encourage wise use of real estate. For charitable gifts by individuals, the normal deduction limits are 50% of adjusted gross income (AGI) for cash and 30% of AGI for appreciated property. If the gift value exceeds those limits, there is a five-year carryforward.
In years prior to 2015, conservation easement gifts qualified for an enhanced 50% deduction limit for appreciated property for most taxpayers. However, farmers and ranchers whose income is primarily from a farm or ranch qualify for a 100% limit on appreciated property gifts of conservation easements. There is also a 15-year carryforward for those gifts.
The working group proposed to make permanent the expanded deduction for conservation easements. However, there were extensive discussions about methods for increasing the accuracy of the appraised valuations of the conservation easements.
Editor’s Note: It was very significant that the first tax topic in the Senate report was the IRA charitable rollover. This ordering probably indicates a broad base of bipartisan support. The favorable news for philanthropy is that at some point there will be a tax bill with a permanent IRA charitable rollover. While this is likely to apply to the current $100,000 rollover, there also is the potential for expansion to include life income gifts. The Charitable IRA Initiative, Inc. is a coalition of leaders from the American Council on Gift Annuities, the Partnership for Philanthropic Planning, the National Catholic Development Conference and other organizations. It has made personal contact with several Senators and Representatives to encourage expanding the IRA rollover to life income gifts.
FINANCES
God heard their prayers. Over the years, He prospered their labor. They eventually built a very large chicken business with over 16 million chickens housed in various states. They continued to honor God's faithfulness by becoming generous givers and teaching the principles of generous giving to their four children. In 2007, Randall, Janet and some of their family established a substantial endowment fund with the Church of the Nazarene Foundation. This endowment fund will generate income to the local Church of the Nazarene for use in family and children's ministries. The pastor says, "This gift will enable our church to reach into the homes and lives of countless people without negatively impacting our daily operational needs."
The eggs they gathered over a lifetime will produce far more than a wonderful breakfast.
WASHINGTON NEWS
Bipartisan Tax Reform Efforts
On July 8th Senate Finance Committee Chairman Orrin Hatch (R-UT) and Ranking Member Ron Wyden (D-OR) released the reports of the five Senate bipartisan working groups. These Senate Finance Committee Members devoted six months to reviewing and analyzing proposed tax reform in five major areas.
The five areas were individual income tax, business income tax, savings and investment, international tax and community development and infrastructure.
The Senators in each of the five groups received input from a wide segment of American taxpayers and professional advisors as they were developing their reports. Sen. Hatch stated, “Any remake of the U.S. tax code should work to lower the rates and broaden the base. We need to simplify the code and make it easier for families and create a system to keep American job-creators competitive around the globe.”
Ranking Member Wyden continued, “I am very appreciative of the time and effort my colleagues put into this exercise. Their constructive feedback and ideas are essential as we push ahead toward our shared goal of modernizing the tax.”
Editor’s Note: The bipartisan Senate groups were an initial step by Hatch and Wyden to pave the way for a major tax reform bill. Both recognize that there are a diversity of ideas in these five areas. However, the exercise enabled Senators to focus on specific planning options. The report gives a good indication of potential tax reforms that are likely to have broad support. Because the Senate generally acts in a bipartisan manner on major tax reform bills, this collective effort is quite important. While the election in 2016 makes it probable that major tax reform is now deferred until 2017, this effort by Hatch and Wyden to move the process forward is an important step.
Individual Giving Group Highlights IRA Rollover
The Bipartisan Senate Individual Income Tax Group is likely to be of greatest interest to taxpayers and their professional advisors. This group focused on three major areas – charitable giving, higher education and tax administration. The charitable giving topics included the IRA charitable rollover and expanded deductions for conservation easements.
Since 2006, IRA owners over age 70½ have been permitted to transfer up to $100,000 per year directly from the IRA custodian to charity. This provision has been extended since 2006 in one or two year increments. It awaits Congressional action for 2015, but is expected to be passed prior to the end of this year. All of the bills have been retroactive to January 1 of the year of passage.
There were four specific IRA rollover proposals discussed by the Senate group. First, there is strong bipartisan support for making permanent the $100,000 current IRA rollover. Second, many community and religious foundations have proposed that the IRA rollover should be permitted for gifts to donor advised funds and supporting organizations. Third, the Charitable IRA Initiative, Inc. and other organizations have been promoting an expansion to include IRA rollovers to life income gifts. Fourth, the possibility of increasing the $100,000 limit on the current IRA rollover was discussed.
Conservation easements were the second focus of the group discussions. Senators generally approve of the goal of using conservation easements to encourage wise use of real estate. For charitable gifts by individuals, the normal deduction limits are 50% of adjusted gross income (AGI) for cash and 30% of AGI for appreciated property. If the gift value exceeds those limits, there is a five-year carryforward.
In years prior to 2015, conservation easement gifts qualified for an enhanced 50% deduction limit for appreciated property for most taxpayers. However, farmers and ranchers whose income is primarily from a farm or ranch qualify for a 100% limit on appreciated property gifts of conservation easements. There is also a 15-year carryforward for those gifts.
The working group proposed to make permanent the expanded deduction for conservation easements. However, there were extensive discussions about methods for increasing the accuracy of the appraised valuations of the conservation easements.
Editor’s Note: It was very significant that the first tax topic in the Senate report was the IRA charitable rollover. This ordering probably indicates a broad base of bipartisan support. The favorable news for philanthropy is that at some point there will be a tax bill with a permanent IRA charitable rollover. While this is likely to apply to the current $100,000 rollover, there also is the potential for expansion to include life income gifts. The Charitable IRA Initiative, Inc. is a coalition of leaders from the American Council on Gift Annuities, the Partnership for Philanthropic Planning, the National Catholic Development Conference and other organizations. It has made personal contact with several Senators and Representatives to encourage expanding the IRA rollover to life income gifts.
FINANCES
Stocks - WD-40 Company Misses Expectations
WD-40 Company Misses Expectations
WD-40 Company (WDFC) reported its latest quarterly earnings on Wednesday, July 8. The company missed expectations as earnings were negatively affected by a strong dollar and political instability across Europe.
WD-40 Company reported revenue of $92.49 million for the quarter. This represents a decrease from the same period last year when the company reported revenue of $95.65 million. Analysts expected revenue of $99.4 million.
“Foreign currency exchange headwinds and political and economic instability in Eastern Europe continue to adversely impact and distort the true strength of our business,” said Garry Ridge, WD-40 Company President and CEO. “Our net sales results in the third quarter were negatively impacted by foreign currency issues, particularly in our EMEA segment, as well as significantly reduced sales in our distributor markets in Ukraine and Russia. We experienced strong sales growth in the Americas segment during the third quarter due to increased distribution and promotional activities.”
The company reported quarterly net income of $10.96 million. This represented a slight increase from the comparable period last year when the company reported net income of $10.41 million. Earnings per share came in at $0.75 per share, below expectations that the company would post earnings of $0.78 per share.
The “WD” in WD-40 stands for Water Displacement. In 1953, the Rocket Chemical Company was tasked by an aerospace contractor to come up with a formula to help displace water from the outer skin of the Atlas Missile when it was launched into the atmosphere. The 40 in WD-40 stands for the number of attempts it took the lab of the Rocket Chemical Company to come up with a solution that would displace water and withstand the extreme heat and cold required for the job. The product worked so well that the founder of Rocket Chemical Company began selling it to the public in aerosol cans for household uses in 1958.
WD-40 Company (WDFC) shares ended the week at $85.30, down 2% for the week.
Alcoa Reports Solid Earnings
Alcoa, Inc. (AA), producer and manager of primary and fabricated aluminum worldwide, reported its latest quarterly earnings on Thursday, July 9. The company reported solid revenue and net income.
The company reported revenue of $5.90 billion for the quarter. This was a slight increase over the same period last year when the company reported revenue of $5.84 billion.
“We continue to transform Alcoa; our portfolio reshaping combined with smart investments in growth markets is delivering strong results,” said Klaus Kleinfeld, Chairman and CEO. “Our value-add businesses are outperforming, with record profitability in the downstream and exciting profitable growth in the midstream. Recent acquisitions are fully on track, and paired with our innovations we are cementing Alcoa’s position as a premier aerospace and automotive partner.”
Alcoa reported quarterly net income of $207 million. This represents a significant increase over the comparable period last year when the company reported net income of $129 million.
Over the past several years aluminum premiums have dropped. As a result, Alcoa instituted a plan to shift its primary focus from its commodity business to value-added businesses. The company has reduced its smelting capacity significantly and is focusing increasingly on manufacturing specialty metals.
Alcoa, Inc. (AA) shares ended the week at $10.63, down 3% for the week.
PepsiCo Reports Quarterly Results
PepsiCo, Inc. (PEP) reported its latest quarterly earnings on Thursday, July 9. The company reported revenue above analysts’ expectations.
The company reported net revenue of $15.92 billion for the quarter. This figure is lower than the same period last year when PepsiCo reported net revenue of $16.89 billion. Analysts had forecast earnings of $15.8 billion.
“PepsiCo achieved strong financial performance in the second quarter. The macroeconomic environment around the world remains volatile and foreign exchange headwinds persist in many of our international markets. The steps we are taking to manage our businesses responsibly – such as taking pricing actions and optimizing our global sourcing – are clearly contributing to high-quality top and bottom-line year-to-date results and position us well for the remainder of 2015.”
PepsiCo reported quarterly net income of $1.98 billion. This is unchanged from the quarter one year ago when the company reported net income of $1.98 billion. Earnings per share came in at $1.33, above analysts’ expectations of $1.24 per share.
PepsiCo has had to rethink its overall strategy during the past few years as consumers have targeted healthier drink options. The company is now focusing on generating revenue rather than volume. The beverage giant is repackaging drinks and snacks so that they sell at a higher overall price point. The strategy seemed to work this quarter as PepsiCo announced that revenue rose for each of its Frito-Lay North America and PepsiCo Americas Beverages units despite steady volume.
PepsiCo, Inc. (PEP) shares ended the week at $95.55, up 2% for the week.
The Dow started the week of 7/6 at 17,728 and closed at 17,760 on 7/10. The S&P 500 started the week at 2,074 and closed at 2,077. The NASDAQ started the week at 4,964 and closed at 4,998.
WD-40 Company (WDFC) reported its latest quarterly earnings on Wednesday, July 8. The company missed expectations as earnings were negatively affected by a strong dollar and political instability across Europe.
WD-40 Company reported revenue of $92.49 million for the quarter. This represents a decrease from the same period last year when the company reported revenue of $95.65 million. Analysts expected revenue of $99.4 million.
“Foreign currency exchange headwinds and political and economic instability in Eastern Europe continue to adversely impact and distort the true strength of our business,” said Garry Ridge, WD-40 Company President and CEO. “Our net sales results in the third quarter were negatively impacted by foreign currency issues, particularly in our EMEA segment, as well as significantly reduced sales in our distributor markets in Ukraine and Russia. We experienced strong sales growth in the Americas segment during the third quarter due to increased distribution and promotional activities.”
The company reported quarterly net income of $10.96 million. This represented a slight increase from the comparable period last year when the company reported net income of $10.41 million. Earnings per share came in at $0.75 per share, below expectations that the company would post earnings of $0.78 per share.
The “WD” in WD-40 stands for Water Displacement. In 1953, the Rocket Chemical Company was tasked by an aerospace contractor to come up with a formula to help displace water from the outer skin of the Atlas Missile when it was launched into the atmosphere. The 40 in WD-40 stands for the number of attempts it took the lab of the Rocket Chemical Company to come up with a solution that would displace water and withstand the extreme heat and cold required for the job. The product worked so well that the founder of Rocket Chemical Company began selling it to the public in aerosol cans for household uses in 1958.
WD-40 Company (WDFC) shares ended the week at $85.30, down 2% for the week.
Alcoa Reports Solid Earnings
Alcoa, Inc. (AA), producer and manager of primary and fabricated aluminum worldwide, reported its latest quarterly earnings on Thursday, July 9. The company reported solid revenue and net income.
The company reported revenue of $5.90 billion for the quarter. This was a slight increase over the same period last year when the company reported revenue of $5.84 billion.
“We continue to transform Alcoa; our portfolio reshaping combined with smart investments in growth markets is delivering strong results,” said Klaus Kleinfeld, Chairman and CEO. “Our value-add businesses are outperforming, with record profitability in the downstream and exciting profitable growth in the midstream. Recent acquisitions are fully on track, and paired with our innovations we are cementing Alcoa’s position as a premier aerospace and automotive partner.”
Alcoa reported quarterly net income of $207 million. This represents a significant increase over the comparable period last year when the company reported net income of $129 million.
Over the past several years aluminum premiums have dropped. As a result, Alcoa instituted a plan to shift its primary focus from its commodity business to value-added businesses. The company has reduced its smelting capacity significantly and is focusing increasingly on manufacturing specialty metals.
Alcoa, Inc. (AA) shares ended the week at $10.63, down 3% for the week.
PepsiCo Reports Quarterly Results
PepsiCo, Inc. (PEP) reported its latest quarterly earnings on Thursday, July 9. The company reported revenue above analysts’ expectations.
The company reported net revenue of $15.92 billion for the quarter. This figure is lower than the same period last year when PepsiCo reported net revenue of $16.89 billion. Analysts had forecast earnings of $15.8 billion.
“PepsiCo achieved strong financial performance in the second quarter. The macroeconomic environment around the world remains volatile and foreign exchange headwinds persist in many of our international markets. The steps we are taking to manage our businesses responsibly – such as taking pricing actions and optimizing our global sourcing – are clearly contributing to high-quality top and bottom-line year-to-date results and position us well for the remainder of 2015.”
PepsiCo reported quarterly net income of $1.98 billion. This is unchanged from the quarter one year ago when the company reported net income of $1.98 billion. Earnings per share came in at $1.33, above analysts’ expectations of $1.24 per share.
PepsiCo has had to rethink its overall strategy during the past few years as consumers have targeted healthier drink options. The company is now focusing on generating revenue rather than volume. The beverage giant is repackaging drinks and snacks so that they sell at a higher overall price point. The strategy seemed to work this quarter as PepsiCo announced that revenue rose for each of its Frito-Lay North America and PepsiCo Americas Beverages units despite steady volume.
PepsiCo, Inc. (PEP) shares ended the week at $95.55, up 2% for the week.
The Dow started the week of 7/6 at 17,728 and closed at 17,760 on 7/10. The S&P 500 started the week at 2,074 and closed at 2,077. The NASDAQ started the week at 4,964 and closed at 4,998.
Bonds - Treasuries End Week on Two-Day Drop
Treasuries End Week on Two-Day Drop
U.S. Treasury prices fell for the second consecutive day on Friday, July 10 after Federal Reserve Chair Janet Yellen indicated the Fed remains on track to raise interest rates later this year. Ms. Yellen’s comments contributed to a Treasury selloff that had begun yesterday when problems in Greece and China began to show signs of improvement.
Since June 12, China’s most prominent stock exchange has been in a downhill decline, losing 30% of its value. After several attempts to prop stocks up failed, the Chinese government announced even more dramatic steps heading into the week of July 6. By Thursday, July 9, those new steps appeared to have worked as the Chinese stock market began a much-anticipated rally.
In Greece the situation quickly went from dire to promising when the parameters of a solution began to take shape. On the evening of July 9 the Greek government submitted a new fiscal proposal that included a three-year €53.5 billion bailout in exchange for the country’s adoption of reforms and spending cuts creditors have been seeking.
“Suddenly, two perceived risks to market dissipated,” said Zhiwei Ren, Managing Director and Portfolio Manager at Penn Mutual Asset Management, Inc. “Never underestimate the power of the Chinese government. Greece is showing good faith in this round of negotiations.”
Treasury yields further rose during Friday trading after comments from Fed Chair Janet Yellen. She indicated that the Fed still plans to raise interest rates later this year, despite the stagnating economic conditions at home and abroad.
Investors have been hoping that weak economic conditions around the world would cause the Federal Reserve to delay raising interest rates this year. Ms. Yellen’s comments on Friday dashed those hopes. As a result, prices on the 10-year Treasury note fell for the second day with a corresponding rise in yields.
The 10-year Treasury note yield finished the week of 7/6 at 2.42% while the 30-year Treasury note yield finished the week at 3.21%.
U.S. Treasury prices fell for the second consecutive day on Friday, July 10 after Federal Reserve Chair Janet Yellen indicated the Fed remains on track to raise interest rates later this year. Ms. Yellen’s comments contributed to a Treasury selloff that had begun yesterday when problems in Greece and China began to show signs of improvement.
Since June 12, China’s most prominent stock exchange has been in a downhill decline, losing 30% of its value. After several attempts to prop stocks up failed, the Chinese government announced even more dramatic steps heading into the week of July 6. By Thursday, July 9, those new steps appeared to have worked as the Chinese stock market began a much-anticipated rally.
In Greece the situation quickly went from dire to promising when the parameters of a solution began to take shape. On the evening of July 9 the Greek government submitted a new fiscal proposal that included a three-year €53.5 billion bailout in exchange for the country’s adoption of reforms and spending cuts creditors have been seeking.
“Suddenly, two perceived risks to market dissipated,” said Zhiwei Ren, Managing Director and Portfolio Manager at Penn Mutual Asset Management, Inc. “Never underestimate the power of the Chinese government. Greece is showing good faith in this round of negotiations.”
Treasury yields further rose during Friday trading after comments from Fed Chair Janet Yellen. She indicated that the Fed still plans to raise interest rates later this year, despite the stagnating economic conditions at home and abroad.
Investors have been hoping that weak economic conditions around the world would cause the Federal Reserve to delay raising interest rates this year. Ms. Yellen’s comments on Friday dashed those hopes. As a result, prices on the 10-year Treasury note fell for the second day with a corresponding rise in yields.
The 10-year Treasury note yield finished the week of 7/6 at 2.42% while the 30-year Treasury note yield finished the week at 3.21%.
CDs and Mortgages - Interest Rates Decline
Interest Rates Decline
Freddie Mac released its latest Primary Mortgage Market Survey (PMMS) on Thursday, July 9. The report showed average fixed mortgage rates dropping in an uncertain global environment.
The 30-year fixed rate mortgage averaged 4.04% this week. This represents a decrease from last week when it averaged 4.08%. Last year at this time, the fixed rate mortgage averaged 4.15%.
This week, the 15-year fixed rate mortgage averaged 3.20%. This is lower than last week when it averaged 3.24%. The 15-year fixed rate mortgage averaged 3.24% one year ago as well.
“Yields on Treasury securities declined this week in response to investor concerns about events in Greece and China,” said Sean Becketti, Chief Economist at Freddie Mac. “Mortgage rates fell as well, although not by as much as government bond yields. The rate on 30-year fixed rate mortgages fell 4 basis points to 4.04%. Overseas volatility is likely to persist for some time, providing some restraint on potential U.S. rate increases. In addition, the minutes of the June meeting of the Federal Open Market Committee suggest the Federal Reserve will proceed cautiously – monitoring events both overseas and in the U.S. to ascertain the appropriate moment to begin raising short-term interest rates. As a result, mortgage rates may remain in the neighborhood of 4% for a while.”
The money market fund finished the week of 7/6 at 0.3%. The 1-year CD finished at 0.6%.
Interest Rates Decline
Freddie Mac released its latest Primary Mortgage Market Survey (PMMS) on Thursday, July 9. The report showed average fixed mortgage rates dropping in an uncertain global environment.
The 30-year fixed rate mortgage averaged 4.04% this week. This represents a decrease from last week when it averaged 4.08%. Last year at this time, the fixed rate mortgage averaged 4.15%.
This week, the 15-year fixed rate mortgage averaged 3.20%. This is lower than last week when it averaged 3.24%. The 15-year fixed rate mortgage averaged 3.24% one year ago as well.
“Yields on Treasury securities declined this week in response to investor concerns about events in Greece and China,” said Sean Becketti, Chief Economist at Freddie Mac. “Mortgage rates fell as well, although not by as much as government bond yields. The rate on 30-year fixed rate mortgages fell 4 basis points to 4.04%. Overseas volatility is likely to persist for some time, providing some restraint on potential U.S. rate increases. In addition, the minutes of the June meeting of the Federal Open Market Committee suggest the Federal Reserve will proceed cautiously – monitoring events both overseas and in the U.S. to ascertain the appropriate moment to begin raising short-term interest rates. As a result, mortgage rates may remain in the neighborhood of 4% for a while.”
The money market fund finished the week of 7/6 at 0.3%. The 1-year CD finished at 0.6%.
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