NPH Due Diligence

NPH Due Diligence

MARKET DATA
April / 3 Mo. / YTD / 1 Year
S&P 500 / 0.62% / 5.69% / 1.93% / 17.93%
Russell 2000 / -3.94% / -0.36% / -3.16% / 18.93%
NASDAQ / -2.01% / 0.26% / -1.49% / 23.61%
MSCI EAFE ($ basis) / 1.09% / 5.39% / 1.10% / 10.44%
MSCI EAFE (local) / 0.44% / 3.02% / -0.50% / 8.50%
UK (FTSE) / 2.75% / 4.14% / 0.46% / 5.44%
Germany (DAX) / 0.50% / 3.19% / 0.53% / 21.35%
Japan (NIKKEI) / -3.53% / -4.09% / -12.20% / 3.20%
MSCI Emerging Markets ($ basis) / 0.06% / 6.27% / -0.74% / -4.25%
Barclays Aggregate / 0.84% / 1.21% / 2.70% / -0.26%

All market data as of the end ofApril2014. Quoted index returns are based on month end index prices (in local currency except where noted) and do not include dividends.

U.S. ECONOMIC DATA
April / Prior Month / Beginning of Year / Prior Year
10 year Treasury Yield / 2.69% / 2.72% / 3.03% / 1.67%
Gold (London pm fixing per ounce in dollars) / 1,289 / 1,292 / 1,202 / 1,469
Oil ($ per barrel) / 99.74 / 101.58 / 98.42 / 93.46
VIX Index / 13.4 / 13.9 / 13.7 / 13.5

All economic and market data as of the end of April2014

Eye on the Market Express

The Federal Open Market Committee (FOMC) concluded its April monetary policy meeting by leaving the benchmark Federal Funds rate unchanged in a range of 0-0.25% while cutting the level of asset purchases of Treasuries and asset-backed securities by $10 billion to $45 billion per month, its fourth consecutive $10 billion per month drop in the rate of asset purchases. The Fed’s announcement came just hours after the release of disappointing first quarter GDP numbers. The U.S. economy grew by only 0.1% during the first three months of the year. Due to the severe winter most of the country experienced, analysts had expected growth to slow from 2.6% in the final quarter of 2013 to 1.0%. The decline in GDP growth was attributed to declines in business equipment investment, residential home constructions, U.S. exports, and government spending. Additionally, companies increased their inventories at slower rates than in the previous quarter. Despite the weak GDP figure, in the press release following the meeting, the FOMC stated that “Information received since the [FOMC] met in March indicates that growth in economic activity has picked up recently, after having slowed sharply during the winter in part because of adverse weather conditions.” The FOMC’s press release stated that the labor market“showed further improvement” and that consumer spending “appears to be rising more quickly.” The FOMC’s decision to continue tapering its asset purchases at the present rate was unanimous. The FOMC also reaffirmed it will most likely “maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends, especially if projected inflation continues to run below the [FOMC]’s 2 percent longer-run goal.”

U.S. equity markets were mixed during April with the benchmark S&P 500 rising by 0.6%, bringing its year-to-date gain to 1.9%. The tech heavy NASDAQ fell by 2% and the small cap Russell 2000 Index fell by almost 4%. Drilling down into S&P 500 sectors, the strongest performing sectors in April were energy (+5.1%), utilities (+4.2%), and real estate (+4.2%). The weakest sectors were financial services (-2.4%), consumer cyclical (-2.0%), and healthcare (-0.4%). Economic data reported during the month was generally mixed, as it has been for much of the year. The employment report for April showed that nonfarm payrolls rose by 288,000, which beat expectations of a rise of 219,000 jobs, and job growth was broad based across sectors. The headline unemployment rate dropped from 6.7%, to 6.3% in April, the lowest level in 5.5 years. The broader U-6 unemployment rate, which includes underemployed and discouraged workers, fell to 12.3% from 12.7% in April, and the number of long term unemployed fell by nearly 300,000 to 3.5 million.Unfortunately the decline in the unemployment rate is partially due to a decline in labor force participation. 806,000 Americans dropped out of the labor force in April, bringing the labor force participation rate from 63.2% in March to 62.8%. In the housing market, new home and existing homes sales have slowed. New home sales dropped by 14.5% in March, and existing home annual sales pace declined 0.2% to 4.59 million homes. Home prices remained unchanged in February according to the S&P/Case-Shiller 20-city composite index, and they are still 20% below the 2006 peak.

International developed markets were mostly higher with the benchmark MSCI EAFE Index rising by 1.1% during April in dollar terms, bringing its year-to-date return up to 1.1%. European bourses delivered positive performance in April with the UK FTSE outperforming the EAFE and the German DAX index underperforming the EAFE. The FTSE gained 2.7% and the DAX gained 0.5%. The positive European market performance came on generally positive economic news for the month, as the British reported 0.8% GDP growth in the first quarter and Germany’s unemployment fell by 25,000, more than twice as much as forecast, in April. At the beginning of April, the European Central Bank (the ECB) announced that it would maintain its benchmark interest rate at 0.25%. However, inflation in the currency block fell to 0.5% in March, a five year low. This is the third month in a row that inflation has fallen in the Eurozone, and the sixth month that it has been in what ECB President Mario Draghi refers to as the “danger zone” below 1%. Policy-makers fear that too low inflation or even deflation could harm the nascent Eurozone recovery. In his press conference following the ECB’s meeting Draghi stated that the ECB is considering implementing some form of quantitative easing, and that the Governing Council was unanimous in its willingness to implement unconventional monetary policy if the current low inflation rates persist for too long. The Japanese Nikkei Index continued its downward trend for the year and fell by 3.5% in April. On April 1, Japan implanted its first sales tax increase in seventeen years to combat the country’s large outstanding debt. Japan has the largest debt to GDP ratio in the world. Emerging markets underperformed for the month, and were more or less flat with the MSCI Emerging Markets index returning 0.1% in dollar terms. China reported that its economy grew by 1.4 percent (7.4% annualized) for the first quarter of this year, its slowest pace in eighteen months, but only slightly below the government’s 7.5% target rate. Russia was also a drag on emerging market performance. Its stock market index, dropped 4.6% in April based on concerns over Ukraine and increased internet censorship.

Fixed income markets were broadly positive in March. The benchmark Barclays Aggregate Bond Index (the Agg) rose by 0.84%, which brings its year to date performance up to 2.70%. For the month, the yield on 10-year Treasury note fell by 3 basis points to 2.69%. In general, lower credit quality fixed income, such as high yield and loans, underperformed the Agg, and higher credit quality, such as TIPS and municipals outperformed the Agg. Looking at international bond markets, yields on bonds from Europe’s troubled periphery countries continued to fall throughout April on hopes that the ECB may begin to utilize unconventional monetary policy to increase inflation and stimulate growth. As an example, the yield on Spanish 10-year bonds ended the month only 33 basis points higher than the 10-year US Treasury.

Commodity markets rallied again in April with the Thomson-Reuters Jeffries CRB Index rising by 1.8%, extending its year to date gain to 10.5%. After a poor showing in 2013, commodities have been one of the best performing asset classes of 2014. However not all commodities performed well in April, with both gold and crude oil declining slightly for the month. Gold prices had been rising throughout April on concerns over the US economy and the escalating conflict in Ukraine, but lost some of those gains towards the end of the month in anticipation of the Fed’s continued reduction in bond buying. Coffee extended its gains from March and rose by 16.7% for the month, bringing its year to date to 77.6%. Coffee’s huge rise has been attributed to drought in Brazil, the source of one third of the world’s coffee.

True Wealth Advisors Group

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IMPORTANT DISCLOSURES:

True Wealth Advisors Group, Inc. is separate from, and unrelated to SII Investments, Inc. (SII), and all other named companies.

The Market Update has been prepared by National Planning Holdings, Inc. (NPH), for use by its affiliated broker-dealers which includes SII Investments, Inc. This Update is forinformational purposes only – any mention of any security, index, or corporation is not meant as a solicitation to buy or sell any security, or any investment related to any corporation mentioned in this Update.

Securities offered through SII Investments, Inc., Member FINRA/SIPC.

Opinions, Forecasts and Statistical Information. All expressions of opinions and forecasts expressed in this Market Update are based on assumptions we feel are reasonable. However, these opinions and forecasts may or may not actually come to pass. This information is subject to change at any time, based on market or other conditions and should not be construed as a recommendation. Undue reliance should not be placed on forward-looking statements because, by their nature, they are subject to known and unknown risks and uncertainties. Past performance does not guarantee future results. NPH, its affiliates, officers, directors or their employees may in the normal course of business, have a position in any securities mentioned in this report. This Update also contains statistical information related to the performance of certain indices which are presented for illustrative purposes only as factors that may have an impact on today’s economic environments. Keep in mind individuals cannot invest directly in any index, and index performance does not include transaction cost or other fees, which will affect actual investment performance. Individual investor’s results will vary.

Risks of Investing. Both stock and bond investing are subject to risks, including the possibility you may lose money andinclude credit, interest rate and inflation risk. Stock or bond market investing may not be suitable for all investors. Certain investments including international investments, global or emerging markets, securities of small to middle sized companies, companies with low quality industry ratings, commodities, foreign currencies are subject to a higher degree of risk than more conservative investments and thus may only be suitable for the more speculative investor. International investments are subject to special risks, such as political unrest, economic instability, and currency fluctuations.

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Affiliate Disclosure. Please note that NPH and SII Investments, Inc. are affiliates of Jackson National Life Insurance Company and Curian Capital LLC.

INDEX / DESCRIPTION
10 Year Treasury / The closing yield on 10-year Treasury notes calculated on a daily basis. Data sourced from the Federal Reserve.
Barclays Capital Aggregate Bond Index / A broad based index used to represent performance of investment grade bonds traded in the United States. The index includes Treasury securities, government related and corporate securities, mortgage-backed securities and asset-backed securities.
Barclays Municipal Bond Index / An unmanaged index considered representative of the tax-exempt bond market.
Conference Board Consumer Confidence / An indicator used to measure consumer confidence in the economy produced by the Conference Board on a monthly basis based upon a survey of 5,000 households.
DAX (Germany) / A total return index of 30 selected German blue chip stocks traded on the Frankfurt Stock Exchange.
Dow Jones Industrial Average / An unmanaged index of 30 widely held securities.
Federal Funds Rate / Targeted interest rate at which depository institutions lend to each other overnight. The rate is targeted by the Federal Open Market Committee (FOMC).
FTSE (UK) / A capitalization-weighted index of the 100 most highly capitalized companies traded on the London Stock Exchange.
FTSE NAREIT All REITs Index / Market capitalization weighted index that includes all tax-qualified REITs listed on the New York Stock Exchange.
GDP / A measure of broad economic output in the United States produced by the US Bureau of Economic Analysis on a quarterly basis with revisions made monthly.
Gold / Value of gold based upon the afternoon fix (15:00 GMT) in London each afternoon.
ISM / A measure of manufacturing activity reported by the Institute of Supply Management each month. A reading over 50 signifies growth in manufacturing during the month.
MSCI EAFE / A widely accepted benchmark of foreign stocks. It comprises 21 MSCI country indices, representing the developed markets outside North America: Europe, Australasia and the Far East.
MSCI Emerging Markets / A widely accepted benchmark of emerging markets stocks. It is a float-adjusted market capitalization index designed to measure equity market performance in the global emerging markets.
NASDAQ / An unmanaged index of all stocks traded on the NASDAQ over-the-counter market.
Nikkei (Japan) / An unmanaged price-weighted index of 225 widely held stocks listed in Japan.
Oil / Closing value of light, sweet crude oil futures in the near month.
Retail Sales / A measure of retail sales compiled monthly by the US Department of Commerce
Russell 2000 / An unmanaged index of small cap securities.
S & P 500 / An unmanaged index of 500 widely held stocks.
Shanghai Composite / Index of all listed (A and B share class) stocks traded on the Shanghai Stock Exchange.
Thomson-Reuters Jefferies CRB Index / A widely accepted benchmark of commodity prices. The index is designed to provide a representation of long-only broadly diversified investment in commodities.
Unemployment / A measure of unemployment compiled monthly by the US Bureau of Labor Statistics.
VIX Index / Measure of market expectations of near-term volatility based on S&P 500 stock option prices.

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