Real estate values have bounced back providing Americans with more
purchasing power. That is an important
development which supports a stronger economy ahead.
According to the Federal Reserve Bank, the value of Americans’ equity in their real estate peaked at $10.3 trillion as of 12/31/07, fell to
$6.3 trillion by 12/31/11, and
then climbed back to $10.0 trillion
as of 12/31/13.
Most
of the time the U.S. stock market looks to 3 factors (call them the “pillars”
that support the stock market) to support its upward trend – let’s grade each
of the pillars.
CONSUMER SPENDING: I grade this factor a C- (below average).
THE FED AND ITS POLICIES: I continue to grade this factor an A+ (extremely favorable) because the
FED cannot do much more than it is doing to support the stock market and asset
prices.
BUSINESS PROFITABILITY: I continue to grade this factor an A (very favorable).
NOTE: no change from prior week.
Positive
economic reports last week indicated U.S. factory output rose 8%, building
permits jumped 7.7%, 29 of 30 large banks passed their stress tests,
Philadelphia area showed very strong economic strength, and jobs continued to
strengthen.
Some
negative data was reported: existing
home sales were down in February (weather?), housing starts sunk (weather?),
and National Assn of Home Builders sentiment declined (weather?).
In
summary, manufacturers have built up inventories hoping consumers will spend abnormally
high amounts in the spring. We will
monitor how well consumers spend and report to you in upcoming issues.
Last week, U.S. Stocks and Foreign Stocks increased but Bonds declined. During the last 12 months, STOCKS outperformed BONDS.
|
Returns through 3-21-2014 |
1-week |
Y-T-D |
1-Year |
3-Years |
5-Years |
10-Years |
|
Bonds- BarCap Aggregate Index |
-.4 |
1.6 |
-.1 |
3.5 |
4.8 |
4.4 |
|
US Stocks-Standard & Poor’s 500 |
1.4 |
1.5 |
23.3 |
15.3 |
22.0 |
7.5 |
|
Foreign Stocks- MS EAFE Developed Countries |
.1 |
-2.5 |
10.8 |
3.9 |
12.1 |
3.5 |
Source:
Morningstar Workstation. Past performance is no guarantee of future
results. Indices are unmanaged and cannot be invested into directly.
Three, five and ten year returns are annualized excluding dividends.
“Your
Financial Choices” The
show airs on WDIY Wednesday evenings, from 6-7 p.m. The show is normally hosted
by Valley National’s Laurie Siebert CPA, CFP®, AEP®. This week guest host Rod Young CPA, CFP® will discuss: “Real estate considerations –
homeowner, renter, landlord.”
WDIY is broadcast on FM
88.1 for reception in most of the Lehigh Valley; and, it is broadcast on FM
93.9 in the Easton and Phillipsburg area; and, it is broadcast on FM 93.7 in
the Fogelsville and Macungie area – or listen to it online from anywhere on the
internet. For more information, including how to listen to the show
online, check the show’s website www.yourfinancialchoices.com and
visit www.wdiy.org.
“If
you do what you always did, you will get what you always got.” – Anonymous
One of my personal goals is to do what I can to
attract local, Lehigh Valley based talent and keep that talent in the Lehigh
Valley.
With that objective in mind, we are actively seeking
to hire a select group of entry level professionals from top university
programs and integrate them into Valley National’s expanding “one-stop”
financial services business model. We are looking specifically for individuals
who have a strong desire to stay in the Lehigh Valley area and establish a
long-term career in financial services.
This Entry Level Professional (ELP) Program allows
for new associates to be immediately integrated into the company’s business
model giving them the skills necessary to serve Valley National’s clients and
grow along with Valley National’s client base. The program includes training,
education and practice of foundations in financial planning, tax preparation,
and investment management.
Last year the company hired two graduates from local
universities into the program: Laura Morganelli, from DeSales University and
Doug Marcincin, from Lehigh University. Both Laura and Doug have since been
integrated into Valley National’s Bethlehem office as Associates.
Applicants
can find more details about the program responsibilities, requirements and
benefits, as well as instructions to apply online at www.valleynationalgroup.com/join-our-team.
One bad day of Fed-induced fretting about interest rates didn’t spoil the whole week, and by Friday the broad market had closed up 1.4%. Fading from view—at least for now—is the ratcheting up of sanctions and rancor between the West and Russia over the illegal absorption of Crimea.
Comments from the Federal Open Market Committee (FOMC) and chair Janet Yellen on Wednesday suggested the Federal Reserve might raise its funds rate earlier than expected and shook up both stocks and bonds temporarily.
Despite that, on the week the Dow Jones Industrial Average still rose 237 points or 1.5% to 16,302.77. The Standard & Poor’s 500 index rose 25 point to 1866.52. On Friday the S&P reached a new intraday high of 1883.97 before fading. The Nasdaq Composite index added 31 points, or 0.7%, to 4276.79.
In a policy statement Wednesday, the FOMC hiked guidance for the federal funds rate to 1% at the end of 2015 and 2.25% at 2016’s end, compared to the previous 0.75% to 1.75%, respectively; it’s currently 0-0.25%. The Fed repeated that the funds rate will remain near zero for a “considerable time” after its bond-buying program ends. However, at the press conference afterwards, Yellen was asked to clarify the timing and said it “probably means something on the order of around six months.”
She shocked the market by putting a number on it—six months, notes Frederic Dickson, chief investment strategist at D.A. Davidson. Investors are still mulling whether that was just a rookie mistake or perhaps an inadvertent disclosure of FOMC thinking. Investors know rates are going up, and probably in 2015, yet the subject will likely remain a trip wire for market volatility in coming months (Barrons Online).