Monthly Archives: April 2014

The “Heat Map”

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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 have
downgraded this factor to a B- (above average). We
have reached the end of the first quarter and it showed little sign of the
acceleration many are expecting.  We can
expect more stock market volatility from lower-than-expected first quarter
earnings reports, out in April and May. One well known analyst issued a consensus
first-quarter earnings-per-share growth projections for S&P 500 companies declining
to 1% to 2% from 6% to 7% as the year began. The severe winter weather that
gripped much of the U.S. in January and February may yet be seen again in many
first-quarter reports.  The question
remains whether the warming weather will bring the economic acceleration stock
market analysts expected to occur starting in January.

The Economy

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In a light reporting week, economic data
last week indicated an improving jobs market, an upwardly revised Gross
Domestic Product, personal spending bouncing back, and personal incomes rising
along with durable goods orders.

The upcoming week is very busy with the
all-important jobs report being issued on Friday.


The Numbers

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Last week, Foreign Stocks and Bonds
increased but U.S. Stocks declined.  During
the last 12 months, STOCKS outperformed BONDS.  

Returns through 3-28-2014

1-week

Y-T-D

1-Year

3-Years

5-Years

10-Years

Bonds- BarCap Aggregate Index

  .3

 1.9

  -.1

  4.0

 4.9

4.5

US Stocks-Standard & Poor’s 500

 -.4

 1.0

20.9

14.8

20.4

7.5

Foreign Stocks- MS EAFE Developed Countries

 1.9

  -.6

13.7

  4.0

11.9

3.8

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”

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“Your Financial Choices”  The show airs on WDIY Wednesday evenings, from 6-7 p.m. The show is hosted by Valley National’s Laurie Siebert CPA, CFP®, AEP®.  This week Laurie and her guest, Eileen Budd from Budd Insurance Agency, will discuss: “Tips on insurance coverage.” 

Laurie and Eileen will take your calls on these topics and other inquiries this week. 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. 

Personal Notes

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Finally, winter is
over!  How do I know for sure?  Baseball starts this week.

I am a big fan of
the Pittsburgh Pirates.  Last year the
Pirates had their first winning season in 21 years, made the play-offs, and
came very close to defeating the St Louis Cardinals in the divisional match-up.
I have high hopes of another winning season although my hopes have been
tempered because Pittsburgh lost 3 veteran players and one pitching ace to the
free agency market.  I suspect the
Pirates have a very good starting pitching rotation and one of the best bull
pens in the Major League.  Pitching could
make the difference!

The Markets This Week

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It was a good week to be out of U.S. stocks as broad market indexes here gave up ground. That was in marked contrast to major markets around the world, which posted solid rises. After American stocks smoked foreign equities last year, this was a rare week of role reversal.

In sympathy with overseas equities, the largest U.S. companies—which tend to get a good chunk of their sales from international sources—did better. Small-company stocks, typically more domestically focused, fell sharply. Among them, technology and biotech did especially poorly.

Don’t mistake this for the return of the “risk off” trade, since even the MSCI Emerging Markets index—a beaten-down but riskier set of stocks—rose more than 3% last week. World equities, not including the U.S., were up 1.8%; German stocks rose nearly 3%, Japan was up 1.5%.

On these shores, the Standard & Poor’s 500 index dropped nine points to 1857.62. The Nasdaq Composite index lost 121 points, or 2.8%, to 4155.76. The Russell 2000 small-company index dropped 42 points, or 3.5%, to 1151.81. Only the Dow Jones Industrial Average gained, up 0.1%, 20 points, to 16,323.06.

With the quarter about to end, the S&P 500 is essentially flat, a far cry from the 10% rise in the same year-ago period. The bond market continues to confound. Though many have expected interest rates to rise since the Fed announced the tapering in mid-December, bond prices are higher and rates lower. The long end of the Treasury yield curve has flattened a little bit, suggesting bond investors don’t see much in the way of U.S. economic growth. Maybe that’s why some have put their money to work overseas.  (Barrons Online).