Last week,U.S. Stocks and Foreign Stocks and Bonds all advanced. During the last 12 months, STOCKS outperformed BONDS.
Returns through 5-30-2014
1-week
Y-T-D
1-Year
3-Years
5-Years
10-Years
Bonds- BarCap Aggregate Index
.4
3.8
2.7
3.6
4.9
5.0
US Stocks-Standard & Poor’s 500
1.2
4.9
20.4
15.2
18.4
7.8
Foreign Stocks- MS EAFE Developed Countries
.9
2.1
14.9
4.1
8.2
4.2
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.
You may have received unsolicited mail from Stansberry & Associates claiming the passage of H.R. 2847 will cause the U.S. dollar to collapse as of July 1, 2014. I believe the mailing to be a “sales pitch” attempting to entice the recipient to subscribe to their publication or purchase their book. It is a panic piece that should be ignored. For more information about this, click here.
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 have graded this factor B (above average) based upon the
increase in retail sales as reported in recent economic reports.
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 rate this factor B- (slightly above average).
Last
weeks revised first quarter 2014 Gross Domestic Product number confirmed the
U.S. economy contracted at -1.0%, revised from an original reading of
.1%. This was the first time US GDP slipped into negative territory on a
quarterly basis since 2011. Many economists believe the stall occurred
due to the brutally harsh winter. The remainder of the year will dictate
if they were correct. Other releases included US Personal Income which
increased at .30% in April over the prior month and Services Purchasing Managers
Index increased to 58.40 in May from 55 in April. For housing data
releases, Pending Home Sales month-over-month rose .4% and the House Price
Index rose .70%.
“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 will discuss: “Frequently Asked
Questions about Financial Issues”
Laurie will take your calls on this topic
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.
The weather this last weekend – great again. Two weekends in a row. And, the long range weather forecast for the
upcoming week is very promising. That
would make 3 consecutive beautiful weekends in a row. Are we making up for the really tough
winter? NO, not yet. But, my family and I are certainly enjoying
the great weather.
For
a few days at least, the stock market resembled its 2013 self, setting high
after high last week. Share prices rose smartly, over 1%, and the Standard
& Poor’s 500 index saw record closes in three of last week’s four trading
days, while the Dow Jones Industrial Average also had its all-time best close
Friday.
The
surge came amid thin volumes in a holiday-shortened week. Despite poor
first-quarter GDP numbers — which investors blamed on frigid weather — most of
the economic data, such as falling jobless claims, were positive.
Also
boosting stocks and spirits was a lack of geopolitical tension; an M&A
battle in the food industry; a recovery in small-cap stocks; and expectations
that the European Central Bank will do some monetary easing next week, says
Michael Matousek, head trader at U.S. Global Investors. Even the $2 billion
offer for the Los Angeles Clippers by former Microsoft chief Steve Ballmer
probably got animal spirits moving, he adds.
On
Thursday, first-quarter gross domestic product was revised down to an
annualized negative 1%, or contraction, from a positive 0.1%, weaker than
expected, though much of the revision came from lower inventories. Investors
mostly ignored GDP data, says Tom Carter, a trader with JonesTrading
Institutional Services. With little to dampen the mood, investors found it
tough to sit on the sidelines watching stocks rise day after day, and the
“pain trade was up,” he adds.
Jobless
claims for the week ending May 24 fell 27,000 to 300,000, below the consensus.
That, adds Mark Luschini, chief market strategist at Janney Montgomery Scott,
measures a more recent past than GDP and points to improving labor and housing
markets. It’s more indicative about the second-half, which should see rising
economic activity and a good climate for profit growth, says the bullish
strategist, who notes that outside the stock market, investors still face a
lack of better-yielding alternatives.
Last
week, the Dow rose 111 points, 0.7% to 16,717.17. The S&P 500 closed at
1923.57, up 23 points. The Nasdaq Composite index advanced 1.4%, or 57, to
4242.62.
This
week promises new data with “more gravity,” says Carter, and perhaps
a truer indication of market sentiment. Investors will most likely focus on two
figures from the Institute for Supply Management that could give a more
up-to-date picture of the economy than GDP did: the ISM May manufacturing
purchasing managers index on Monday, and the nonmanufacturing PMI on Wednesday (Barrons Online).
