21 of the last 25 Decembers have produced a positive total return for the S&P 500. The average December performance during this 25 year period is a gain of +2.0%, the best of any month.
Monthly Archives: November 2015
The “Heat Map”
Most of the time, the U.S. stock market looks to 3 factors (call them the “pillars” which support the stock market) to support its upward trend – let’s grade each of the pillars.
CONSUMER SPENDING: This grade equals B+ (very favorable). Gasoline prices continue to drop. Imports have become cheaper due to the strength of the U.S. dollar. Low interest rates will help real estate, an important component for the consumers’ wealth effect. These trends put more money in the pockets of Americans coming into the all-important Holiday shopping season.
THE FED AND ITS POLICIES: We 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. The FED’s minutes released last week suggest the Fed will “pause and reassess” after the first move. Investors had been uncertain about whether a hike would be one-and-done or the start of a series of stepped increases, as has been the Fed’s history, says Kevin Kelly, chief investment officer of Recon Capital Partners.
The next big milestone is the Fed (Open Market Committee) meeting which will occur December 16 – 17.
BUSINESS PROFITABILITY: This factor’s grade is a C (average).
OTHER CONCERNS: The “Heat Map” is indicating the U.S. stock market is in OK shape ASSUMING no international crisis. On a scale of 1 to 10 with 10 being the highest level of crisis, we rate these international risks collectively as a 6. This is unchanged from last. These risks deserve our ongoing attention.
The Numbers
Last week, U.S. Stocks, Foreign Stocks and Bonds all increased. During the last 12 months, STOCKS outperformed BONDS.
|
Returns through 11-19-2015 |
1-week |
Y-T-D |
1-Year |
3-Years |
5-Years |
10-Years |
|
Bonds- BarCap Aggregate Index |
.1 |
.7 |
1.5 |
1.5 |
3.1 |
4.6 |
|
US Stocks-Standard & Poor’s 500 |
3.3 |
3.4 |
3.9 |
17.0 |
14.1 |
7.5 |
|
Foreign Stocks- MS EAFE Developed Countries |
2.5 |
1.3 |
-.9 |
8.1 |
4.9 |
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”
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, due to the Thanksgiving Holiday, the show will be pre-recorded.
No calls will be taken this week due to the pre-recording. This show will be broadcast at the regular time. Questions may be submitted early through www.yourfinancialchoices.com by clicking Contact Laurie. 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– 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.
Motivational Quote of the Week
“People often say that motivation doesn’t last. Well, neither does bathing. That’s why we recommend it daily.”
– Zig Ziglar
The Markets This Week
The Federal Reserve signaled it is “good-to-go” for an interest-rate increase next month. Investors are OK with that and sent the stock market roaring to its best weekly finish this year, up over 3%.
Mounting certainty that the Fed will finally raise rates next month, the first time in nearly a decade, bolstered investor confidence. A hike would indicate the Fed believes the economy is showing enough strength to justify monetary tightening.
More importantly, there’s a wide-ranging conviction now that the central bank will move slowly next year. U.S. stocks also received support from across the Atlantic, as European equities rose 3.3% on dovish rate talk Friday from European Central Bank President Mario Draghi that the central bank “won’t hesitate” to expand its monetary stimulus.
The Dow Jones Industrial Average jumped 3.4%, or 579 points, last week to 17,823.81, while the Standard & Poor’s 500 index gained 66 to 2089.17. The Nasdaq Composite advanced 3.6% to 5104.92.
After many weeks flip-flopping over whether a rate hike is a good thing for stocks, investors opted to celebrate what is typically a key market aspiration: certainty. Fed speakers last week were generally clear that a hike of the benchmark federal-funds rate is in the cards at the next meeting of the Federal Open Market Committee, Dec. 15-16. But Wednesday’s release of minutes of the previous FOMC meeting surprised equity markets and made the bulls happy.
Michael Arone, chief investment strategist at State Street Global Advisors, says the market took that to mean that “the Fed will be slow and gradual” when it comes to future tightening. “It was a relief to the fears of continual hikes,” he adds.
Raymond James chief investment strategist Jeffrey Saut says the market will be spurred on during the rest of 2015 by “performance anxiety,” that is, underperforming money managers trying to catch up and boost their annual return by buying during a traditionally bullish season for equities. History shows “it’s tough to put the equity market down in December,’ he notes.
(Source: Barrons Online)
Heads Up!
What is the impact of the terrorist attacks in Paris? I do not know for sure. So many variables exist, the outcome is unknowable at this time.
But, we believe the implications will be vast, far reaching, and BIG.
FOR EXAMPLE, we recall attending an investment conference last decade during which a futurist (one who forecasts what the future holds based upon his or her insights) predicted a number of developments – one of which was the demise of the European Union as a result of immigration and racial tensions. I think we can see more clearly how that is a possibility.
Here in the United States the issue of States’ Rights (one of the causes of the Civil War) will come front and center in the debate over the Syrian refugees’ settlement within America. The topic of Syrian refugees will enter into the Presidential debates in the coming months.
And, France may invoke Article 5 of NATO (North Atlantic Treaty Organization) which, in effect, is a declaration of war by NATO on ISIL. Is it possible? YES. It was invoked after America was attacked on 9-11. Click here for a comprehensive description of the issues surrounding Article 5.
The “Heat Map”
Most of the time, the U.S. stock market looks to 3 factors (call them the “pillars” which support the stock market) to support its upward trend – let’s grade each of the pillars.
CONSUMER SPENDING: This grade equals B+ (very favorable). Gasoline prices continue to drop. Imports have become cheaper due to the strength of the U.S. dollar. Low interest rates will help real estate, an important component for the consumers’ wealth effect. These trends put more money in the pockets of Americans coming into the all-important Holiday shopping season.
THE FED AND ITS POLICIES: We 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.
The next big milestone is the Fed (Open Market Committee) meeting which will occur December 16 – 17.
BUSINESS PROFITABILITY: This factor’s grade is a C (average).
OTHER CONCERNS: The “Heat Map” is indicating the U.S. stock market is in OK shape ASSUMING no international crisis. On a scale of 1 to 10 with 10 being the highest level of crisis, we rate these international risks collectively as a 6- an increase to reflect the uncertainty arising from the response to the ISIS attacks in France. These risks deserve our ongoing attention.
The Numbers
Last week, Bonds increased. US Stocks and Foreign Stocks declined. During the last 12 months, BONDS outperformed STOCKS.
|
Returns through 11-13-2015 |
1-week |
Y-T-D |
1-Year |
3-Years |
5-Years |
10-Years |
|
Bonds- BarCap Aggregate Index |
.2 |
.5 |
1.4 |
1.5 |
3.0 |
4.7 |
|
US Stocks-Standard & Poor’s 500 |
-3.6 |
.1 |
1.3 |
16.2 |
13.4 |
7.3 |
|
Foreign Stocks- MS EAFE Developed Countries |
-1.7 |
-1.2 |
-3.3 |
7.4 |
3.9 |
3.6 |
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 hosted by Valley National’s Laurie Siebert CPA, CFP®, AEP®. This week, Laurie and guest Steve Stelzman from The Mortgage Company will discuss: “Qualifying for a mortgage and restoring your credit.”
Laurie and Steve will take your calls on these topics and other inquiries this week. This show will be broadcast at the regular time. Questions may be submitted early through www.yourfinancialchoices.com by clicking Contact Laurie. 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– 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.