Two gauges tracking home sales surged last week. New-home sales rose to the highest rate since January 2008. Also, an index tracking contract signings of previously owned homes hit its highest level in a decade. Job growth and fear of higher rents and mortgage rates may be spurring purchases. Momentum will support a further expansion of sales this summer.
An improving real estate market will support faster growth in the U.S. economy.
(Source, in part: Barrons Online)
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 is A- (very favorable).
THE FED AND ITS POLICIES: This factor is rated B (favorable). The U.S. economy can handle higher rates as long as the pace of future interest rate increases is slow. Fed Chair Janet Yellen made clear in her press conference after the December meeting that the path higher would be “gradual”.
The Fed’s plan to gradually raise rates in the coming years won’t derail the economy and brings some certainty to the market, says Morningstar’s Bob Johnson.
BUSINESS PROFITABILITY: This factor’s grade is a C- (below average). The first quarter corporate-earnings reports weren’t as bad as anticipated but certainly nothing to write home about.
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 3. While decreased, these risks still deserve our ongoing attention.
Last week, U.S. Stocks and Foreign Stocks all increased. During the last 12 months, BONDS outperformed STOCKS.
|
Returns through 5-27-2016 |
1-week |
Y-T-D |
1-Year |
3-Years |
5-Years |
10-Years |
|
Bonds- BarCap Aggregate Index |
.2 |
3.4 |
3.2 |
2.7 |
3.3 |
4.9 |
|
US Stocks-Standard & Poor’s 500 |
2.3 |
3.7 |
1.1 |
10.7 |
11.9 |
7.3 |
|
Foreign Stocks- MS EAFE Developed Countries |
2.7 |
-.9 |
-9.5 |
1.6 |
2.5 |
1.9 |
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.
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 host Loretta Tubiello-Harr CPA will discuss: “Student loans and paying them back”
Laurie and Loretta will take your calls on these topics and other inquiries this week. Questions may be submitted early through www.yourfinancialchoices.com by clicking Contact Laurie. This show will be broadcast at the regular time. 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.
“Champions keep playing until they get it right.” – Billie Jean King
Buoyed by strong economic data, stocks rose more than 2% on the week, but investors had to wait until late Friday to be sure they’d have a relaxing long weekend.
A perfectly boring week was at risk of becoming exciting on Friday when Federal Reserve Chair Janet Yellen sat down with a Harvard professor for a cozy, low-stress “conversation.” Nothing involving the Fed is low-stress these days, given that Wall Street is increasingly torn over whether it will raise interest rates at its June 14-15 meeting. Traders listened closely, letting their Lexuses idle in the garage before racing to the Hamptons.
They needn’t have waited. Yellen only said that a rate hike will probably be appropriate “in the coming months.”
Few investors hung around once they heard that; Friday’s trading volume was the lowest since March. The Dow Jones Industrial Average rose 372 points on the week, or 2.1%, to 17,873.22. The Standard & Poor’s 500 index rose 47 points to 2099.06. The Nasdaq Composite rose 164 points, or 3.4%, to 4933.50.
Oil prices rose on the week, with crude futures briefly jumping above $50 for the first time in seven months before ending the week at $49.33.
Durable goods orders also jumped 3.4% in April, the Commerce Department said, and the Atlanta Fed revised second-quarter GDP growth expectations to 2.9% from its prior estimate of 2.5%. Better economic data raise the chances of a June Fed hike—still considered unlikely—but also boosts the chance that the economy would grow despite it.
Investors remain lukewarm on stocks, which still trade at above-average valuations despite weak quarterly earnings. The American Association of Individual Investors sentiment survey indicated that only 17.8% of investors are bullish, the lowest level since 2005. That’s not to say they’re bearish either. It’s more like they’re aggressively neutral, like a man wearing beige Gap khakis and driving a Volvo. The number of investors who said they were neutral rose 6.3 percentage points last week to 52.9%, the highest level since 2003.
That could actually be good news. “Bull markets tend to die with at least some degree of optimism, but what we are seeing today is apathy,” writes Keith Lerner, chief market strategist at SunTrust, adding that “markets are unlikely to have a major decline with so many investors already positioned for one.”
(Source: Barrons Online)
The pace of drilling new oil wells in the U.S. has slowed dramatically due to lower oil prices and the perceived risk that oil prices may crash again. The U.S. rig count (the number of drilling rigs in use in the U.S.) has dropped from 1,811 on 1/1/2015 to 406 rigs on Friday. That is a drop of 78%.
Many oil experts feel the reason for the oil price crash in 2014 and 2015 stems from new U.S. production this decade. The new U.S. production resulted in too much oil production worldwide. Now, with the downturn in drilling activity in the U.S. it is no wonder why oil prices have been trending up in 2016 (Source: Baker Hughes).
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 is A- (very favorable).
THE FED AND ITS POLICIES: This factor is rated B (favorable). The U.S. economy can handle higher rates as long as the pace of future interest rate increases is slow. Fed Chair Janet Yellen made clear in her press conference after the December meeting that the path higher would be “gradual”.
The Fed’s plan to gradually raise rates in the coming years won’t derail the economy and brings some certainty to the market, says Morningstar’s Bob Johnson.
BUSINESS PROFITABILITY: This factor’s grade is a C- (below average). So far, first quarter corporate-earnings reports weren’t as bad as anticipated but certainly nothing to write home about.
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 3. While decreased, these risks still deserve our ongoing attention.
Last week, U.S. Stocks and Foreign Stocks declined. During the last 12 months, BONDS outperformed STOCKS.
|
Returns through 5-13-2016 |
1-week |
Y-T-D |
1-Year |
3-Years |
5-Years |
10-Years |
|
Bonds- BarCap Aggregate Index |
.3 |
3.9 |
4.2 |
2.7 |
3.6 |
5.1 |
|
US Stocks-Standard & Poor’s 500 |
-.4 |
1.0 |
-.3 |
10.1 |
11.3 |
7.0 |
|
Foreign Stocks- MS EAFE Developed Countries |
-.3 |
-3.5 |
-13.4 |
.1 |
1.8 |
1.1 |
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.
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 host Attorney Charles Stopp will discuss: “Real estate topics including conservation, titling, transferring and estate implications”
Laurie and Attorney Stopp will take your calls on these topics and other inquiries this week. Questions may be submitted early through www.yourfinancialchoices.com by clicking Contact Laurie. This show will be broadcast at the regular time. 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.