Are the markets preparing for March Madness?
By Ken Mahoney
www.thesmartinvestors.com
It’s the time of the year when we get our ‘brackets’ and figure out who will win the NCAA tournament. It is an exciting month for college basketball.
The markets have been very tame lately with low volatility. Perhaps the markets volatility will pick up and join the madness?
U.S stock indexes managed a second week of gains on Friday after wrapping up a trading session that was nearly stuck in neutral from mixed reports that showed retail sales rising, but consumer sentiment declining. The abundance of conflicting data, and the market’s reaction to it, is a reminder of what a news-sensitive environment we’re in right now. With nothing significant enough to move the indices decisively in either direction, the equities market is still trying to find its way.
Even as key indices advanced last week, commodities pulled lower. Gold futures fell 2.4% to just over $1,100 an ounce, and crude oil prices dropped to just above $81 a barrel, posting a slight loss for the week. The dollar also lost some steam on Friday, while Treasurys were mixed.
Amidst so much uncertainty, we are wise to take a longer view of the economy, ignoring the minute-to-minute volatility that can take you from depression to euphoria before breakfast. The vast majority of economists are calling for a long, slow recovery – but a recovery nonetheless. “The tailwinds behind the economy are getting stronger than the headwinds holding it back”, said Maury Harris, chief economist for UBS Securities.
Factors such as low inflation, growing exports, and solid corporate profits, combined with weakening resistance from tight credit and willingness to borrow, bode well for the long-term future of the economy.
Key things we’ll be watching this week:
Monday – Industrial Production, Housing Market Index
Tuesday – Housing Starts, Redbook
Thursday – Initial Jobless Claims, Consumer Sentiment, Leading Indicators
Data as of 03/12/2010 1-Week Y-T-D 1-Year 5-Year 10-Year
Standard & Poor's 500 0.99 3.13 52.0 0.83 -1.75
Dow 0.55 1.89 47.0 -0.27 0.70
NASDAQ 1.78 4.34 65.4 3.19 -5.31
MSCI EAFE 1.01 -0.41 64.2 0.12 -1.01
10-year Treasury Note (Yield Only) 3.71 N/A 2.95 4.49 6.17
Notes: All index returns exclude reinvested dividends, and the 5-year and 10-year returns are annualized. Sources: Yahoo! Finance, Google Finance, Barron’s, djindexes.com, MSCI Barra. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not available.
HIGHLIGHTS:
AIG said to cut bonuses to ex-workers by $21 million to meet Feinberg goal. American International Group Inc., the bailed-out insurer, cut retention bonuses to be delivered to former employees today by about $21 million to meet a target imposed by U.S. paymaster Kenneth Feinberg, said a person briefed on the company’s plans.
Industrial production in U.S. unexpectedly rose 0.1% in February. Fed says industrial production unexpectedly rose in February as growing demand for computers and communications gear overcame a drop in autos, pointing to a pickup in U.S. business spending.
A typical 65-year-old married couple without chronic conditions will need $197,000 to pay for out-of-pocket medical costs throughout retirement, according to new calculations by the Center for Retirement Research at Boston College. That figure includes insurance premiums, services not covered by Medicare, and home healthcare expenses, but it excludes nursing-home care. Retirees also have a 5% chance that healthcare costs not covered by insurance will exceed $311,000, according to the study, which was underwritten by Prudential.
Chileans braced for more blackouts after an outage yesterday left 80% of the population in part of the country without electricity, the result of grid damage from last month’s earthquake.
