Europe vs. Earnings for the markets
It’s an interesting time for the stock market. We’re in the middle of a healthy earnings season, economic news is modestly positive, and yet, investors can’t pull their eyes away from the drama in Europe.
On average, 60% of companies in the S&P 500 are beating earnings estimates since the reporting season began this month, and numbers for revenue are coming in even better. The number of people claiming unemployment benefits declined this week, housing construction picked up last month (at least for apartment buildings), and inflation remains low. Add to this the fact that many analysts are saying stocks are undervalued right now , and it would have been reasonable to expect a stock market rally last week. Instead, what we got was a roller coaster ride that eventually ended the week virtually flat. The Dow and S&P rose a little over 1%, while the Nasdaq fell 1%.
Europe is clearly dominating investor sentiment right now, leaving the markets vulnerable to every shred of bad news. With good news, we see stocks push upward. With bad news, they pull back. All of this pushing and pulling is keeping stocks in somewhat of a no man’s land where valuations look good but global economic concerns are scaring people away from them. At the moment we seem to be in a trading range.
Meanwhile, European leaders are scrambling to solve the crisis. And while the outcome of all their meetings is impossible to predict, expectations for a bold and reasonable plan are high. If a concrete plan comes together, it is likely that the markets will respond positively. If a plan doesn’t come together, the bumpy ride will probably continue.
While progress in Europe has been painfully slow, it is starting to look like their leaders are taking things more seriously. If nothing else, most would agree that we are closer to the end of this crisis than to the beginning. And that is definitely good news!
ECONOMIC CALENDAR:
Tuesday – S&P Case Shiller HPI, Consumer Confidence
Wednesday – Durable Goods Orders, New Home Sales
Thursday – GDP, Jobless Claims, Pending Home Sales Index
Friday – Personal Income and Outlays, Employment Cost Index, Consumer Sentiment
HEADLINES:
On Friday, President Obama announced that the United States would withdraw its forces from Iraq by the end of the year. Although the most heart-wrenching costs of the Iraq war come in the form of human lives, Obama's decision is also a major step toward putting the United States on a more sustainable fiscal path.
The U.S. Senate adopted a measure on Thursday that would raise the maximum size of a home loan backed by mortgage companies Fannie Mae, Freddie Mac, and the Federal Housing Administration to $729,750.
The Occupy Wall Street protests are rapidly spreading around the world. St. Paul's Cathedral has closed to the public because Occupy London Stock Exchange protesters camped outside, church officials said Friday.
Federal Reserve officials are starting to build a case for a new program of buying mortgage-backed securities to boost the economy, though they appear unlikely to move swiftly. The idea would be to target any new efforts by the central bank at the parts of the economy that are most severely impeding a recovery – the housing and mortgage markets – by working to push down mortgage rates.
QUOTE OF THE WEEK:
“Those who start with too litte money are more likely to succeed than those who start with too much.Energy and imagination are the springboards to wealth creation. “
Brian Tracy
RECIPE OF THE WEEK: From Marcello’s in Suffern
Tiramisu
1 lb. mascarpone cheese or cream cheese, plain
4 egg yolks
1 cup marsala wine, or any sweet wine
4 tbsp. sugar
10 oz. ladyfingers, or spongecake
3 cups espresso, or verystrong black coffee
cocoa to decorate
Mix sugar, marsala and eggs in copper bowl or double boiler and cook for 5 minutes. Let cool. This mixture is called zabaglione.
Blend the mascarpone cheese with the zabaglione until smooth.
Spread 1/3 of the cream mixture in the bottom of a square pan 2” deep. Dip the ladyfingers individually in espresso and place uniformly on top of cream mixture. Add another 1/3 of cream mixture and repeat another layer of ladyfingers. Add the last of the cream and refrigerate for 3 hours. Cut into squares and sprinkle with cocoa powder.
From Ken’s book Now What? A guide to Retirement during volatile times
Not Your Father's Retirement
Unlike your parents’ generation, most baby boomers have had more than one job or career, and don’t have a generous pension plan to fall back on at retirement. While the post war baby boomers do have some investments that were unknown to previous generations, like Roth IRAs and 401(k) plans, your parents had a safety net, while you must fly solo.
Overall, you’ll live longer and healthier lives than your parents, so you’ll need money for a longer period of time. To further complicate your financial burdens, you may have your own parents and children to care for and help support.
And you’ll likely have more energy and time for living out your personal retirement dreams, unlike many of our parents, who didn’t live long enough, or healthy enough, to enjoy their Golden Years to the fullest. You also have end of life decisions, needs, and opportunities that no generation before yours could benefit from ... or had to face.
Fill (Not Kill) Your Time
“Nobody on his deathbed ever said, ‘I wish I had spent more time at the office.’”
-- Paul Tsongas, the late senator from Massachusetts
Without the structure of that office where you dutifully reported 5 days a week … or more … you’ll have a lot of time on your hands, and a lot less that you have to do with it. Now that you can finally choose how you’ll spend your time, will you choose a new career, a part-time job, leisurely hours on the golf course, a stint back at school, volunteer work, travel, or all of the above?
Who you spend your time with matters as much as how you choose to spend that time. Sometimes, in the rush to succeed, we forget to involve our loved ones in the day to day activities of our working lives, or invest our time and energy in those people and things that matter most to us
Making the most of your relationships with loved ones now, be they friends or family, young or old, can make a huge difference in the quality of your retirement years. In the end, folks with close ties to family and friends tend to live longer, happier lives ... no matter how rich or poor they may be.
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