Why the markets are mixed this year?
Ken’s TV interview last week on
thestreet.com
http://www.thestreet.com/video/12203164/make-munis-a-part-of-your-retirement-strategy.html
Markets stalled in the first full
week of 2014, with major indices ending on a mixed note.
For the week, the S&P 500 gained 0.6%, the Dow lost 0.2%, and the Nasdaq
rose 1.03%.[i]
Friday’s
December Employment Situation report showed that job growth slowed
significantly in December, adding just 74,000 new jobs. This was well below
consensus estimates, which expected a number in the neighborhood of 200,000 new
jobs. At odds with the dismal jobs data, the household survey showed a very
large drop in unemployment, causing the headline unemployment number to fall to
6.7%, very close to the Fed’s goal of 6.5%.[ii]
Markets
reacted nervously to the unexpectedly negative data, which is completely out of
line with the generally positive labor trends of the past weeks and months. One
way for unemployment to drop even as job growth declines is for people to quit
searching for jobs, thus dropping out of the labor force. In December, the
labor force participation rate dropped to its lowest in more than three
decades. However, labor force participation jumped in November, so it’s
possible that the December data is a statistical outlier.[iii] Divergences between the
two surveys do occasionally happen and economists usually wait a month or so
 |
for revisions to be made that straighten out the data.
Bottom
line: we’re getting very close to the Fed’s threshold rate of 6.5%
unemployment, but the overall labor market is still weak. Given this weakness,
the Fed will probably need to clarify its tapering plans and give guidance
about how critical that 6.5% floor really is.
Looking
ahead, earnings season will be kicking off this week. First up are several
major financial firms; like JPMorgan Chase [JPM], Wells Fargo [WFC], Bank of
America [BAC], Citigroup [C],[iv] and
investors, will be taking a hard look to get a sense of how fourth quarter
earnings season will go. If earnings continue their positive trend, investors
could see further upside; if earnings disappoint, investors may decide to take
some more profits off the table and wait for better news.
ECONOMIC
CALENDAR:
Tuesday:
Retail Sales, Import and Export Prices, Business Inventories
Wednesday:
Producer Price Index, Empire State
Thursday:
Consumer Price Index, Jobless Claims, Treasury International Capital, Philadelphia
Friday:
Housing Starts, Industrial Production, Consumer Sentiment
HEADLINES:
Yellen
confirmed as next Fed chair. The Senate voted to confirm current
Federal Reserve vice chairman Janet Yellen as the next Fed chairman. She will
replace current chairman Ben Bernanke when his term ends at the end of January.
A major focus of her tenure will be the unwinding of the central bank’s
unprecedented quantitative easing programs.[v]
Wholesale
inventories grew in November. Business inventories increased 0.5%
in November, following a 1.3% increase in October. Inventory growth has been
strong over the last few months, suggesting firms have confidence in consumer
demand and that restocking could contribute significantly to Q4 economic
growth.[vi]
Retailers
cut forecasts. A disappointing holiday season led
to several retailers cutting 2014 earnings forecasts. Despite aggressive
actions to lure shoppers, a shortened shopping season, unseasonably cold weather,
and anemic spending combined to hit retailer revenues hard.[viii]
Quote of the week
“Courage
is being scared to death...and saddling up anyway.” - John Wayne
The Stock Trader’s Almanac
says:
As January
goes, so does the market. This January barometer has a batting average of
.762 ( now if the Famers almanac was as
accurate with this ‘crazy’ weather …)
Did you know?
That
a year ago Gold was $1648 an ounce, and it is now $1231 an ounce, down 25 %
According
to Page one Financial
It’s the economy, stupid:
We’re
forecasting real GDP of 3% and inflation of 1.5% in both 2014 and 2105
ISI
Group
Just the fact Ma’am:
NOT DOWN - The 11/26/12 issue of Time magazine ran an article titled “Why Stocks are Dead” which documented the gloomy
equity forecast of
money managers Mohamed El-Erian and Bill Gross. From 11/26/12 to the close of
trading on Friday 1/10/14, the S&P 500 has gained +34.2% (total return)
Share the Wealth of Knowledge!
Please share this market update with family, friends, or colleagues. If you would like us to add them to our list, simply click on the "Forward email" link below. We love being introduced!
Please share this market update with family, friends, or colleagues. If you would like us to add them to our list, simply click on the "Forward email" link below. We love being introduced!
If you would like to opt-out of future emails, please reply
to this email with UNSUBSCRIBE in the subject line.
Securities offered
through Aurora Capital Member FINRA/SIPC.
Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
Diversification does not guarantee profit nor is it
guaranteed to protect assets
The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
The
Dow Jones Industrial Average is a price-weighted average of 30 significant
stocks traded on the New York Stock Exchange and the NASDAQ. The DJIA was
invented by Charles Dow back in 1896.
The
Nasdaq Composite is an index of the common stocks and similar securities listed
on the NASDAQ stock market and is considered a broad indicator of the
performance of stocks of technology companies and growth companies.
The
MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that
serves as a benchmark of the performance in major international
equity markets as represented by 21 major MSCI indexes from Europe, Australia and Southeast
Asia .
The
Dow Jones Corporate Bond Index is a 96-bond index designed to represent the
market performance, on a total-return basis, of investment-grade bonds issued
by leading U.S.
The
S&P/Case-Shiller Home Price Indices are the leading measures of U.S.
The
10-year Treasury Note represents debt owed by the United States Treasury to the
public. Since the U.S. Government is seen as a risk-free borrower, investors
use the 10-year Treasury Note as a benchmark for the long-term bond market.
Google
Finance is the source for any reference to the performance of an index between
two specific periods.
Opinions
expressed are subject to change without notice and are not intended as
investment advice or to predict future performance.
Past
performance does not guarantee future results.
You
cannot invest directly in an index.
Consult
your financial professional before making any investment decision.
Fixed
income investments are subject to various risks including changes in interest
rates, credit quality, inflation risk, market valuations, prepayments,
corporate events, tax ramifications and other factors.
. All information is believed to be from reliable sources;
however, we make no representation as to its completeness or accuracy. Please
consult your financial advisor for further information.
By clicking on these links, you will leave our server, as
they are located on another server. We have not independently verified the
information available through this link. The link is provided to you as a
matter of interest. Please click on the links below to leave and proceed to the
selected site.
[i] http://briefing.com/investor/markets/weekly-wrap/weekly-wrap-for-january-6-2014.htm
[iii] http://www.reuters.com/article/2014/01/10/us-usa-economy-idUSBREA090FP20140110
[iv] http://www.cnbc.com/id/101326378
[v] http://www.bloomberg.com/news/2014-01-09/yellen-says-u-s-economy-may-strengthen-this-year-time-reports.html
[vi] http://briefing.com/investor/markets/weekly-wrap/weekly-wrap-for-january-6-2014.htm
[vii] http://www.reuters.com/article/2014/01/10/us-china-economy-trade-idUSBREA0905L20140110
[viii] http://www.smdailyjournal.com/articles/business/2014-01-10/stocks-mixed-as-retailers-give-weaker-outlook/1776425116243.html
