Monthly Archives: April 2012

Weekly Market Commentary 4/30/2012

The Markets

What is the costliest fruit?

How about an apple, as in Apple, Inc.? With more than $500 billion in market capitalization, Apple is the world’s most valuable company, according to Reuters. Last week, the company reported quarterly earnings that easily trumped analyst forecasts and this helped propel the S&P 500 to a 1.8 percent weekly gain. But it’s not just Apple that’s doing well. According to FactSet, a robust 78 percent of the S&P 500 companies that have reported earnings so far this quarter have beaten analysts’ forecasts.

Last week’s gains came despite some disappointing economic news which included the following:

  • A weaker than expected reading on U.S. gross domestic product (GDP), the broadest measure of all goods and services produced in our country.
  • A downgrade of Spain’s government debt—perhaps not surprising since the country now has a debilitating unemployment rate of 24.4 percent.
  • A second consecutive quarter of negative economic growth in the U.K., indicating they have slid back into recession.

Sources: The Wall Street Journal, Yahoo! Finance, Bloomberg

Overall, the economy continues to chug along at a modest pace. Not quite fast enough to signal “all clear” and not quite slow enough to signal “recession ahead.”


Data as of 4/27/12

1-Week

Y-T-D

1-Year

3-Year

5-Year

10-Year

Standard   & Poor’s 500 (Domestic Stocks)

1.8%

11.6%

2.9%

17.9%

-1.3%

2.8%

DJ   Global ex US (Foreign Stocks)

0.5

8.9

-14.0

12.4

-5.0

5.1

10-year   Treasury Note (Yield Only)

1.9

N/A

3.4

2.9

4.7

5.1

Gold   (per ounce)

1.3

5.7

10.1

22.4

19.7

18.3

DJ-UBS   Commodity Index

1.8

0.0

-18.8

9.0

-4.1

3.6

DJ   Equity All REIT TR Index

1.7

12.9

8.9

33.0

0.0

10.7

Notes: S&P 500, DJ Global ex US, Gold, DJ-UBS Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT TR Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.

Sources: Yahoo! Finance, Barron’s, djindexes.com, London Bullion Market Association.

Past performance is no guarantee of future results.  Indices are unmanaged and cannot be invested into directly.  N/A means not applicable.

THE HOUSING MARKET STILL HAS THE BLUES, according to a widely followed barometer of home prices in the U.S. The S&P/Case-Shiller Index is designed to show how home prices are performing in the twenty largest cities and last week’s report showed the index is at its lowest point since October 2002.

Since the peak of the index in 2007 through February of this year, home prices have lost one-third of their value—and that’s even with record low interest rates on mortgages. Unfortunately, tough employment conditions have kept many potential homeowners on the sidelines. Adding to that, obtaining a loan from a bank remains difficult without very good credit.

Even though home prices continue to decline, a silver lining might be emerging. According to the National Association of Realtors, an index that measures the number of agreements signed to buy previously owned homes rose in March to its highest level in two years.

The increase in interested home buyers is coming at a time when supply is declining. Inventory levels in many markets are at their lowest level in years. For example, according to The Wall Street Journal, at the current pace of sales, it would take only 1.5 months to sell all the homes in Sacramento, CA. Considering pickings are pretty slim, home builders have also benefitted. New home sales in the U.S. are up 16 percent so far this year.

Unfortunately, this recent decline in available homes for sale may prove to be temporary because Fannie Mae, Freddie Mac and other banks have been slow to list for sale hundreds of thousands of foreclosed homes. In fact, banks and other investors are believed to hold 450,000 foreclosed homes while an additional 2 million are currently in the process of being foreclosed.

Ultimately, the solution to the housing blues may be strong economic growth. And as last week’s GDP numbers show, that strong growth hasn’t started yet.

Weekly Focus – Think About It

“In order to get a loan you must first prove you don’t need it.”

–Murphy’s Law 

 Best regards,

Margie Shard, CFP, President and Wealth Advisor

P.S.  Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this e-mail with their e-mail address and we will ask for their permission to be added.

Securities offered through LPL Financial, Member FINRA/SIPC.

* This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named broker/dealer.

* 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 DJ Global ex US is an unmanaged group of non-U.S. securities designed to reflect the performance of the global equity securities that have readily available prices.

* 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.

* Gold represents theLondonafternoon gold price fix as reported by the London Bullion Market Association.

* The DJ Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.

* The DJ Equity All REIT TR Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.

* Yahoo! 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.

* To unsubscribe from the Weekly Market Commentary please reply to this e-mail with    “Unsubscribe” in the subject line, or write us at 1537 N. Leroy, Suite D, Fenton, MI 48430.

Sources:

http://www.factset.com/websitefiles/PDFs/earningsinsight/earningsinsight_4.27.12
http://www.reuters.com/article/2012/04/29/dow-barrons-idUSL1E8FT3GJ20120429
http://www.cnbc.com/id/47086804/
http://www.bloomberg.com/news/2012-04-27/spain-s-unemployment-rate-rises-to-highest-in-18-years.html
www.marketwatch.com/Story/story/print?guid=8C76B1F2-8E0A-11E1-BCCD-002128049AD6
http://online.wsj.com/article/SB10001424052702304723304577365511056677458.html?mod=WSJ_hp_LEFT…
http://online.wsj.com/article/SB10001424052702304723304577366294046658820.html?mod=ITP_pageone_0…
http://online.wsj.com/article/SB10001424052702304811304577369640809969900.html?mod=WSJ_hp_LEFT…
http://www.finance.yahoo.com/news/home-sales-sends-stocks-higher-180640550.html
http://www.finance.yahoo.com/news/upturn-homes-sales-sends-stocks-151714135.html
http://www.finance.yahoo.com/news/stock-index-futures-signal-mixed-092819864.html
http://online.wsj.com/article/SB10001424052702304723304577365301140802744.html?mod=ITP_pageone_2…
http://online.wsj.com/article/SB10001424052702304811304577368412310140748.html?mod=ITP_pageone_3…
http://murphyslaws.net/edition.htm

Weekly Market Commentary 4/23/12

The Markets

Move over European debt headlines, corporate earnings have something to say.

Even though troubles are brewing again across the pond in Europe, corporate earnings season in the U.S. is stealing the spotlight. Why? According to CNBC, more than 100 companies in the S&P 500 have reported earnings and 8 out of 10 have delivered better than expected results – and that’s grabbed investors’ attention.

Each quarter, publically traded companies update investors on how their businesses fared over the previous three months. And, according to the updates we’re seeing, business is still looking okay. The news helped push the S&P 500 higher by 0.6 percent on the week.

Now, like all statistics, there’s more than one way to interpret the earnings numbers. While 8 out of 10 companies have beaten expectations, the “expectation” was pretty low. In fact, earnings increased only 3.7 percent from the year ago quarter, according to Zacks. For the remaining S&P 500 companies that are set to report, Zacks expects those companies to report slightly negative earnings growth compared to the year ago quarter.

Over in Europe, Spain and Italy saw the borrowing rate increase on their government debt, which suggests their debt problem is far from over. And, the International Monetary Fund released a report that stated the obvious – if the European debt crisis can’t be contained, it would negatively impact global economic growth in a severe way.

At the moment, the U.S. markets seem fixated on corporate earnings and have put the European problem on the back burner. But, in this interconnected world, problems overseas may eventually find their way to our shores.


Data as of 4/20/12

1-Week

Y-T-D

1-Year

3-Year

5-Year

10-Year

Standard   & Poor’s 500 (Domestic Stocks)

0.6%

9.6%

3.1%

18.3%

-1.5%

2.2%

DJ   Global ex US (Foreign Stocks)

0.9

8.4

-13.6

13.2

-5.2

4.9

10-year   Treasury Note (Yield Only)

2.0

N/A

3.4

2.8

4.7

5.2

Gold   (per ounce)

-1.5

4.3

9.4

23.2

18.9

18.4

DJ-UBS   Commodity Index

-0.9

-1.8

-20.0

8.0

-4.3

3.4

DJ   Equity All REIT TR Index

2.8

11.1

10.3

36.0

-0.3

10.4

Notes: S&P 500, DJ Global ex US, Gold, DJ-UBS Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT TR Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.

Sources: Yahoo! Finance, Barron’s, djindexes.com, London Bullion Market Association.

Past performance is no guarantee of future results.  Indices are unmanaged and cannot be invested into directly.  N/A means not applicable.

WHEN $1 TRILLION ISN’T ENOUGH… Earlier this year the European Central Bank (ECB), Europe’s equivalent of our U.S. Federal Reserve, responded to the fear surrounding the European debt crisis by offering unlimited three-year loans with a 1.0 percent interest rate to European banks. According to The Wall Street Journal, at least 800 banks across Europe responded to this offer by borrowing over $1.3 trillion. As planned, the banks then took a good portion of that money and bought government securities that paid a higher interest rate. It sounds like a great deal to the banks – borrow money at a 1.0 percent rate then turn around and buy government securities that pay a much higher rate and pocket the difference.

The primary objective of this emergency lending was to indirectly allocate money to European governments who are heavily indebted. The ECB thought that making cheap money available would help lower interest rates in these troubled countries and “buy” them more time to work out their economic problems.

How’s it working?

Initially, interest rates in troubled countries dropped dramatically as banks bought the high-yielding government securities and fears of a collapse eased. Unfortunately, The Wall Street Journal says many of the banks who borrowed money from ECB may have already exhausted most of those funds – leaving little money left to keep pushing interest rates down. As a result of this fear, interest rates are rising again, particularly in Spain and Italy, and, like a leak in a dike, it’s hard to stop a rise once it gets going.

Will the ECB step in again and help European banks and governments avoid a Greek-style default? It’s too early to tell, but either way, we’ll be closely watching this tug-o-war between positive corporate earnings in the U.S. and negative headlines out of Europe.

Stay tuned…

Weekly Focus – Think About It

“There are no shortcuts to any place worth going.”

Beverly Sills

Best regards,

Margie Shard, CFP®

P.S.  Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this e-mail with their e-mail address and we will ask for their permission to be added.

Securities offered through LPL Financial, Member FINRA/SIPC.

* This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named broker/dealer.

* 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 DJ Global ex US is an unmanaged group of non-U.S. securities designed to reflect the performance of the global equity securities that have readily available prices.

* 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.

* Gold represents theLondonafternoon gold price fix as reported by the London Bullion Market Association.

* The DJ Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.

* The DJ Equity All REIT TR Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.

* Yahoo! 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.

* To unsubscribe from the Weekly Market Commentary please click here, or write us at 1537 N. Leroy, Suite D, Fenton MI 48430.

* To unsubscribe from the Weekly Market Commentary please reply to this e-mail with    “Unsubscribe” in the subject line, or write us at 1537 N. Leroy, Suite D, Fenton MI 48430.

Sources:

http://www.cnbc.com/id/47120743
http://www.zacks.com/commentary/20670/Q1+Earnings+Season+Off+to+a+Good+Start
http://money.cnn.com/2012/04/19/markets/thebuzz/index.htm
http://online.wsj.com/article/SB10001424052702304432704577347530806018866.html?mod=WSJ_hp_LEFT
http://online.wsj.com/article/SB10001424052702304299304577349592369627840.html?mod=ITP_pageone_2
http://online.wsj.com/article/SB10001424052702304331204577352272051744662.html?mod=ITP_moneyandi
http://finance.yahoo.com/news/stock-futures-signal-slight-gains-113345117.html
http://online.wsj.com/article/SB10001424052702303513404577351560527620108.html?mod=ITP_pageone_3
http://online.wsj.com/article/SB10001424052702304818404577345900847700424.html?mod=ITP_moneyandi
http://blogs.wsj.com/eurocrisis/2012/02/29/which-banks-took-up-second-round-of-ltro/

 

Weekly Market Commentary 4/16/12

It’s back. Volatility, that is.

Like a yo-yo, the market bounced around and the S&P 500 index ultimately ended down 2.0 percent for the week and 3.4 percent from this year’s closing high, according to Reuters. Despite the drop, the market is still showing a solid 9.0 percent gain for the year.

Once again, debt issues in Europe made headlines as Spain became the latest problem country. That, along with some disappointing economic growth data from China, helped spark the volatile week. Because of its massive size, any slowdown in China is closely watched by market participants.

As a sign of the big swings this week, the Dow Jones Industrial closed the day up or down by at least 100 points on four out of the five days last week, according to Barron’s.

Highlights from the week included:

  • China’s economy expanded at the weakest pace in over three years last quarter, missing consensus economic forecasts.
  • Yields on debt in Spain jumped due to a weak debt auction, renewing fears that the European debt crisis could start affecting the global markets again.
  • Several U.S. banks reported earnings that underwhelmed investors, resulting in weakness in financial stocks.
  • U.S. inflation remained under control which may leave open the possibility for further Federal Reserve intervention should economic data deteriorate.

Sources: The Wall Street Journal, Yahoo! Finance

The quarterly corporate earnings season is now underway so we wouldn’t be surprised to see more market volatility as investors digest the latest read on the health of corporate America.

 


Data as of 4/13/12

1-Week

Y-T-D

1-Year

3-Year

5-Year

10-Year

Standard & Poor’s 500 (Domestic Stocks)

-2.0%

9.0%

3.8%

16.9%

-1.2%

2.1%

DJ Global ex US (Foreign Stocks)

-1.0

7.4

-13.8

12.5

-5.1

5.1

10-year Treasury Note (Yield Only)

2.0

N/A

3.5

2.9

4.8

5.1

Gold (per ounce)

2.2

5.8

14.3

23.4

19.6

18.7

DJ-UBS Commodity Index

-1.6

-0.9

-17.7

7.2

-4.4

3.8

DJ Equity All REIT TR Index

-1.2

8.0

11.2

31.7

-0.7

9.5

Notes: S&P 500, DJ Global ex US, Gold, DJ-UBS Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT TR Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.

Sources: Yahoo! Finance, Barron’s, djindexes.com, London Bullion Market Association.

Past performance is no guarantee of future results.  Indices are unmanaged and cannot be invested into directly.  N/A means not applicable.

THE “SHOVE IT” INDICATOR as highlighted by CNBC made a noteworthy gain in February suggesting consumer confidence may be increasing. You’re probably wondering, “What in the world is the ‘shove it’ indicator?” Well, every month the government conducts a Job Openings and Labor Turnover Survey, or “JOLTS” for short. One of the data points in the JOLTS report is the number of workers who quit their job as opposed to being laid off. And, in February, for the first time since September 2008, the quitters were in the majority.

What does this mean? Generally speaking, people who quit their job are typically more confident that there is another job waiting for them when they voluntarily leave a position. Nicholas Colas, chief market strategist at ConvergEx Group says, “Quits go hand-in-hand with consumer confidence.”

This positive JOLTS data point follows a disappointing government jobs report for the month of March where only 120,000 new jobs were created. Also, the preliminary March reading of the University of Michigan’s consumer confidence survey showed a decline from the previous month. Analysts had expected confidence to stay flat, according to International Business Times.

This conflicting economic data gave the bulls and the bears ample ammunition to bolster their respective case. And, conflicting data like this may lead to a continuation of the yo-yo as investors try to predict which direction the economy is headed.

Weekly Focus – Think About It

“Expectation is the root of all heartache.”

–William Shakespeare

Best regards,

Margie Shard, CFP, President and Wealth Advisor

P.S.  Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this e-mail with their e-mail address and we will ask for their permission to be added.

Securities offered through LPL Financial, Member FINRA/SIPC.

* This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named broker/dealer.

* 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 DJ Global ex US is an unmanaged group of non-U.S. securities designed to reflect the performance of the global equity securities that have readily available prices.

* 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.

* Gold represents the London afternoon gold price fix as reported by the London Bullion Market Association.

* The DJ Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.

* The DJ Equity All REIT TR Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.

* Yahoo! 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.

* To unsubscribe from the Weekly Market Commentary please reply to this e-mail with    “Unsubscribe” in the subject line, or write us at 1537 N. Leroy, Suite D, Fenton, MI 48430.

Sources:

http://www.ibtimes.com/articles/327923/20120413/consumer-sentiment-jobs-gas.htm

http://www.bloomberg.com/news/print/2012-04-13/spain-default-swaps-rise-to-record-498-basis-points-cma-says.html

http://online.barrons.com/article/SB50001424053111904857404577333881896203126.html?mod=BOL_twm_mw&_nocache=20120415171852#articleTabs_article%3D2

http://online.wsj.com/article/SB10001424052702304356604577341311601698358.html?mod=WSJ_hp_LEFTTopStories

http://finance.yahoo.com/news/futures-off-spain-yields-rise-105658265.html

http://www.cnbc.com/id/47030350/

http://online.wsj.com/article/SB10001424052702304356604577340532337050116.html?mod=ITP_pageone_3%E2%80%A6

http://finance.yahoo.com/news/food-gas-costs-push-us-123818377.html

http://online.wsj.com/article/SB10001424052702303815404577335111619723768.html?mod=ITP_pageone_0 

http://www.brainyquote.com/quotes/quotes/w/williamsha143400.html