Archive for ND&S Updates
HAPPY HOLIDAYS
December 22, 2014
Equity markets rebounded strongly last week with the DJIA and S&P 500 posting gains of 3.08% and 3.44% respectively. For the prior two weeks, stocks were down over 5%, driven largely by energy stocks which are now down 12.8% over the last three months. Starting Wednesday, stocks rallied sharply fueled by Fed comments that monetary policy will remain easy for the foreseeable future. Surprisingly, energy was the best performing sector last week … up 9.7%.
This week look for economic reports on existing home sales, durable goods, and the third revision to third quarter GDP (which may be revised up from 3.9% to 4.3%).
HAPPY HOLIDAYS
“It is a fine seasoning for joy to think of those we love.” – Moliere
Two Steps Forward, One Step Back
December 15, 2014
The markets ended the week broadly lower, with the S&P falling 3.5% and the Nasdaq lower by 2.7%. Multiple headwinds confronted the markets: the Bank of China tightened liquidity, political uncertainty in Greece [Greek 10-yr @ 7.95%!], and precipitous energy price declines [crude oil is down 46.3% from its $107.73/bbl mid-year high]. The VIX [Volatility Index] is now up to 21.82, its highest level since October [demand for downside protection is increasing].
Equity and energy market volatility has garnered most of the headlines lately, but it is also important to note the strength of the US dollar:
The DXY’s[U.S. Dollar Index… See above] 11% YTD advance is due to a strengthening US economy and the upcoming 2015 Fed rate hikes; that contrasts with weaker overseas economies and more active overseas monetary policies. It is also worth noting that the US dollar is once again positively correlated with the US equity market.
The U.S. Dollar regains a positive correlation with equities:
The “easy-money” part of the bull market cycle may have passed, but a stronger dollar is ultimately better for the country and those who save and invest in a dollar-denominated world.
“When defeat comes, accept it as a signal that your plans are not sound; rebuild those plans and set sail once more toward your coveted goal” – Napoleon Hill
Lucky Seven…
December 8, 2014
Markets finished higher last week for their seventh weekly gain in a row. Investors pushed stocks higher following a slew of positive economic news – better-than-expected Purchasing Managers Index, positive Institute of Supply Management reports on manufacturing and non-manufacturing data, and a robust non-farm payrolls report that showed 321,000 jobs created in November (wage growth of 0.4% was an added bonus). Lower oil prices should help to keep the US recovery on a slow and steady path forward. Unfortunately, many economies outside the Untied States continue to struggle. Data out of the Eurozone, Japan and China point to anemic growth, at best. For now, it looks like the United States is the only game in town; however, international valuations are getting more attractive (so a diversified portfolio will serve most investors well as the rally in the U.S. gets overplayed …).
For the week, the Dow Jones Industrial Average finished at 17,959 to close up by 0.7%. The broader-based S&P 500 closed at 2,075 for a gain of 0.38% for the week. The Nasdaq Composite closed the week at 4,781 for a slight loss of 0.4%. International markets did not fare as well, and the Dow Jones Global (ex US) Index dropped 0.8% for the week. The 10-year Treasury closed the week at a yield of 2.31% as bond prices fell following the strong U.S. jobs report.
As always, we urge investors not to get caught up in the day-to-day noise of the markets. Instead, focus on long-term goals, and enjoy the holiday season.
“Success is getting what you want. Happiness is wanting what you get.” – Dale Carnegie
Oil Plunge Creates Winners and Losers
December 1, 2014
What was supposed to be a “quiet” holiday-shortened week, ended in a flurry with OPEC’s decision to maintain its 30 million barrels per day output despite the 5 month fall in oil prices. Despite the S&P’s energy sector being off -6.4% on Friday alone, the S&P 500 and DJIA managed to finish higher by 0.2% & 0.1% respectively for the week. Consumer Discretionary (2.5%), Technology (2.1%), and Health Care (1.8%) provided ballast for the markets this past week. Globally, the MSCI EAFE was positive 0.48% on speculation of a sovereign QE program from the European Central Bank. Given the volatility and choppy trading sessions, yields on the 10-yr U.S. Treasury moved lower to 2.18%.
Despite the volatility, we see the U.S. markets continuing to plod along as we enter a month that is historically positive for equities. Economic news continues to be encouraging as the second revision to 3Q GDP surprised to the upside (3.9% vs consensus 3.2%) last week. In the week ahead, we will be on the look out for PMI & ISM Mfg., vehicle sales, and employment numbers.
“I dwell in possibility” – Emily Dickinson
Happy 2015!
December 29, 2014
Stocks continued their record run during a holiday-shortened trading week. For the year, the DJIA has posted 38 record highs while the S&P500 has notched 52. The positive news out of the week was 3Q GDP, which was revised to 5.0% q/q from 3.9% (despite a strong 3rd Quarter, we see GDP around 2.8% y/y), strong consumer sentiment, and accommodating moves from China’s central bank looking to further ease liquidity. Oil continued its retreat, and was down 4.2% for the week on oversupply concerns.
The S&P500 finished at 2089, up .90% for the week while the DJIA closed above 18000 for the first time (18,054 to be exact). Small Cap US companies fared a little better for the week with the Russell 2000 up 1.64%. In international markets, the MSCI EAFE finished up 0.47% while the MSCI EM was up 0.98% for the week. The 10-year Treasury closed the week at a yield of 2.25% up from 2.17% the week prior.
This will be our last weekly post for 2014. From all of us at ND&S, we want to wish you happy, healthy and prosperous 2015!
“And now we welcome the New Year. Full of things that have never been.” – Rainer Maria Rilke