Archive for ND&S Updates

Oil Vey!

January 25, 2016 

Oil prices continued their wild swings last week as the price of crude closed at $32.19 a barrel on Friday for a weekly gain of 9.42%. Not surprisingly, equity markets maintained their near perfect correlation to oil and closed the week broadly higher. For the week, the S&P 500 closed at 1,906.9 for a weekly gain of 1.4% while the DJIA closed at 16,093.5 for an increase of 0.7%. International markets finished broadly higher as well as European Central Bank President Mario Draghi hinted at further stimulus.

Economic news last week was mostly supportive of a decent economic environment. The Philly Fed Manufacturing Index came out at -3.5 … better than consensus of -5.9 (yet still negative …). December existing home sales rose sharply by 14.7% … better than expected. So far, 4th quarter earnings reports have been mostly in-line with expectations.

The week ahead will likely be volatile (what’s new?) as 4th quarter earnings are reported by a number of blue chip companies. Last week’s gains were a welcome respite from the head spinning gyrations of the markets, but we’re not convinced that the markets will not test our patience yet again … so buckle-up and stay the course.

“The past, the present and the future are really one: they are today.” – Harriet Beecher Stowe

Just Another Week

January 19, 2016 

Global equities continued their tough start to the year as the pulse of the market seems focused on a list of worldwide issues; growth in China, geopolitical tensions, and what seems like an infinite supply of oil. Thankfully last week kicked off earnings season as investor’s focus will now shift towards company specific data rather than the macro-economic environment … we shall see.

For the week, the DJIA closed below 16000 (15988) for a weekly decline of 2.16%. The broader-based S&P 500 closed the week at 1880 for a weekly loss of 2.15%. US Small Cap companies weren’t immune as the Russell 2000 declined 3.66% and is in the midst of a bear market. International markets were also in the red as the MSCI EAFE and MSCI EM were off 2.82% and 4.17% respectively. US Treasury yields this year have declined across the board as a “flight to safety” has rung in the New Year. The 10YR Treasury closed the week at a yield of 2.03% … down from 2.27% on December 31, 2015.

As we turn the page over to a new week, I’m sure that talking-heads on TV will be discussing what the next level of support is for the market. This will surely make for captivating TV. Most technicians point to the August 25th low of 1867 as a key level. But like every other intra-year decline in history this too shall pass. Stay the course.

“Life’s most persistent and urgent question is, ‘What are you doing for others?’” – Martin Luther King, Jr.

Tough Start

January 11, 2016 

The equity markets began 2016 on a sour note with all major equity indexes finishing below 5% for the week. The negative sentiment persisted despite last week’s solid employment report, a growing US services sector, and dovish sentiments from the Fed that despite seem to point to slow and gradual rate increases. Unfortunately, investors and markets shrugged off these positive developments and focused on negative news out of China and North Korea as well as collapsing oil prices.

For the week, the DJIA finished lower by 6.13% while the broader-based S&P500 closed down 5.91%. International markets also were down with the MSCI EAFE closing down 6.14% while the MSCI EM lost 6.79%. Fixed income, represented by the Barclays Aggregate, finished positive for the week closing up 0.64% illustrating the benefits of diversification. As a result, the 10 YR US Treasury closed at a yield of 2.13% … 14bps lower from where it closed 2015.

Markets around the world are adjusting to what will likely be less-than-average returns in 2016. Global GDP growth will be 3.5% or so, earnings will grow at a reasonable rate, companies will adapt, and the world will likely not end anytime soon. Markets go up over time, and it has been foolish to try to time the markets. Stay the course.

“Faith is the bird that feels the light when the dawn is still dark.” – Rabindranath Tagore

Cheers To 2015

January 4, 2016 

Last week’s market fluctuations were kind of fitting as they brought to close an “up” and “down” year for equity markets. In fact, the ratio of “up” and “down” trading days for 2015 was 47/53, a reflection of its historical average over the last 50 years (which is 53 “up” days to 47 “down”). The 4Q rally in the markets wasn’t quite enough to keep the S&P 500 and DJIA in the green for 2015 on a price-return basis.

For the week, the DJIA was down 0.72% to close the year at 17425. The broader-based S&P 500 was lower by 0.80% to finish the year at 2044. Smaller US companies represented by the Russell 2000 actually finished worse, closing the week down -1.57%. International markets also finished lower for the week with the MSCI EAFE down 0.26% and MSCI EM off 1.02%. Yields were higher across the board as the 10YR US Treasury closed the week/year at a yield of 2.27% … 10bps higher than 12/31/2014.

Cheers to Happy and Prosperous 2016!

“Let the beauty of what you love be what you do.” – Rumi