December 6, 2016

A Mixed View

After a three-week run where all major U.S. indexes posted significant gains, we saw a mixed view in the market last week. The Dow was up 0.10%, but the S&P 500 lost 0.97% and the NASDAQ was down 2.65%. The MSCI EAFE‘s measure of international developed markets also dropped 0.24%. Rallies such as the one we’ve experienced since Donald Trump’s election can’t go on forever, so we aren’t too concerned about these minor pullbacks. In fact, as we’ve recently said, when you look more deeply at the data, we see many reasons to believe that our economy is moving in the right direction. Good News This Week Positive economic news for the U.S. continued to come in this week, including reports that: Unemployment dropped again to 4.6% – hitting its lowest level since August 2007. Manufacturing increased for the third straight month. Personal income increased 0.6% in October. Q3 GDP was 10% higher than previously thought. Of course, despite the ongoing indications that our economy is doing well, everything isn’t perfect in the U.S. We’d like to see the economy growing even faster than it is. And while unemployment is low, the measure of people who are underemployed is still […]
August 23, 2016

NASDAQ Posts Eighth Week of Gains

NASDAQ Posts Eighth Week of Gains WEEKLY UPDATE – August 22, 2016 The S&P 500 and Dow ended last week slightly lower, but the NASDAQ posted an eighth straight week of gains for the first time since 2010.[1] For the week, the S&P 500 lost 0.01%, the Dow fell 0.13%, the NASDAQ gained 0.10%,and the MSCI EAFE lost 0.64%.[2] What is the Fed thinking? Minutes from the July Federal Reserve Open Market Committee meeting showed that officials are split about the economic outlook and when to raise interest rates. Hawkish rhetoric from Fed members who favor a rate hike soon could push the central bank into raising rates as early as September. More dovish officials aren’t convinced that tepid inflation will rise to the Fed’s 2.0% objective and favor a wait-and-see approach to raising interest rates.[3] After several months of strong labor market gains, some economists think the economy is close to full employment and central bankers should move soon to put on the brakes by raising interest rates. If the economy gets overheated, prices could rise too much and push the economy into a boom/bust cycle that federal officials are anxious to avoid. While a few years of outsized growth […]
August 18, 2016

VIDEO: August Educational Stock Market Update ~ Why we don’t panic!

August Educational Stock Market Update ~ Why we don’t panic! Hey Guys, this is Justin Goodbread from Heritage Investors with an educational economic update for August 2016. In this month’s video, we’ll talk about some of the events that influenced markets in July, and give you some insight into what they could mean for you as an investor. Please stay tuned at the end for a required disclosure statement. Markets had a lot to think about in July. A British exit (BREXIT), interest rates, and earnings season all affected market movements last month. After dropping sharply at the end of June following Britain’s vote to leave the European Union, markets regained steam and rallied for four straight weeks, pushing the S&P 500 and Dow to new records. We often talk about the importance of not overreacting to market declines. This is the reason why. We can’t predict how markets will perform after a shock, but the biggest market days often come shortly after a pullback. Calmly assessing the situation and avoiding emotional responses is a smart strategy for long-term investors. Ok, let’s talk about some of last month’s economic events. The Federal Reserve held another Open Market Committee meeting at […]
August 8, 2016

SP 500 at New High After Jobs Blowout

“SP 500 at New High After Jobs Blowout”, WEEKLY UPDATE – August 8, 2016 Stocks bounced last week, ending sharply higher after a better-than-expected jobs report. For the week, the SP 500 gained 0.43%, the Dow rose 0.60%, the NASDAQ added 1.14%, but the MSCI EAFE lost 1.41%.[1] SP 500 Among last week’s major events was a shockingly good July jobs report. Last month, the economy added 255,000 new jobs, blowing away expectations of 180,000 jobs.[2] Even better, the gains were broad-based and the labor force participation rate (an area of concern because fewer people in our population were actively participating in the labor force) ticked upward.[3] Overall, not too shabby. Headline unemployment remained stable at 4.9%, but that single number hides a lot of complexity. Let’s dig a little deeper. The chart below shows six different measures of unemployment, each slicing the data in a different way. The U-6 unemployment rate is the most comprehensive, showing total unemployed, marginally attached workers (discouraged workers and those considered barely employed) and those total employed part time for economic reasons.[4] You can see that all measures rose during the recession and have been steadily dropping ever since. While headline unemployment (U-3 unemployment in official […]