Quote
of the month.
“When you are aspiring to the highest place, it is honorable to reach the second or even the third rank.” – Cicero
“When you are aspiring to the highest place, it is honorable to reach the second or even the third rank.” – Cicero
Idea
of the month.
“There are several problems of setting a fixed goal for your long-term finances. What if “your number” isn’t big enough when you get there? What if you could have done much better? What if your plan still includes significant inefficiencies? Better to get a second opinion and try to maximize your long-term wealth, while protecting yourself from unexpected surprises along the way. Let us help you think through your alternatives.”
“There are several problems of setting a fixed goal for your long-term finances. What if “your number” isn’t big enough when you get there? What if you could have done much better? What if your plan still includes significant inefficiencies? Better to get a second opinion and try to maximize your long-term wealth, while protecting yourself from unexpected surprises along the way. Let us help you think through your alternatives.”
The
month in brief.
Stocks rocketed north in March. The DJIA, NASDAQ and S&P 500 all advanced between 5.2-7.2% for the month.1 Whispers about a double-dip recession, a possible correction and prolonged malaise in the real estate sector were not loud enough to take the market out of rally mode. Shouts of victory and shouts of anger accompanied the passage of the President’s long-envisioned health care reforms. Economically, slow and reasonably assured growth seemed the order of the day.
Stocks rocketed north in March. The DJIA, NASDAQ and S&P 500 all advanced between 5.2-7.2% for the month.1 Whispers about a double-dip recession, a possible correction and prolonged malaise in the real estate sector were not loud enough to take the market out of rally mode. Shouts of victory and shouts of anger accompanied the passage of the President’s long-envisioned health care reforms. Economically, slow and reasonably assured growth seemed the order of the day.
Domestic
economic health.
First the indicators, then over to Congress. March’s ISM manufacturing index came in at a very strong 59.6, and the ISM service sector index read 55.4.2 Durable goods orders rose by 0.6% in February, the tenth advance in the last 11 months.3 Data showed personal spending up 0.3% for February, even as personal wages were flat.4 It was hard to get a fix on consumer confidence. The Conference Board’s index soared from 46.5 in February to 52.5 in March, even as the IBD and University of Michigan indexes fell.5
First the indicators, then over to Congress. March’s ISM manufacturing index came in at a very strong 59.6, and the ISM service sector index read 55.4.2 Durable goods orders rose by 0.6% in February, the tenth advance in the last 11 months.3 Data showed personal spending up 0.3% for February, even as personal wages were flat.4 It was hard to get a fix on consumer confidence. The Conference Board’s index soared from 46.5 in February to 52.5 in March, even as the IBD and University of Michigan indexes fell.5
How
about inflation? Was it still minimal? Yes. CPI was flat in
February; core CPI inched up 0.1%. Core CPI rose just 1.3% from
February 2009-February 2010, which marked the tamest core inflation
in six years.6
Wholesale inflation (PPI) decreased 0.6% in
February.7
The
Federal Reserve reiterated that interest rates would remain low for
an extended period. The end of March did mark the end of its
purchases of mortgage-backed securities, with everyone wondering
what that would mean for the real estate sector.9
The
jobless rate wouldn’t budge. It stayed at 9.7% for March – the
same as it had been for the previous two months.9
Major
health care reforms finally passed as the House of Representatives
approved the Senate version of the long-contested legislation. Not
one Republican voted for the bill. As a result of its passage, some
big changes are poised to happen in 2014 – just about every
American will be required to have health insurance or pay a penalty,
and businesses with 50 or more employees will pay a penalty for not
sponsoring health insurance plans. Insurers will not be able to deny
coverage due to preexisting conditions, and individuals and firms
may shop for (theoretically cheaper) insurance through state-run
exchanges. The public option? It fell by the wayside.10,11
Global
economic health.
Japan’s industrial output posted a gain for the eleventh straight month in February, a month in which its exports increased by the most in any month in 30 years. In March, small business confidence in Japan hit its highest level in two years. Purchasing manufacturers indices showed strong growth in March in China, Japan, Taiwan and South Korea.12,13
Japan’s industrial output posted a gain for the eleventh straight month in February, a month in which its exports increased by the most in any month in 30 years. In March, small business confidence in Japan hit its highest level in two years. Purchasing manufacturers indices showed strong growth in March in China, Japan, Taiwan and South Korea.12,13
The
European Union began to outline a bailout for Greece’s troubled
economy, which helped preserve its credit rating with Standard &
Poor’s (Greece’s rating remained at BBB+ and it lost the
“creditwatch negative” label). Investor confidence beat
expectations in Germany last month, and jobless claims in the U.K.
had fallen at the fastest pace in 13 years in February.
Manufacturing expanded in the Eurozone, as the key PMI index went
from 54.2 in February to 56.6 in March. Last month, Germany’s PMI
stood at an impressive 60.2.13,14
World
financial markets.
You have to look hard to find a benchmark index of consequence that had a bad March. (For the record, Chile’s stock index lost 1.7% last month.) Ireland’s ISEQ and Russia’s RTSI gained 10.6% and 10.0% last month. On the Nikkei 225, it was like old times – a remarkable 9.5% March gain. Other indices performed as follows last month: CAC 40, + 7.2%; DAX, +9.9%: FTSE 100, +6.1%; TSX Composite, +3.5%; Shanghai Composite, +0.2%; Hang Seng, +3.1%; Bovespa, +5.8%; Australian All Ordinaries, +5.2%; Sensex, +6.7%. The MSCI Emerging Markets Index advanced 5.9%; the MSCI World Index gained 7.9%.15
You have to look hard to find a benchmark index of consequence that had a bad March. (For the record, Chile’s stock index lost 1.7% last month.) Ireland’s ISEQ and Russia’s RTSI gained 10.6% and 10.0% last month. On the Nikkei 225, it was like old times – a remarkable 9.5% March gain. Other indices performed as follows last month: CAC 40, + 7.2%; DAX, +9.9%: FTSE 100, +6.1%; TSX Composite, +3.5%; Shanghai Composite, +0.2%; Hang Seng, +3.1%; Bovespa, +5.8%; Australian All Ordinaries, +5.2%; Sensex, +6.7%. The MSCI Emerging Markets Index advanced 5.9%; the MSCI World Index gained 7.9%.15
Commodities
markets.
Looking at metals, we saw mostly gains. Gold futures did lose 0.45% in March, with prices dipping to $1,113.30 at month’s end. Silver gained 6.1% for the month; platinum prices were up 6.9% for March. Oil gained 5.15% for March and 5.54% for the quarter, settling at $83.76 a barrel on March 31. Natural gas prices had another bad month, losing 19.61%. The U.S. Dollar Index advanced 0.89% in March.16,17,18
Looking at metals, we saw mostly gains. Gold futures did lose 0.45% in March, with prices dipping to $1,113.30 at month’s end. Silver gained 6.1% for the month; platinum prices were up 6.9% for March. Oil gained 5.15% for March and 5.54% for the quarter, settling at $83.76 a barrel on March 31. Natural gas prices had another bad month, losing 19.61%. The U.S. Dollar Index advanced 0.89% in March.16,17,18
Housing
& interest rates.
At the end of March, the Fed stopped its 15-month campaign to buy up mortgage-backed securities. So everyone was watching interest rates as March came to a close. Rates did move up, though not noticeably until the last week of the month. Rates on 30-year FRMs were averaging 4.97% in Freddie Mac’s March 4 Primary Mortgage Market Survey, and 5.08% in the April 1 survey. As for other types of home loans, rate averages moved as follows across March: 5/1-year ARMs, a tiny 0.01 descent to 4.10; 1-year ARMs, a 0.22% drop to 4.05%; 15-year FRMs, a 0.06% rise to 4.39% on April 1.19
At the end of March, the Fed stopped its 15-month campaign to buy up mortgage-backed securities. So everyone was watching interest rates as March came to a close. Rates did move up, though not noticeably until the last week of the month. Rates on 30-year FRMs were averaging 4.97% in Freddie Mac’s March 4 Primary Mortgage Market Survey, and 5.08% in the April 1 survey. As for other types of home loans, rate averages moved as follows across March: 5/1-year ARMs, a tiny 0.01 descent to 4.10; 1-year ARMs, a 0.22% drop to 4.05%; 15-year FRMs, a 0.06% rise to 4.39% on April 1.19
The
latest home sales numbers? Not so hot. Pretty cold, in fact. New
home sales slipped 2.2% in February to a new all-time low, while
residential resales fell 0.6% in that month. The encouraging
surprise was the February pending home sales figure: +8.2% despite
bad weather. Economists had expected that number to be flat or
slightly negative.20,21
Major
indexes.
The numbers were spectacular. The NASDAQ and S&P 500 had their best months since July, and the Dow had its best month since November. The real yield of the 10-year TIPS (which had been unchanged after the first two months of the year) also increased.1,22
The numbers were spectacular. The NASDAQ and S&P 500 had their best months since July, and the Dow had its best month since November. The real yield of the 10-year TIPS (which had been unchanged after the first two months of the year) also increased.1,22
%
Change
|
3/10
|
YTD
|
DJIA
|
+5.15
|
+4.11
|
NASDAQ
|
+7.14
|
+5.68
|
S&P
500
|
+5.68
|
+4.87
|
10YrTIPS
Real Yield
|
+8.11
|
+8.11
|
(Source: CNBC.com, ustreas.gov, 3/31/10)1,22
Indices
are unmanaged, do not incur fees or expenses, and cannot be invested
into directly. These returns do not include dividends.
April
outlook.
Well, you’ve heard it, we’ve all heard it: the talk that the rally is ahead of the economy, the warnings that equities are overvalued, murmurs over what might happen as interest rates rise. Yet the market soldiers on, largely in response to continued positive indicators. Real estate aside, so many signs indicate that the U.S. (and world) economy is improving. The mood remains bullish. The Dow was climbing toward 11,000 at the end of March, and the 12,000 mark does not seem so far away given current investor sentiment and global economic improvement.
Well, you’ve heard it, we’ve all heard it: the talk that the rally is ahead of the economy, the warnings that equities are overvalued, murmurs over what might happen as interest rates rise. Yet the market soldiers on, largely in response to continued positive indicators. Real estate aside, so many signs indicate that the U.S. (and world) economy is improving. The mood remains bullish. The Dow was climbing toward 11,000 at the end of March, and the 12,000 mark does not seem so far away given current investor sentiment and global economic improvement.
Now,
the major economic releases for the rest of April: the most recent
Fed FOMC minutes (4/6), February wholesale inventories (4/9), March
retail sales and CPI, February business inventories, and the Fed’s
April Beige Book (4/14), March industrial production (4/15) , March
housing starts and building permits and the University of Michigan’s
April consumer sentiment poll (4/16), the Conference Board’s March
leading indicators (4/19), March PPI and existing home sales (4/22),
March new home sales and durable goods orders (4/23), the February
Case-Shiller home price index and the Conference Board’s April
consumer confidence survey (4/27), and the initial reading on first
quarter GDP (4/30). We get the March consumer spending data on May
3.
Riddle
of the month.
This is an unusual paragraph. How quickly can you find out what is unusual about it? It looks so plain you would think nothing was wrong with it. In fact, nothing is wrong with it. It is unusual, though. Study it, and think about it, but you still may not find anything odd. What is missing from it?
This is an unusual paragraph. How quickly can you find out what is unusual about it? It looks so plain you would think nothing was wrong with it. In fact, nothing is wrong with it. It is unusual, though. Study it, and think about it, but you still may not find anything odd. What is missing from it?
Contact
my office or see next month’s Update for the answer.
Last
month’s riddle.
A rope ladder hangs over the side of a docked ship and dips into the water. The rungs are 15.75" apart, all equally distanced. At low tide, two of the ladder’s rungs are underwater. At high tide, which is exactly 3.5' above low tide, how many rungs will be underwater?
A rope ladder hangs over the side of a docked ship and dips into the water. The rungs are 15.75" apart, all equally distanced. At low tide, two of the ladder’s rungs are underwater. At high tide, which is exactly 3.5' above low tide, how many rungs will be underwater?
Last
month’s riddle answer:
Two. Although the tide rises 3.5', the ship also rises the same amount. So there will be no change in the number of rungs under water.
Two. Although the tide rises 3.5', the ship also rises the same amount. So there will be no change in the number of rungs under water.
*Registered
Representative and Financial Advisor of Park Avenue Securities LLC
PAS.
Securities
products/services and advisory services offered through PAS a
registered Broker-dealer and investment advisor.
Field
Representative, The Guardian Life Insurance Company of America
(Guardian) New York, NY.
PAS
is an indirect wholly owned subsidiary of Guardian.
Wealth
Design Group is not an affiliate or subsidiary of PAS or Guardian.
PAS
is a member FINRA, SIPC.
These
views are those of Peter Montoya Inc., and not the presenting
Representative or the Representative’s Broker/Dealer, and should
not be construed as investment advice. The Dow Jones Industrial
Average is a price-weighted index of 30 actively traded blue-chip
stocks. The NASDAQ Composite Index is an unmanaged, market-weighted
index of all over-the-counter common stocks traded on the National
Association of Securities Dealers Automated Quotation System. The
Standard & Poor's 500 (S&P 500) is an unmanaged group of
securities considered to be representative of the stock market in
general. It is not possible to invest directly in an index. NYSE
Group, Inc. (NYSE:NYX) operates two securities exchanges: the New
York Stock Exchange (the "NYSE") and NYSE Arca (formerly
known as the Archipelago Exchange, or ArcaEx®,
and the Pacific Exchange). NYSE Group is a leading provider of
securities listing, trading and market data products and services.
The New York Mercantile Exchange, Inc. (NYMEX) is the world's largest
physical commodity futures exchange and the preeminent trading forum
for energy and precious metals, with trading conducted through two
divisions – the NYMEX Division, home to the energy, platinum, and
palladium markets, and the COMEX Division, on which all other metals
trade. The published index of Irish Stock Exchange shares is known as
the Irish Stock Exchange Quotient or ISEQ Overall Index. The General
Stock Price Index (Indice General de Precios de Acciones, or IGPA) is
the main index of the Santiago Stock Exchange in Chile. The RTS Index
(RTSI) is an index of 50 Russian stocks that trade on the RTS Stock
Exchange in Moscow. Nikkei 225 (Ticker: ^N225) is a stock market
index for the Tokyo Stock Exchange (TSE). The Nikkei average is the
most watched index of Asian stocks. The CAC-40 Index is a
narrow-based, modified capitalization-weighted index of 40 companies
listed on the Paris Bourse. The DAX 30 is a Blue Chip stock market
index consisting of the 30 major German companies trading on the
Frankfurt Stock Exchange. The FTSE 100 Index is a share index of the
100 most highly capitalized companies listed on the London Stock
Exchange. The S&P/TSX Composite Index is an index of the stock
(equity) prices of the largest companies on the Toronto Stock
Exchange (TSX) as measured by market capitalization. The Shanghai
Stock Exchange Composite Index is a capitalization-weighted index
that tracks the daily price performance of all A-shares and B-shares
listed on the Shanghai Stock Exchange. The Hang Seng Index is a
free-float capitalization-weighted index of selection of companies
from the Stock Exchange of Hong Kong. The Bovespa Index (Portuguese:
Índice Bovespa) is an index of about 50 stocks that are traded on
the São Paulo Stock, Mercantile & Futures Exchange. The S&P/ASX
All Ordinaries Index represents the 500 largest companies in the
Australian equities market. The BSE Sensex or Bombay Stock Exchange
Sensitive Index is a value-weighted index composed of 30 stocks that
started January 1, 1986. The MSCI World Index is a free-float
weighted equity index that includes developed world markets, and does
not include emerging markets. The MSCI Emerging Markets Index is a
float-adjusted market capitalization index consisting of indices in
more than 25 emerging economies. Neither the named Representative nor
Broker/Dealer gives tax or legal advice. All information is believed
to be from reliable sources; however we make no representation as to
its completeness or accuracy. All economic and performance data is
historical and not indicative of future results. The market indices
discussed are unmanaged. Investors cannot invest in unmanaged
indices. The publisher is not engaged in rendering legal, accounting
or other professional services. If other expert assistance is needed,
the reader is advised to engage the services of a competent
professional. Please consult your Financial Advisor for further
information. Additional risks are associated with international
investing, such as currency fluctuations, political and economic
instability and differences in accounting standards.
www.montoyaregistry.com
Citations.
1
cnbc.com/id/36116955 [3/31/10]
2
ism.ws/ [4/5/10]
3
businessweek.com/news/2010-03-31/factory-orders-in-the-u-s-climb-for-10th-time-in-11-months.html
[3/31/10]
4
foxbusiness.com/story/markets/updateus-consumers-spend-february-income-flat/
[3/29/10]
5
nasdaq.com/newscontent/20100330/dollar-rallies-on-stronger-consumer-confidence-.aspx?storyid=20100330_3087_fx360
[3/30/10]
6
washingtonpost.com/wp-dyn/content/article/2010/03/18/AR2010031804905.html?hpid=topnews
[3/18/10]
7
bls.gov/news.release/ppi.nr0.htm [3/17/10]
8
businessweek.com/news/2010-04-02/geithner-says-u-s-economy-entering-sustainable-growth-period.html
[4/2/10]
9
nytimes.com/2010/04/01/business/01fed.html [3/31/10]
10
nytimes.com/2010/03/23/health/policy/23health.html?ref=us [3/23/10]
11
cbsnews.com/stories/2010/03/23/eveningnews/main6326955.shtml
[3/23/10]
12
cfdtrading.com/category/asian-markets/ [4/1/10]
12
cfdtrading.com/category/asian-markets/page/2/ [4/1/10]
13
blogs.wsj.com/economics/2010/04/01/world-wide-factory-activity-by-country-3/
[4/1/10]
14
cfdtrading.com/category/european-markets/ [3/16/10]
15
investmentpostcards.com/wp-content/uploads/2010/04/tabel-groot.jpg
[4/1/10]
16
blogs.wsj.com/marketbeat/2010/03/31/data-points-energy-metals-252/
[3/31/10]
17
coinnews.net/2010/04/03/bullion-business-weekend-report-april-3-2010/
[4/3/10]
18
online.wsj.com/mdc/public/npage/2_3051.html [4/1/10]
19
freddiemac.com/pmms/ [4/4/10]
20
foxbusiness.com/story/markets/industries/industrials/february-new-home-sales--annual-rate/
[3/24/10]
21
marketwatch.com/story/pending-home-sales-jump-82-in-february-2010-04-05?reflink=MW_news_stmp
[4/5/10]
22
ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml
[4/5/10]
