MONTHLY QUOTE
“If
you command wisely, you’ll be obeyed cheerfully.” – Thomas
Fuller
MONTHLY TIP
If
you are in line for a bonus (or you are considering taking one
from your own business), weigh the tax implications of receiving
it in December versus January.
MONTHLY
RIDDLE
I
am the center of gravity, and part of every victory. I am clearly
seen in the middle of a river. Three are in love with me and I
have three associates in vice. What am I?
Last month’s riddle:
I
went into the woods and got it. I sat down to seek it. I brought
it home with me because I couldn't find it. What is it?
Last month’s answer: A
splinter.
THE
MONTH IN BRIEF
An
astonishing rally during the last three days of November did much
to improve what had been an anxious month for investors. The Dow
ended up gaining 0.76% in November after jumping 4.24% on
November 30 alone, responding largely to coordinated action by
the world’s central banks to improve liquidity in the European
Union. We got hints that the real estate market might be finding
a legitimate bottom, some fine numbers from Black Friday and
Cyber Monday, and pleasant surprises from some other key economic
indicators. Our stock market struggled to pull off gains in the
face of debt worries, both in Europe and at home.
1
DOMESTIC
ECONOMIC HEALTH
November
2011 might be remembered most for a political and economic
lowlight. On November 21, the Congressional “super committee”
of 12 assigned to come up with a plan to reduce the federal
deficit simply quit. This paved the way for involuntary cuts of
$1.2 trillion in 2013. That prompted a stock market plunge and a
Fitch Ratings decision, with the agency changing its U.S. outlook
to “negative”.2,3
In
better news, consumers spent $52.4 billion during the four-day
Thanksgiving Day weekend. The National Retail Federation said
average shopper shelled out $398.62 in those four days, a new
record. Cyber Monday sales rose 22% over 2010 levels to $1.25
billion. The Commerce Department noted that personal spending
rose only 0.1% in October; however, personal wages did increase
by 0.4%. The federal government’s Consumer Price Index also
budged north by 0.1% in October with annualized inflation coming
in at 3.5%.4,5,6
.ng only
rose 0.1% for the montday sales rose 33%m some other key economic
indicators. Statesidgn
There
was a rebound in consumer confidence. November’s Conference
Board poll saw a 15-point spike to 56.0. The month’s final
University of Michigan index of consumer sentiment came in at
64.1, much better than the final 55.7 for October; it was the
third straight monthly gain for the index.4,7
Now,
over to industry. The Institute for Supply Management’s
November manufacturing PMI bucked a global trend and advanced
1.9% to 52.7, marking the sector’s 28th straight month of
expansion. ISM’s most recent service sector PMI (October) came
in at 52.9, down from 53.0 the preceding month. Producer prices
fell 0.3% in October and total durable goods orders slipped 0.7%
in September (they went +0.7% when transportation orders were
factored out).8,9,10,11
The
jobless rate stunningly dropped to 8.6% in November; it had been
9.0% in October and 9.1% in September. Some of this reduction in
unemployment was attributable to people dropping out of the job
hunt, but the private sector did add 140,000 positions last
month. The underemployment rate fell 0.6% to 15.6%.12
GLOBAL
ECONOMIC HEALTH
Political
change did not stop key Italian bond yields from approaching 7%
during November. On November 23, 35% of the 10-year notes offered
at Germany’s federal bond auction went unsold. After these
alarming developments, the Federal Reserve and other key central
banks united on November 30 to foster cheaper dollar loans for
European lenders, a move that global markets cheered in
relief.1,13,14,15
Economically,
the world is sometimes a small village. Was the trouble in Europe
now indirectly affecting China? Its PMI fell to 48 in October
from 51, the largest monthly slip since March 2009; below 50 is
the contraction zone. Output also contracted in Taiwan and South
Korea in October. Key PMIs for the Eurozone and Great Britain
also fell below 50 in that month of data.14,16
WORLD
MARKETS
Most
world benchmarks seem headed for double-digit 2011 losses;
fortunately, our benchmarks have done better. How did things go
globally in November? Poorly, for the most part. In USD terms,
here are the monthly numbers according to Morningstar on November
30: FTSE 100, -0.70%; DAX, -0.85%; CAC 40, -2.72%; All
Ordinaries, -4.03%; Shanghai Composite, -5.46%; Nikkei 225,
-6.16%; TSX Composite, -6.29%; Hang Seng, -9.63%; Sensex,
-10.09%. The oft-watched MSCI World (-2.69%) and MSCI Emerging
Markets (-6.75%) indices both slipped for the month.17,18
COMMODITIES
MARKETS
Gold
futures advanced 1.45% last month while copper lost 1.56% and
silver lost 4.51%. Through the end of November, gold was +23.14%
YTD on the COMEX. The U.S. Dollar Index gained 2.86% in November;
at 78.49, it was still -1.01% YTD. Oil ended November at $100.36
a barrel after going +7.69% for the month. Natural gas went
-9.76% in November. Retail gas prices (regular unleaded) fell
4.30% last month to $3.30 a gallon at month’s end. Coffee
gained 2.82% for November, but other key crop futures descended:
cotton lost 11.13%, corn lost 6.03% and wheat lost 2.27%.15
REAL
ESTATE
Unexpectedly,
the National Association of Realtors found that existing home
sales increased 1.4% in October. Inventory shrank 2.2% to an
8.0-month backlog; the median sale price was $162,500, down 4.7%
from a year before. The NAR also measured pending home sales
surging by 10.4% in October. The S&P/Case-Shiller Home Price
Index showed an overall 0.6% decline in September; after a 3Q
overall gain of 0.1%, the index showed home prices at roughly 1Q
2003 levels. New home sales increased by 1.3% in October with the
annualized gain at 8.9%.15,19,20,21
Interest
rates on conventional mortgages didn’t move much. Freddie Mac
noted the following change (or lack thereof) in its November 3
and December 1 Primary Mortgage Market Surveys: the average rate
on the 30-year FRM stayed flat at 4.00%, and the average rate on
the 15-year FRM ticked down 0.01% to 3.30%. Rates on 5/1-year
ARMs moved down from 2.96% to 2.90%; rates on 1-year ARMs fell to
2.78% from 2.88%.22
LOOKING
BACK…LOOKING FORWARD
The
month ended well. November 28-30 represented the S&P 500’s
best three days since November 23-25, 2008. At the close on
November 30, the Dow was back above 12,000, the S&P back
above 1,200 and the NASDAQ back above 2,600.15
| % CHANGE |
Y-T-D
|
1-MO
CHG
|
1-YR
CHG
|
10-YR
AVG
|
DJIA
|
+4.04
|
+0.76
|
+9.45
|
+2.23
|
NASDAQ
|
-1.23
|
-0.50
|
+4.89
|
+3.57
|
S&P
500
|
-0.85
|
-2.39
|
+5.63
|
+0.94
|
| REAL YIELD |
11/30
RATE
|
1
YR AGO
|
5
YRS AGO
|
10
YRS AGO
|
10
YR TIPS
|
0.03%
|
0.74%
|
2.16%
|
3.50%
|
Sources:
reuters.com, cnnmoney.com, bigcharts.com, treasury.gov -
11/30/111,23,24,25,26,27,28 Indices
are unmanaged, do not incur fees or expenses, and cannot be
invested into
directly. These
returns do not include dividends.
December
is historically a fine month for stocks, of course. With the
continuing EU debt troubles, will a “Santa Claus” rally will
occur as we get toward New Year’s Day? It does seem as though
there is more optimism at the moment, or at least greater
distraction on Wall Street from the crisis in Europe and the
apparent slowdown in China. Perhaps stateside indicators will
encourage the bulls to run and make 2011 a bit better
statistically for investors. As CNBC notes, the Dow has gone
positive in 71% of Decembers in its long history, posting an
average gain of 1.40%. December has also been the best month of
the year for the S&P 500 since 1950.29,30
UPCOMING
ECONOMIC RELEASES
Here are the news items arriving between now and the end of the
year: the
November ISM service sector index and the report on October
factory orders (12/5), the initial University of Michigan
December consumer sentiment survey (12/9), the report on November
retail sales and a Federal Reserve policy announcement (12/13),
the November PPI and November industrial output (12/15), the
November CPI (12/16), data on November housing starts and
building permits (12/20), November existing home sales (12/21),
the BEA’s final estimate of 3Q GDP, the final University of
Michigan December consumer sentiment survey and the Conference
Board’s November Leading Economic Indicators index (12/22),
November consumer spending, new home sales and durable goods
orders (12/23), the October Case-Shiller home price index and the
Conference Board’s December consumer confidence poll (12/27),
and the November pending home sales report (12/29). The December
unemployment report will be out on January 6.
*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
3040 Post Oak Blvd, Suite 400, Houston, TX 77056 281.220.2776
PAS is an indirect wholly owned subsidiary of Guardian.
PAS is a member FINRA/SIPC
Wealth Design Group is not an affiliate or subsidiary of PAS or Guardian.
This
material was prepared by MarketingLibrary.Net Inc., and does not
necessarily represent the views of the presenting party, nor
their affiliates. Marketing
Library.Net Inc. is not affiliated with any broker or brokerage
firm that may be providing this information to you. This
information should not be construed as investment, tax or legal
advice and may not be relied on for the purpose of avoiding any
Federal tax penalty. This is not a solicitation or recommendation
to purchase or sell any investment or insurance product or
service, and should not be relied upon as such. 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
FTSE 100 Index is a share index of the 100 most highly
capitalized companies listed on the London Stock Exchange. The
DAX 30 is a Blue Chip stock market index consisting of the 30
major German companies trading on the Frankfurt Stock Exchange.
The CAC-40 Index is a narrow-based, modified
capitalization-weighted index of 40 companies listed on the Paris
Bourse. The S&P/ASX All Ordinaries Index represents the 500
largest companies in the Australian equities market. The SSE
Composite Index is an index of all stocks (A shares and B shares)
that are traded at the Shanghai Stock Exchange. 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 Hang Seng Index is a freefloat-adjusted market
capitalization-weighted stock market index that is the main
indicator of the overall market performance in Hong Kong. BSE
Sensex or Bombay Stock Exchange Sensitivity 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. The US Dollar Index measures
the performance of the U.S. dollar against a basket of six
currencies. Additional risks are associated with international
investing, such as currency fluctuations, political and economic
instability and differences in accounting standards. 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. 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
assistance is needed, the reader is advised to engage the
services of a competent professional.
Citations.
1
-
www.reuters.com/article/2011/11/30/markets-stocks-close-idUSWEN125420111130
[11/30/11]
2
-
abcnews.go.com/Business/gdp-grew-25-percent-boosted-consumer-spending-double/story?id=14821833
[10/27/11]
3
-
abcnews.go.com/blogs/business/2011/11/fitch-cuts-u-s-outlook-from-stable-to-negative/
[11/28/11]
4
-
www.kansascity.com/2011/11/29/3291899/americans-in-november-more-confident.html
[11/29/11]
5
-
www.reuters.com/article/2011/11/23/us-usa-economy-consumer-idUSTRE7AM17320111123
[11/23/11]
6
- www.businessweek.com/ap/financialnews/D9R1SFE00.htm [11/16/11]
7
-
latimesblogs.latimes.com/money_co/2011/11/report-consumer-confidence-is-up-.html
[11/23/11]
8
- www.ism.ws/ISMReport/MfgROB.cfm [12/1/11]
9
- www.ism.ws/ISMReport/NonMfgROB.cfm?navItemNumber=12943
[11/3/11]
10
- www.bls.gov/news.release/ppi.nr0.htm [11/15/11]
11
-
community.nasdaq.com/News/2011-11/us-durablegoods-order-fell-07-in-october.aspx?storyid=104419
[11/23/11]
12
-
www.reuters.com/article/2011/12/02/us-usa-economy-idUSTRE7AL14I20111202
[12/2/11]
13
-
www.reuters.com/article/2011/11/29/italy-bonds-auction-idUSL5E7MS3S820111129
[11/29/11]
14
-
www.fxstreet.com/fundamental/analysis-reports/the-energy-report/2011/11/24/
[11/24/11]
15
-
money.msn.com/market-news/post.aspx?post=fd688bc8-f250-4f5f-b360-b0324cd7581c
[11/30/11]
16
-
www.ft.com/cms/s/0/88f51a98-1c3e-11e1-af09-00144feabdc0.html#axzz1fKupP0aW
[12/1/11]
17
- news.morningstar.com/index/indexreturn.html [11/30/11]
18
-
mscibarra.com/products/indices/international_equity_indices/gimi/stdindex/performance.html
[11/30/11]
19
- realtors.org/press_room/news_releases/2011/11/ehs_oct
[11/21/11]
20
- www.census.gov/const/newressales.pdf [11/28/11]
21
-
www.marketwatch.com/story/us-home-prices-drop-06-in-september-2011-11-29
[11/29/11]
22
- www.freddiemac.com/pmms/ [12/2/11]
23
-
money.cnn.com/data/markets/dow/ [11/30/11]
24
-
money.cnn.com/data/markets/sandp/ [11/30/11]
25
-
money.cnn.com/data/markets/nasdaq/ [11/30/11]
26
-
bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=11%2F30%2F01&x=0&y=0
[12/2/11]
26
-
bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=11%2F30%2F01&x=0&y=0
[12/2/11]
26
-
bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=11%2F30%2F01&x=0&y=0
[12/2/11]
27
-
www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll
[11/2/11]
28
-
www.treasurydirect.gov/instit/annceresult/press/preanre/2001/ofm71101.pdf
[7/11/01]
29
-
montoyaregistry.com/Financial-Market.aspx?financial-market=an-introduction-to-the-stock-market&category=29
[11/2/11]
30
- www.cnbc.com/id/45481657 [11/30/11]
