MONTHLY QUOTE
“You
make a living by what you get. You make a life by what you
give.” – Winston
Churchill
A man tells a friend
that he married three women yesterday, and it was all legal. In
fact, it was routine. How can he make such a statement?
Last month’s riddle:
What
has three feet yet cannot run or walk?
Last month’s answer: A
yardstick.
MONTHLY
TIP
"You
can never stop paying for term life insurance".
Indeed, most folks stop writing their premium checks at some
point - the overwhelming majority (>98%) of term (i.e.
temporary, rented) life insurance policies are cancelled by the
insured without the company paying any benefit. That doesn’t
make term life protection a bad thing. But consider this - the
opportunity cost of those "lost premiums" you paid
during the rental period - money you could have otherwise
invested - continues growing, forever, no matter when you stopped
paying to rent the protection.
Said
another way, take a dollar out of your financial life today, with
term life or any other “pure insurance” program [e.g., auto
insurance, homeowners’ insurance, disability income insurance;
from all of which you DON’T WANT TO COLLECT ANY BENEFITS], and
the dollar is gone forever, along with the potential earnings it
could have made you.
Let’s
recap - unlimited costs, uncertain benefits - no wonder people
gloss over the possible outcomes and instictively minimize their
term life programs!
I’m
a huge fan of protecting yourself and your family, but I’d like
to show you ways to accomplish this important goal that will
provide a positive return of, and on, your money. Just give me a
call!
THE
MONTH IN BRIEF
The
Dow gained 0.01% in April – a month in which the impressive
bull run of the first quarter moderated and more pessimism crept
onto Wall Street. Some domestic indicators were tepid – but
others did provide nice surprises. Signals out of Europe flashed
hints (or confirmations) of recession. Some key overseas indices
suffered notable April losses. Our Q1 GDP was unimpressive, but
U.S. consumer spending improved for March. Oil futures rose while
gasoline and crop futures retreated. Analysts wondered (again) if
the real estate market had at last bottomed out.1
DOMESTIC
ECONOMIC HEALTH
Consumer
spending advanced 0.3% in March, with wages rising 0.4%. The wage
increase doubled the gain forecast by a consensus of economists
polled by Briefing.com; that was the good news. The bad news:
those analysts expected a personal spending gain of 0.5% in light
of the (revised) 0.9% advance in February. Consumer sentiment was
holding up reasonably well even with soaring fuel prices. From
March to April, the Conference Board’s poll wavered from 69.5
to 69.2; the University of Michigan’s consumer sentiment survey
went from a final March reading of 75.7 to a final April mark of
76.4.2,3
The
initial estimate of Q1 GDP arrived in late April, and it
underwhelmed the bulk of economists and Wall Street analysts, who
were hoping for something more in line with the 3.0% growth of
the preceding quarter. The economy’s 2.2% Q1 growth was by no
means horrible; investors just hoped to further justify the
winter rally. What kind of inflation was America experiencing?
The Consumer
Price Index rose 0.3 in March
following gains of 0.4%
in February and 0.2% in January. Annualized consumer inflation
was at 2.7% in March, down from 2.9% in February. The Producer
Price Index was flat in March, although core PPI advanced
0.3%.3,4,5
One
big positive that surprised nearly everybody emerged. According
to the Institute for Supply Management, April 2012 was the
hottest month for U.S. manufacturing since June 2011. ISM’s
manufacturing PMI jumped 1.4% for April to 54.8. Weeks earlier,
ISM’s service sector PMI had read 56.0 for March, down 1.3%
from the February mark. Something else that declined in March:
durable goods orders. They fell 4.2%, with core hard goods orders
down 1.1%. March retail sales rose by 0.8%, far surpassing the
0.3% gain projected by economists surveyed by Bloomberg.3,6,7,8
April
also saw solid corporate earnings. The buzz was that this
earnings season would disappoint, but as Bloomberg noted, 74% of
S&P 500 firms reporting results between April 10 and May 1
beat forecasts. At the start of May, the S&P 500 was trading
at 14.3x reported earnings, notably below the average of 16.4
recorded since 1954. The takeaway: stocks were still pretty
cheap.9
The
jobless rate ticked down to 8.2% in March. The economy added
merely 120,000 jobs during that month, but that brought the net
gain in hiring since December to 635,000. While the Federal
Reserve indicated it would hold off on further quantitative
easing measures, it did state its commitment to keeping the
federal funds rate at the current lows through the end of
2014.8,10
GLOBAL
ECONOMIC HEALTH
Was
Spain the next Greece? Global investors hoped not, given its
comparative magnitude and influence on the European and global
economies. April ended with Standard & Poor’s downgrading
Spain’s debt from A to BBB with a negative outlook. Spain’s
jobless rate had hit 24.4% in the first quarter. Beyond Spain,
the EU jobless rate was 10.9% in March with inflation at 2.6% in
April. The key Markit purchasing manager index for the EU dipped
down to 45.9 last month, marking the ninth straight month of
sector contraction. Word also arrived that Great Britain had
slipped back into a recession in the first quarter; its last
downturn had ended at the start of 2010. In April, a total of 12
European economies were in recession; besides the U.K., the list
also included Spain, Italy, Ireland and the
Netherlands.10,11,12,13
The
Asia-Pacific region offered a different story. China’s official
PMI hit 53.3 for April, a 13-month peak. The HSBC China PMI
(which tracks mostly private firms) also rose 1.0% to 49.3. Other
key PMIs in April: India, 54.9; Indonesia, 50.5; South Korea,
51.9; Taiwan, 51.2; Australia, 43.9. In other news, exports fell
in India for the first time since 2009 in April and the Bank of
Japan announced a stimulus.12,14,15
WORLD
MARKETS
Looking
at Morningstar data measured in U.S. dollar terms, we see a mixed
month. The Hang Seng (+2.50%), Shanghai Composite (+5.90%) and
S&P/ASX All Ordinaries (+ 1.07%) fared better than the FTSE
100 (-0.53%), the CAC 40 (-6.16%), the Nikkei 225 (-5.58%), the
TSX Composite (-2.19%), the DAX (-4.05%) and the Sensex (-0.71%).
The MSCI World Index (-1.37%) and MSCI Emerging Markets Index
(-1.48%) both posted April losses.16,17
COMMODITIES
MARKETS
Gold’s
allure dimmed just a bit in April. At the close on April 30, the
COMEX price was $1,664.20 an ounce (-0.46% on the month). Silver
lost 4.52% in April, but copper managed a monthly gain of 0.12%.
Oil futures rose 1.80% for the month on the NYMEX to $104.87 per
barrel. Heating oil went +0.44% for the month while natural gas
went +7.48%. Gasoline futures pulled back: RBOB gasoline lost
-5.55% in April. Retail gas prices fell 2.72% as well. It was
also a poor month for crop futures, with wheat going -0.95%, corn
-1.51%, coffee -2.95% and cotton -4.81%.13
REAL
ESTATE
According
to the National Association of Realtors, pending home sales rose
4.1% in March. Economists polled by Briefing.com expected a 1.0%
gain. That was a bright spot, and others could be found in data
that for the short term was mostly negative. The February
S&P/Case-Shiller Home Price Index showed that overall prices
actually rose 0.2% - the first advance since the April 2011
edition. (Zillow reported that the median U.S. home value rose
0.5% in March, the best monthly gain since 2006.) As for new and
existing home sales, both retreated: the Census Bureau said that
the pace of new home sales fell 7.1% in March and NAR noted a
2.6% slip in residential resales. The bright side in existing
home sales: NAR also said the median price had risen 2.5% in the
past 12 months.18,19,20
Looking
at Freddie Mac’s March 29 and April 26 Primary Mortgage Market
Surveys, average interest rates on home loans moved lower as
follows:
30-year FRMs, 3.99% to 3.88%; 15-year FRMs, 3.23% to 3.12%;
5/1-year ARMs, 2.90% to 2.85%; 1-year ARMs, 2.78% to 2.74%.21
LOOKING
BACK…LOOKING FORWARD
NASDAQ
and S&P 500 winning streaks ended in April, but the Dow’s
winning streak extended to seven months. At the close on April
30, the Dow was at 13,213.63, the S&P 500 at 1,397.91 and the
NASDAQ at 3,046.36.1,13,22
%
CHANGE
|
Y-T-D
|
1-MO
CHG
|
1-YR
CHG
|
10-YR
AVG
|
DJIA
|
+8.15
|
+0.01
|
+3.15
|
+3.46
|
NASDAQ
|
+16.94
|
-1.46
|
+6.01
|
+8.39
|
S&P
500
|
+11.16
|
+0.75
|
+2.52
|
+3.12
|
REAL
YIELD
|
4/30
RATE
|
1
YR AGO
|
5
YRS AGO
|
10
YRS AGO
|
10
YR TIPS
|
-0.30%
|
0.75%
|
2.20%
|
3.48%
|
Sources:
usatoday.com, thestockmarketwatch.com, bigcharts.com,
treasury.gov - 4/30/121,22,23,24,25,26
Indices
are unmanaged, do not incur fees or expenses, and cannot be
invested into
directly.
These
returns do not include dividends.
Will
May be a decent month for stocks? Looking past the old warning to
“sell in May and go away”, we see that the fifth month of the
year has been a pretty good month in recent market history. The
S&P 500 logged a May gain 71% of the time from 1988-2011; the
average monthly gain was 1.22%. The MSCI Emerging Markets index
advanced in 58% of Mays in the same window of time, with the
average May gain being 1.28%.
Also,
many U.S. economic indicators have really improved in the past 12
months. ISM surveys have manufacturing up 2% year-over year and
nonfarm payrolls have expanded by 29% in that time frame. Our
2.2% Q1 growth is a big improvement over the 0.4% GDP advance of
Q1 2011. Our housing sector seems poised for improvement, and
maybe it is on the way back already – Credit Suisse analysts
note that U.S. building permits are up 35% from a year ago, while
housing starts and existing home sales are respectively 3% and 5%
improved. Auto sales are at a four-year peak. So while spring and
summer have historically brought stock market doldrums, it
appears we have some compelling reasons to disregard history
again, at least for this month.27
UPCOMING
ECONOMIC RELEASES
The schedule for the balance of May looks like this ... the April
jobs report (5/4), March wholesale inventories (5/9), the April
PPI and the initial University of Michigan consumer sentiment
survey for April (5/11), April’s CPI and retail sales plus
March business inventories (5/15), April industrial output,
housing starts and building permits and the minutes of the 4/25
Fed policy meeting (5/16), the April Conference Board Leading
Economic Indicators index (5/17), April existing home sales
(5/22), April new home sales (5/23), April durable goods orders
(5/24), the final April University of Michigan consumer sentiment
survey (5/25), the March Case-Shiller home price index and the
Conference Board’s May consumer confidence poll (5/29), April
pending home sales (5/30) and the second estimate of Q1 GDP
(5/31). The April personal spending report won’t be released
until June 1 – coincidentally, the same day as the May
unemployment report and the May ISM services index.
*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.
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 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. The SSE
Composite Index is an index of all stocks (A shares and B shares)
that are traded at the Shanghai Stock Exchange.
The
S&P/ASX All Ordinaries Index represents the 500 largest
companies in the Australian equities market. The FTSE 100 Index
is a share index of the 100 most highly capitalized companies
listed on the London Stock Exchange. The CAC-40 Index is a
narrow-based, modified capitalization-weighted index of 40
companies listed on the Paris Bourse. 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
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
DAX 30 is a Blue Chip stock market index consisting of the 30
major German companies trading on the Frankfurt Stock Exchange.
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
-
thestockmarketwatch.com/stock-market-news/market-updates/stocks-end-lower-sp-500-and-nasdaq-post-losses-for-april/26012
[4/30/12]
2
- briefing.com/investor/calendars/economic/2012/04/30-04 [5/1/12]
3
- briefing.com/investor/calendars/economic/2012/04/23-27
[4/27/12]
4
-
www.nytimes.com/2012/04/14/business/economy/consumer-inflation-up-modestly.html
[4/13/12]
5
- www.cnbc.com/id/47027476 [4/12/12]
6
- www.ism.ws/ISMReport/MfgROB.cfm [5/1/12]
7
- www.ism.ws/ISMReport/NonMfgROB.cfm [4/4/12]
8
-
www.bloomberg.com/news/print/2012-04-16/retail-sales-in-u-s-increased-more-than-forecast-in-march.html
[4/16/12]
9
-
www.bloomberg.com/news/2012-05-01/u-s-stock-futures-are-little-changed-before-factory-data.html
[5/1/12]
10
-
https://www.mfs.com/wps/portal/mfs/us-advisor-pub/market-outlooks/week-in-review
[4/27/12]
11
- epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home/
[5/2/12]
12
-
www.reuters.com/article/2012/05/02/global-economy-wrapup-idUSL5E8G223R20120502
[5/2/12]
13
-
money.msn.com/market-news/post.aspx?post=0552b6eb-e56b-40c6-ad22-0751394ee803
[4/30/12]
14
- blogs.ft.com/beyond-brics/2012/05/02/asia-pmis-mixed-signals
[5/2/12]
15
-
blogs.ft.com/beyond-brics/2012/05/02/indian-manufacturing-inches-up
[5/1/12]
16
- news.morningstar.com/index/indexReturn.html [4/30/12]
17
-
mscibarra.com/products/indices/international_equity_indices/gimi/stdindex/performance.html
[4/30/12]
18
-
www.nydailynews.com/life-style/real-estate/rebuilding-home-resales-highest-2010-article-1.1068578
[4/27/12]
19
- briefing.com/Investor/Calendars/Economic/Releases/newhom.htm
[4/27/12]
20
-
blogs.wsj.com/developments/2012/04/19/behind-the-numbers-existing-home-sales-fall/
[4/19/12]
21
- www.freddiemac.com/pmms/ [4/2/12]
22
-
montoyaregistry.com/Financial-Market.aspx?financial-market=an-introduction-to-the-stock-market&category=29
[4/2/12]
23
- www.usatoday.com/money/index [4/30/12]
24
-
bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=4%2F29%2F11&x=0&y=0
[4/30/12]
24
-
bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=4%2F29%2F11&x=0&y=0
[4/30/12]
24
-
bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=4%2F29%2F11&x=0&y=0
[4/30/12]
24
-
bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=4%2F29%2F02&x=0&y=0
[4/30/12]
24
-
bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=4%2F29%2F02&x=0&y=0
[4/30/12]
24
-
bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=4%2F29%2F02&x=0&y=0
[4/30/12]
25
-
treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll
[5/2/12]
26
-
treasurydirect.gov/instit/annceresult/press/preanre/2002/ofm10902.pdf
[1/9/02]
27
- www.marketoracle.co.uk/Article34414.html [5/1/12]
