MONTHLY QUOTE
“When
one door of happiness closes, another opens; but often we look so
long at the closed door that we do not see the one which has
opened for us.” – Helen
Keller
MONTHLY TIP
Are
YOU going to be the one to get information about stock or market
trends first? OR will you more likely be playing a failed game
of catch up if you make investment decisions based on
anticipating short-term trends?
MONTHLY
RIDDLE
This word signifies a
gap between hills or mountain ranges. Yet remove just one letter,
and it signifies a gap between buildings. What is this six-letter
word?
Last month’s riddle:
Sometimes
you pass me slowly, yet other times I just fly by. Sometimes I
simply slip away. Regardless of how slow or fast I am, one
thing’s for sure: when I’m gone, I’m gone for good. So what
am I?
Last month’s answer: Time.
THE
MONTH IN BRIEF
Were
soaring oil and gas prices threatening the recovery? Was a new
European recession exerting a drag on the global economy? In
February, these questions barely dented the prevalent optimism on
Wall Street. The Dow gained 2.5% for the month and settled above
13,000 on February 28; it hadn’t closed that high since June
2008. Energy futures set the pace in the commodities sector. The
housing market offered some hopeful signals. Our economy seemed
to be clearly on the mend, although the economies of China and
certain EU nations appeared poised for soft landings or mild
recessions. It was a strangely calm month, one in which the stock
market behaved like a mature bull market.1,2
DOMESTIC
ECONOMIC HEALTH
Consumer
spending accounts for around 70% of the U.S. economy, so it was
nice to see the biggest rise in that category in four months in
January: a 0.2% increase. Consumer incomes were up 0.3% as well.
Other Commerce Department statistics showed a 0.4% January gain
in retail sales and a 4.0% January drop in durable goods orders
(the expiring 2011 tax break on capital investment likely had
something to do with that decrease). With consumer spending up,
retail sales up and the jobless rate descending to 8.3% for
January, the big picture of the economy looked positive.3,4
So
how did consumers feel? In a word, better. The University of
Michigan’s consumer sentiment survey improved for the sixth
straight month, coming at a final mark of 75.3 for February. (The
gauge has not posted six consecutive months of gains in 15
years.) The Conference Board’s survey also improved in
February, coming in at 70.8.3,5
While
concerns abounded about foreign manufacturing, our factory sector
looked comparatively healthy, even if our premier purchasing
managers index decreased in February. The Institute for Supply
Management’s manufacturing PMI fell 1.7% to 52.4, but it was
above 50 for the 31st consecutive month. ISM’s
non-manufacturing index had come in at 56.8 for January; the 25th
straight month of service sector growth.6,7
The
Labor Department noted a 0.2% January advance in consumer prices.
This was only the second rise in CPI in four months. Core CPI
also rose 0.2% in January. Producer prices rose 0.1% in January
with a 0.4% gain in core PPI. All this looked moderate, but one
spike in prices got the attention of all Americans: the price of
a gallon of regular unleaded gasoline soared 8.36% in February,
settling at a national average of $3.73 a gallon on February
29.1,8
GLOBAL
ECONOMIC HEALTH
As
February wound down, Greece was in line for a third EU/IMF rescue
package of €237 billion to attack the nation’s €350 billion
in sovereign debt
– €107
billion in haircuts to bond investors followed by €130 billion
in loans. Was it another temporary fix to a lingering problem? If
it was, it wasn’t the only continuing economic dilemma in the
EU. In February, Eurozone unemployment hit a euro-era record high
of 10.7% (Spain’s jobless rate is currently above 20%). The
Markit Eurozone PMI came in at 49.0 for February; it hasn’t
been above 50 since July. Many economists believe the EU is now
in a recession.9,1o
China’s
apparent soft landing was corroborated by its latest PMI
readings. Its official PMI was but 51.0 in February, up from 50.5
in January but not far from the 49.0 reading last November. Fresh
data showed that Chinese consumer inflation rose 0.4% in January
to 4.5% while its GDP lessened to 8.9% in Q4 2011. India’s GDP
slipped to 6.1% in Q4 but its PMI remained strong at 56.6 in
February; its inflation rate hit a two-year low in
February.10,11,12
WORLD
MARKETS
Key
benchmarks did well. In fact, gains occurred on all continents.
Looking at data from Morningstar calculated in U.S. dollar terms,
we see that the Nikkei 225 led the way, going +10.46% last month.
Other February performances: DAX, +6.16%; Hang Seng, +6.04%;
Shanghai Composite, +5.93%; CAC 40, +4.67%; FTSE 100, +3.34%;
Sensex, +2.88%; TSX Composite, +2.20%; Australian All Ordinaries,
+1.44%. The MSCI World Index rose 4.66% last month while the MSCI
Emerging Markets Index climbed 5.89%.13,14
COMMODITIES
MARKETS
Oil
ended the month at $107.07 a barrel (and it would climb higher to
open March). Oil futures posted an 8.72% monthly gain, but that
paled next to the 12.67% advance for RBOB gasoline. Natural gas
even rose 4.51% on the COMEX in February. Gold actually had a
losing month, with futures slipping 1.52% to $1,711.30 at the
close on February 29. On the other hand, silver went +4.15% and
copper went +2.36%. In crops, cotton fell 4.31%, coffee retreated
6.77%, corn gained 2.97% and wheat rose 0.30%. The U.S. Dollar
Index retreated for a second straight month, going -0.78%.1
REAL
ESTATE
Existing
home sales had improved again in January, and a slight decline in
new home sales was offset by upward revisions to the Census
Bureau’s December figures. Residential resales improved by 4.3%
in the first month of the year while new home sales were down
0.9%. Both the new and existing home inventories were reduced to
a 6-month supply (6.1 months for existing homes, 5.6 months for
new homes), which is characteristic of a normal, healthy housing
market. The National Association of Realtors said pending home
sales rose 2.0% in January. In yet another positive sign, the
Mortgage Bankers Association reported that there had been a 28%
reduction in foreclosures in 2011. On the downside, it turned out
that the S&P/Case-Shiller Home Price Index had dropped 3.8 %
for December.15,16,17
From
February 2 to March 1, average home loan interest rates shifted
as follows in Freddie Mac’s Primary Mortgage Market Survey:
30-year FRMs, 3.87% to 3.90%; 15-year FRMs, 3.14% to 3.17%;
5/1-year ARMs, 2.80% to 2.83%; 1-year ARMs, 2.76% to 2.72%.18
LOOKING
BACK…LOOKING FORWARD
The
first sixth of 2012 saw the best year-opening advance in some
time for the major indices. The year-to-date numbers below
represent the Dow’s best start since 1998, the NASDAQ’s best
start since 2000 and the S&P’s best start since 1991. At
February’s end, the Dow had settled at 12,952.07, the S&P
at 1,365.68 and the NASDAQ at 2,966.89.1,2,19
%
CHANGE
|
Y-T-D
|
1-MO
CHG
|
1-YR
CHG
|
10-YR
AVG
|
DJIA
|
+6.01
|
+2.53
|
+5.94
|
+2.82
|
NASDAQ
|
+13.89
|
+5.44
|
+6.64
|
+7.13
|
S&P
500
|
+8.59
|
+4.06
|
+2.90
|
+2.34
|
REAL
YIELD
|
2/29
RATE
|
1
YR AGO
|
5
YRS AGO
|
10
YRS AGO
|
10
YR TIPS
|
-0.28%
|
1.03%
|
2.20%
|
3.48%
|
Sources:
online.wsj.com, bigcharts.com, treasury.gov -
2/29/122,20,21,22,23
Indices
are unmanaged, do not incur fees or expenses, and cannot be
invested into
directly.
These
returns do not include dividends.
While
some analysts think things are weirdly calm on Wall Street,
others feel that most of the economic signs hint at a better year
for the consumer, the worker and the stock market investor. Q4
GDP was recently revised up to a decent 3.0%; the jobless rate
has fallen 0.7% since September; consumer spending rose in
January by the most since October; the real estate market is
showing signs of improvement. Hopefully, headwinds from overseas
will lose some velocity and exert less drag on our economy this
spring and summer.24
UPCOMING
ECONOMIC RELEASES
Scheduled news items across the balance of March are as follows:
January factory orders and the February ISM service sector index
(3/5), the February jobs report (3/9), February retail sales,
January business inventories and a Federal Reserve interest rate
policy announcement (3/13), February’s PPI (3/15), February’s
CPI and industrial output and the initial University of Michigan
consumer sentiment survey for March (3/16), February housing
starts and building permits (3/20), February existing home sales
(3/21), a new Conference Board Leading Economic Indicators index
(3/22), February new home sales (3/23), February pending home
sales (3/26), the January Case-Shiller home price index and the
Conference Board’s March consumer confidence poll (3/27),
February durable goods orders (3/28), the third and final
estimate of Q4 GDP (3/29), and February consumer spending along
with the final March University of Michigan consumer sentiment
survey (3/30).
*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.
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 DAX 30 is a Blue Chip stock market
index consisting of the 30 major German companies trading on the
Frankfurt Stock Exchange. 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 CAC-40 Index is a narrow-based,
modified capitalization-weighted index of 40 companies listed on
the Paris Bourse. The FTSE 100 Index is a share index of the 100
most highly capitalized companies listed on the London 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
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
S&P/ASX All Ordinaries Index represents the 500 largest
companies in the Australian equities market.
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
-
money.msn.com/market-news/post.aspx?post=ba5dfb2a-4c91-4d39-aa5e-f3bfb0d9bb5e&_nwpt=1
[2/29/12]
2
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[2/29/12]
3
- www.businessweek.com/printer/articles/339?type=bloomberg
[3/1/12]
4
-
www.reuters.com/article/2012/02/28/us-usa-economy-instant-idUSTRE81R0Y820120228
[2/28/12]
5
- www.conference-board.org/data/consumerconfidence.cfm [2/28/12]
6
- www.ism.ws/ISMReport/MfgROB.cfm [3/1/12]
7
- www.ism.ws/ISMReport/NonMfgROB.cfm [2/3/12]
8
-
www.latimes.com/business/la-fi-consumer-prices-20120217,0,7037692.story
[2/17/12]
9
-
www.channelnewsasia.com/stories/afp_world_business/view/1186463/1/.html
[3/2/12]
10
-
www.reuters.com/article/2012/03/01/global-economy-wrapup-idUSL4E8E13IO20120301
[3/1/12]
11
- www.chinadaily.com.cn/china/2012-03/02/content_14735838.htm
[3/2/12]
12
- www.aljazeera.com/news/asia/2012/02/201222995446384262.html
[2/29/12]
13
- news.morningstar.com/index/indexReturn.html [2/29/12]
14
-
mscibarra.com/products/indices/international_equity_indices/gimi/stdindex/performance.html
[2/29/12]
15
-
www.ft.com/cms/s/0/89e852da-5eec-11e1-a087-00144feabdc0.html#axzz1nvMnI56Z
[2/24/12]
16
-
www.cbsnews.com/8301-505123_162-57382754/existing-home-sales-up-inventory-down-for-now/
[2/22/12]
17
-
www.charlotteobserver.com/2012/02/29/3054668/housing-slump-continues.html
[2/29/12]
18
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19
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montoyaregistry.com/Financial-Market.aspx?financial-market=an-introduction-to-the-stock-market&category=29
[11/2/12]
20
-
bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=2%2F28%2F11&x=0&y=0
[2/29/12]
20
-
bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=2%2F28%2F11&x=0&y=0
[2/29/12]
20
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bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=2%2F28%2F11&x=0&y=0
[2/29/12]
20
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bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=2%2F28%2F02&x=0&y=0
[2/29/12]
20
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bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=2%2F28%2F02&x=0&y=0
[2/29/12]
20
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[2/29/12]
21
-
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[3/2/12]
22
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[1/9/02]
23
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[3/2/12]
