This Week's Quote:
"The point of living, and of being an optimist, is to be foolish enough to believe the best is yet to come." ~ Peter Ustinov (1921-2004) British actor, writer and director
J.L. Davis Thoughts This Week:
OK, we admit it: we can’t wait to see what 2013 has in store!
While the U.S. economy continues a plodding recovery and our politicians devise new and creative ways to blame one another, closer to home we are more optimistic than ever. For good reason, we believe.
Here are our “Top Ten Reasons to be Optimistic in 2013”:
10. Sustained low interest rates appear to be the norm. The Federal Reserve expects to keep current rates, which are effectively near zero, intact through 2014 according to their last report. That means affordable housing, easier debt service, and more money for business expansion, among other things
9. Government focus on the problem. In the heat of battle, it’s hard to see progress, but we believe that the very fact that both parties are talking about the issue of debt and how best to deal with it is enormously better and more positive for markets around the world
8. Technology. Marvelous things are becoming ubiquitous, with smart phones, smart cars, smart everything. Access to information is greater than ever before, empowering individuals, businesses and economies at a rate never seen in human history
7. Energy. Who would have thought a scant ten years ago that in spite of ever increasing needs, we’d be discussing the U.S. becoming energy independent in the near term? Conservation coupled with exploration and production appears to be leading business and industry to a brave new world where energy may not only be abundant, but cost relatively less as well
6. Productivity. Closely related to all these elements is the sharp rise in personal productivity. By every industrial measure, workers of today are able to produce more in less time. Businesses, by extension, ought to be ever more profitable when they’re well run
5. Profits. The last 24 months have seen some of the best profits in modern history for the constituent companies of the Standard & Poor’s 500, the largest companies in the United States. At some point, and we don’t think it’s far off, those companies will begin to deploy those profits in mergers, acquisitions, and yes, hiring (see below!)
4. The Mayan Calendar was wrong. OK, we apologize for this one. But we had to throw it in for those who may continue to think that the sky is falling. The world didn’t end because it just plain doesn’t end, despite the continuing barrage of nay saying! Same folks missed some great investment returns in 2012 with that thinking. It might just be time to recognize the media’s addiction to all things negative…and ignore them
3. Consumer spending is back in a big way. Holiday sales numbers are roundly positive as are virtually all spending data in 2012. Controlling 2/3’s of the U.S. economy, the consumer (you and us!) has returned
2. Employment. Yep, we said it. Not only is the unemployment rate down considerably the last 24 months, but we believe companies will accelerate hiring in 2013. We also think the combination of expiring unemployment benefits (extended to an amazing 99 weeks at present) and companies in need of help reduces the unemployment rate and contributes to the economy in 2013
1. You. Like never before, our friends and clients are working harder and smarter. They are caring more for their businesses, their families, and their communities. We could write volumes on the heroic stories we hear every day in our journey. You do not fail because you will not fail. You succeed in spite of any obstacle.
So here’s to you in 2013. May you, your business, your family and all the things you care about enjoy health, wealth, and prosperity!
Market Week: December 31, 2012
The Markets
Ending with a whimper: As the year wound to a close with no grand bargain out of Washington, equities took their own trip over the fiscal cliff last week. The last positive day for the S&P 500 was the Thursday before Christmas, and five straight down days took the Dow back under 13,000, the Nasdaq below 3,000, and the S&P 500 perilously close to 1,400. Though all four domestic indices are in far better shape than they were on last New Year's Eve, they also seem likely to end in negative territory for the quarter, handily outpaced--at least for Q4--by a resurgent Global Dow.
Last Week's Headlines
• With the fiscal cliff dead ahead, last-minute negotiations seemed to produce more questions than answers. The stalemate left the country facing tax increases and spending cuts and wondering what fresh uncertainties the new year might bring.
• Orders for new durable goods orders rose 0.7% in November despite a drop in defense-related aircraft orders, according to the Census Bureau. It was the sixth increase in the last seven months, and the best news was a strong jump in new orders by businesses for capital goods, which were up 2.7% for the month.
• Home prices measured by the S&P/Case-Shiller 20-city index in October were up an average of 4.3% from a year earlier. Though 12 cities saw price declines from the month before, many of the cities showing the strongest improvement--Las Vegas, Detroit, Phoenix, San Francisco--are the ones that had been hardest hit by the housing collapse. Average home prices represented by the 20-city index are now at roughly the same levels that they were in the fall of 2003.
• Sales of new homes soared 4.4% in November. According to the Commerce Department, that's the highest level since April 2010 and 15.3% higher than a year earlier. The $299,700 average sales price was up almost 20% from last November.
• As it did in 2011, the U.S. Treasury will have to adopt "extraordinary measures" to avoid problems once the country hits the debt ceiling on New Year's Eve. A letter to congressional leaders from Treasury Secretary Timothy Geithner said the accounting measures are expected to extend the deadline for roughly two months.
Eye on the Week Ahead Friday's monthly unemployment numbers and reports on both the manufacturing and services sectors may paint the last portrait of the pre-cliff economy.
Key dates and data releases: Federal Open Market Committee minutes, U.S. manufacturing, construction spending, auto sales (1/2); unemployment/payrolls, U.S. services sector, factory orders (1/4).
Data sources: Includes data provided by Brounes & Associates. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results.
The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indexes listed are unmanaged and are not available for direct investment.
Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2012
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