Getting Up Again and Your Weekly Update

While our Colorado-based clients are still in the process of overcoming an embarrassing Super Bowl defeat this week, one of your authors is just hoping to get out of New Jersey!

As you’ll read in the Update, Jeremy’s bucket list included watching his beloved Broncos in the Super Bowl live, in person. So how did it go for him in New York? Enjoy the read.

Also, we’ve included some of the market news as always, and with the downdraft of the last few weeks, it makes for interesting content as well.

Our best,
Jeremy and Lee

PS-- Last Chance: Thanks to all who’ve given us your Dow guess for 2014. As of Monday the index has slipped to 15,372.80. Click “Reply”, let us know your guess, if you’ve not done so. We can’t wait to buy the winner dinner for two at their favorite place!

PSS—Congratulations to our Washington State clients on your Seahawks!


This Week’s Quote:
“A champion is someone who gets up when he can’t.” ― Jack Dempsey


JL Davis Thoughts This Week:

What do the Broncos and former heavyweight fighter Jack Dempsey have in common?

Both are from Colorado. Both won world championships. And both have been knocked out. For the Broncos, the most recent was Sunday night. Ouch.

A childhood dream of mine (Jeremy) was to attend a Super Bowl and watch my beloved Broncos bring home the Lombardi trophy. The day after Denver won the AFC and the tickets came up for sale, I booked the flight. Then it was off to the Big Apple with a few of my buddies to take in the game. Great seats; 5th row on the 30 yard line. Not bad!

My wife, Beth, who may now qualify for sainthood, forgave me for missing the surprise birthday/Super Bowl party she had already set up for me at our place (all the invites were already out, and yes, about 30 guests still showed up for the party!). All those who attended, yes, including Lee, understood my dream and last minute choice. They had fun texting me during the game, as you might imagine. Back to the story.

This year’s game was meaningful not only because the Broncos were playing, but it was in New York, the biggest stage of all. The day before the game, we made sure to visit Wall Street and the 9-11 Memorial. Wow—the Memorial took my breath away.

Both the game's outcome and viewing the site where the twin towers once stood reminded me of how unpredictable things can be. Clearly any football game pales in importance to an event like 9-11. But I’m reminded that tomorrow’s events are forever uncertain. It's important to have that perspective at all times, even for a silly football game.

In case you’ve been shipwrecked on a Pacific atoll, the Broncos lost. Big. I saw it happen and it was u-g-l-y. Enough said about that.

After getting knocked out by Gene Tunney to lose the heavyweight championship of the world, Jack Dempsey, with his usual remarkable display of sportsmanship said to his team, “Lead me back out there. I want to shake his hand.” What a gentleman. Kind of reminds us of Peyton Manning on Sunday night complementing Seattle’s outstanding defense. That’s how it’s done. That’s how a winner behaves.

I believe Peyton Manning and the Broncos will get up, regroup and make another run at the title next year. Time will tell. As for the markets, my trip to Wall Street didn’t seem to help them, either! More on that below…**

Jeremy

http://en.wikiquote.org/wiki/Jack_Dempsey


Market Week: February 3, 2014

The Markets

It's a small, small world: Despite various attempts at propping up local currencies, emerging markets continued to suffer from concerns that 1) assets being moved to stronger currencies could undermine already fragile economies, and 2) a slowdown in Chinese manufacturing could reduce demand for commodities, exports of which are crucial to many emerging-market countries. Fueled by additional Fed tapering, risk aversion also spread to markets in developed countries, hurting large caps that derive a large portion of their revenues overseas. The Dow's losses gave the index its worst January since 2009. Traditional safe-haven refuges such as U.S. Treasuries continued to benefit from the turmoil

Last Week's Headlines

• For the second month in a row, the Federal Reserve's monetary policy committee will cut $10 billion a month from its bond purchases. That will leave the total at $65 billion a month instead of the $85 billion it had been buying as recently as December.
• Some emerging-market countries whose currencies have been hurt in recent months attempted to fight back. Turkey hiked its key interest rate from 7.5% to 12% to try to halt a decline in the country's lira, while South Africa's central bank raised its interest rate to 5.5% and India's repo rate went to 8% from 7.75%. The moves came in the wake of Brazil's decision to raise its key interest rate by a half-point to 10.5% and Venezuela's recent attempt to impose currency controls indirectly by limiting the amount of airline tickets that can be exchanged for U.S. dollars.
• The U.S. economy expanded at an annualized rate of 3.2% during the fourth quarter of 2013. Though that was somewhat less than Q3's annualized 4.1% growth, the Bureau of Economic Analysis said the 3.7% growth during 2013's second half was stronger than the 1.8% expansion during the first six months. The growth was led by consumer spending, exports, and business spending on capital goods.
• Sales of new homes dropped 7% in December. However, the Department of Commerce said the figure is still 4.5% ahead of the previous December, and sales for all of 2013 were 16.4% higher than in 2012. Meanwhile, home prices in the cities covered by the S&P/Case-Shiller 20-City Composite Index were up 13.7% year-over-year in November. Though the 0.1% drop was the first monthly decline in nine months, it represented the best November since 2005
• Durable goods orders fell 4.3% in December, according to the Commerce Department; that's the second decline in the last three months. Aside from the volatile transportation sector, new orders for U.S. manufactured goods fell 1.6%, and business spending on equipment was down 5% for the month.
• The Bureau of Economic Analysis said personal incomes were basically flat in December, though after adjusting for inflation, they were down 0.2% for the month. Meanwhile, holiday spending helped push consumer spending up 0.4%, cutting the personal savings rate to 3.9% from November's 4.3%

Eye on the Week Ahead

In addition to the ongoing focus on emerging markets and earnings reports, Friday's unemployment numbers will be of interest. And in light of currency concerns around the world, the European Central Bank's announcement on Thursday could receive extra attention.

Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). 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 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.

Prepared by Jeremy & Lee Davis** and Broadridge Investor Communication Solutions, Inc. Copyright 2014