Quote of the Week:
"Everyone has inside of him a piece of good news. The good news is that you don't know how great you can be! How much you can love! What you can accomplish! And what your potential is!" - Anne Frank
Like one of our heroes, Anne Frank, continued optimism is built into our DNA, too. Thank heavens ours has never been tested as hers was, God bless her soul.
But this week's quote is a reminder that there is always good news.
In spite of a steady stream of media focus on Europe and the "Occupy" folks, several remarkable pieces of good news continue to come up just beneath the headlines these days. All are very recent. Among them*:
• 91% of Americans are employed, up from 90.3% a year ago.
• Existing home sales are up 11.3% versus a year ago
• In the past year, personal income is up 4.5% while spending is up 4.7%.
• October chain store sales are up 3.7% over a year ago.
• Core railcar loadings are up 5.8% over a year ago.
• U.S. steel production is up 10.3% the last 12 months.
• Hotel occupancy rates are up 6.8% over 12 months ago.
• Of the first 118 S&P 500 companies recently reporting earnings, 75% were above estimates.
• Autos & light trucks sold at a 13.3 million annual rate in October, up 8.9% over last year.
• Average weekly earnings increased .2% in September, up 1.8% over the last year.
• The U.S. economy has not entered a single dip, double dip, or any other type of "dip", i.e. recession, since coming out of recession in June, 2009, 28 months ago.
These elements and other data we follow continue to support a slow, plodding recovery here in the United States. To us, that continued recovery seems likely to manifest, eventually, in an improved equities market. Time will tell, and we continue to be vigilant. And optimistic!**
*Data comes from the following sources: Census Bureau, Bureau of Labor Statistics, Bureau of Economic Analysis, the Federal Reserve Board, Haver Analytics, FactSet (S&P earnings) and the International Council of Shopping Centers. Data is taken from sources generally believed to be reliable but no guarantee is given to its accuracy.
Market Week: November 7, 2011
The Markets
Greek drama: Once again, uncertainty about Greece eclipsed domestic news to send equities south. The Dow's five-week winning streak was snapped as the industrials once again fell below 12,000, though the Dow remained the strongest domestic index year-to-date. The slump left the S&P 500 just below even for the year and sent investors back into the arms of U.S. Treasuries, pushing the 10-year yield down.
Last Week's Headlines
• Greek Prime Minister George Papandreou blindsided the world by announcing a referendum on whether to accept the terms of the eurozone bailout package. However, the proposal had all the durability of a reality-TV marriage. Under pressure from G-20 summit attendees, he not only reversed himself but agreed to form a new coalition government, prompting reports that he would step down. Meanwhile, European officials said bailout payments would be halted until resolution of the referendum issue, which they said would effectively be a vote on whether Greece wanted to remain in the eurozone.
• Elsewhere on the continent, Italian 10-year bond yields rose to 6.33% at Thursday's auction, underscoring concerns about the country's indebtedness and increasing calls for Prime Minister Silvio Berlusconi's resignation. The European Central Bank cut its key interest rate from 1.5% to 1.25% to try to keep yields from spiraling upward, and new ECB head Mario Draghi said the region faces a "mild recession" by the end of the year.
• An additional 80,000 jobs created in October nudged the unemployment rate down slightly to 9%. It was the 12th straight month of increases, though the 125,000 new jobs created monthly on average for the past year has been just enough to keep the unemployment rate between 9% and 9.2% since April. Business and professional services, leisure and hospitality, health care, and mining created many of October's 104,000 new private-sector jobs, while government employment continued to contract.
• Despite seeing stronger growth in the year's third quarter, the Federal Reserve lowered its forecast for U.S. economic growth in 2011 to 1.6%-1.7% rather than the previous 2.7%-2.9%. It also predicted unemployment would remain static for the rest of the year and stay above 8% through 2013.
• U.S. manufacturing growth slowed in October, according to the Institute for Supply Management, whose index registered 50.8%. Though that represented the 27th straight month of expansion, it was just above the 50% mark that separates expansion from contraction. The ISM's gauge of the U.S. services sector, at 52.9% in October, also indicated growth at a slightly slower pace.
• Troubled European debt claimed its first U.S. victim as brokerage MF Global Holdings filed for Chapter 11 bankruptcy after the firm's leverage of its bond holdings helped bring on a downgrade of its credit rating to junk status. In the wake of reports of discrepancies in the company's accounting of its assets, CEO and former New Jersey Gov. Jon Corzine resigned.
Eye on the Week Ahead
Domestic data will be skimpy, and all eyes will be on Greece and Italy to see what emerges from their respective political situations. Key dates and data releases: international trade, import/export prices (11/10); consumer sentiment (11/11).
Data source: 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. Equities data reflect price change, not total return.
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 Lee Davis** and Broadridge Investor Communication Solutions, Inc. Copyright 2011
Monday, November 7, 2011
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