John Rothe | Portfolio Manager, Quant, Tech Geek, And Sometime Superhero To My Kids http://www.johnrothe.com Mon, 23 May 2016 12:15:06 +0000 en-US hourly 1 http://wordpress.org/?v=4.2.8 The Economy Is Sluggish Because Of You And Me http://www.johnrothe.com/the-economy-is-sluggish-because-of-you-and-me/ http://www.johnrothe.com/the-economy-is-sluggish-because-of-you-and-me/#comments Mon, 23 May 2016 12:15:06 +0000 http://www.johnrothe.com/?p=5699 This week the Fed meets and the once again Janet Yellen and gang are stuck between a rock and a hard place.

Investors are so "keyed in" that any rise in rates will be a mistake. But what the Fed actually does or doesn't do is not the problem we face here in the US.
The problem is you and me.

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This week the Fed meets and the once again Janet Yellen and gang are stuck between a rock and a hard place.

Investors are so “keyed in” that any rise in rates will be a mistake.

The main objectives are:

1) Raising rates will increase the cost of our debt load.

2) Will hurt consumer lending.

3) Will slow the global economy even more (if overseas countries are adding more stimulus to their economies, why can’t we?).

4) Will *insert reason here*…

You get the point.

 

But what the Fed actually does or doesn’t do is not the problem we face here in the US.

The problem is you and me.

fault

For decades, the US has been a consumer driven economy. Pre 2008, individuals have decided that they get a greater happiness by purchasing all the newest and shiniest “toys” they can get their hands on.

This of course sounds better than saving and watching all their friends and neighbors have fun playing with those new toys.

But something has shifted since 2008 in the minds of consumers — what they think makes them happy.

 

First, lets take a step backwards to understand the us, the consumer a bit better.

In The Secret Of Selling Anything by Harry Browne ,which was recommended to me when I first opened the doors to my investment firm a decade ago, the author talks about selling as finding and addressing the happiness of the customer.

screen1

Instead of the aggressive and over enthusiastic sales cycles, consumers are really just focused on what will make them happiest.

“Will this new sports car make me happy — or will I be happier if I save that money?”

porsche-the-new-image

Source: Porsche

Pre-2008, the answer was to buy the sports car.

But now, what makes consumers happy has changed. People are happier to save the money, or get a deal on a more practical car.

 

 

Apr-2016-Consumer-Polling-Savings-v-Spending

 

We can even see evidence of this in the TV shows we watch. In the early 2000’s, the shows that were popular on networks such as MTV, TLC and HGTV focused on flipping houses quickly, making money, and the bling.

Now lets look at what is popular

imgres

Frugal

vs

asset

Bling

Show list like Duck Dynasty and Pawn Stars dominate the tv listings now. A 18o degree turn from MTV Cribs, My Super Sweet 16 (where parents throw over the top 16th birthday parties) and every curb appeal show on HGTV.

(note for Kardashians, the reason your ratings are down may be due to the glitzy feel the show now has.)

 

If happiness in the mind of the consumer is now being measured by frugal spending, practical family trips (think camping), cheaper/streaming entertainment, and less focus on name brands, then no amount of Fed intervention will jump start the economy.

What is needed is something to motivate the consumer back into believing that they will be happier spending vs saving.

How to do this, I don’t really know.

– A new cycle of amazing products (weren’t we suppose to have Back to the Future like hover-boards by now)?

– The millennials entering the work force (remember spending freely in your 20’s?), but will college loan paybacks suppress this?

– Incentives to spend vs save, like negative interest rates?

Whatever does spark a change won’t happen at the next Fed meeting. We need to stop hoping the Fed will magically fix the economy, and start figuring out how to make spending fun again.

 

 

 

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Understanding The Investment Needs of Non-Profits http://www.johnrothe.com/understanding-the-investment-needs-of-non-profits/ http://www.johnrothe.com/understanding-the-investment-needs-of-non-profits/#comments Fri, 11 Mar 2016 13:20:49 +0000 http://www.johnrothe.com/?p=5692 As non-profit organizations grow, they also need to grow and preserve wealth. In accepting donations to fund their operations and programs, they realize they cannot rely on fundraising alone. They decide to invest, and they turn to financial professionals for input.

Because non-profits exist to carry out particular missions, their investment preferences may differ from those of individuals. A non-profit may shy away from investing in certain companies because of what they represent. Additionally, some types of investment vehicles may clash with a non-profit organization’s image.

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Just like households, charities and other groups need wealth-building strategies.

As non-profit organizations grow, they also need to grow and preserve wealth. In accepting donations to fund their operations and programs, they realize they cannot rely on fundraising alone. They decide to invest, and they turn to financial professionals for input.

Because non-profits exist to carry out particular missions, their investment preferences may differ from those of individuals. A non-profit may shy away from investing in certain companies because of what they represent. Additionally, some types of investment vehicles may clash with a non-profit organization’s image.

Like businesses, non-profits constantly need cash. Unlike businesses, however, non-profits cannot rely on sales for revenue or promise third parties a quantifiable return on investment.

While some non-profits, associations, and charities fail on leadership, many more fail because of insufficient revenue and the lack of an investment strategy. Investing will not solve short-term cash flow issues, but it may help a non-profit grow into a larger, more impactful organization with greater stability.

An investment strategy is part of a non-profit’s evolution. While not every non-profit is ready to have an endowment, many want to invest for organizational sustainability. A commitment to investing is part of a long-term vision for success.

An Investment Policy Statement (IPS) may help. An IPS is a written statement that defines the investment approach of the non-profit. That approach must align with the organization’s mission and purpose.

An IPS for a non-profit group lays out its preferred investment style, the level of investing risk it will accept, and its near-term and long-term goals. Periodically, the IPS is reviewed and revised.

A periodic portfolio review is also important to consider. Investment choices that return well for a few years may return poorly when the financial climate shifts. A financial professional who consults a non-profit needs to help the organization revise a portfolio in light of economic and market trends. If an individual’s investment portfolio suffers a 10% loss, that downturn may affect a handful of people at most; if a charity’s investment portfolio suffers a 10% loss, hundreds or thousands of people may feel the financial pinch.

That periodic portfolio review should also check to see if the portfolio needs rebalancing. Just as non-profits can suffer philosophically from mission drift, their investment portfolios can be plagued by style drift: a diversion from the original, stated asset allocations per investment type. Rebalancing seeks to address this problem and restore the preferred allocations.

Some non-profits invest in a wide variety of asset classes. A recent, joint study of 835 college endowment funds by Commonfund and the National Association of College and University Business Officers found that a slight majority of the money in those funds was allocated to so-called “alternative assets.” This phrase refers to commodities, real property, and other investment types away from the usual Wall Street options. The famous Yale and Harvard endowments were pioneers in this regard. Hospitals, arts groups, and faith-based groups, on the other hand, tend to invest more conservatively than universities.1

 A financial professional can also help a non-profit plan and control the way it spends. In addition, he or she can help the organization determine how to adjust that spending in response to changing economic pressures, altered priorities, or the absence or appearance of major donors.

A fiduciary standard must be upheld. A financial industry professional serving as an investment manager for a non-profit group should be licensed to assume a fiduciary duty. That duty means the assumption of a legal obligation to help the organization make investment decisions in its best interest. As the partnership between the financial professional and the non-profit group develops, this should never feel like a secondary concern.

Both the non-profit and the investment manager must understand regulatory requirements. A full discussion of them is beyond the scope of this article, but it should be noted that they are frequently amended and revised at both the state and federal level. Non-profits and their investment managers must follow federal and state guidelines when it comes to the role of a fiduciary, the entrustment of investment authority, the treatment and assignment of individual donations, establishing spending rates, and maintaining the investment policy.

As non-profit groups think about their future goals, they may consider an investment strategy and a relationship with a financial professional who can serve as an investment manager.

 

   

 

Top image Flickr/scope II
1 – insights.som.yale.edu/insights/how-should-nonprofits-invest [6/26/15]
This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. 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. This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. 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 neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.
    

 

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Should We Break Up the Big Banks? http://www.johnrothe.com/should-we-break-up-the-big-banks/ http://www.johnrothe.com/should-we-break-up-the-big-banks/#comments Wed, 24 Feb 2016 14:39:41 +0000 http://www.johnrothe.com/?p=5686 This opinion comes from the man who once directed TARP, the Troubled Asset Relief Program that bailed out giant banks in the Great Recession. Kashkari was assistant secretary of the Treasury at that time. This year, he became president of the Federal Reserve Bank of Minneapolis, two years after running for governor of California.1

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One Federal Reserve official says we should rethink our financial system.

 

The newest Federal Reserve policymaker just put forth a radical proposal. Neel Kashkari thinks America’s big banks should be broken up, the sooner the better.

This opinion comes from the man who once directed TARP, the Troubled Asset Relief Program that bailed out giant banks in the Great Recession. Kashkari was assistant secretary of the Treasury at that time. This year, he became president of the Federal Reserve Bank of Minneapolis, two years after running for governor of California.1

On February 16, Kashkari spoke at the Brookings Institution and delivered, as one Bloomberg article put it, “a speech that [read] like a cover letter on a resume sent to the White House c/o Bernie Sanders.” Specifically, he called for “serious consideration” of three ideas.1

The first: “Breaking up large banks into smaller, less connected, less important entities.” The second: “Turning large banks into public utilities by forcing them to hold so much capital that they virtually can’t fail (with regulation akin to that of a nuclear power plant).” The third: “Taxing leverage throughout the financial system to reduce systemic risks wherever they lie.”1

While the Dodd-Frank Act of 2010 increased regulation of behemoth banks, Kashkari is hardly satisfied with it. As he told the Washington Post recently, “Policymakers have been telling Congress, or maybe Congress has been telling the American people, that Dodd-Frank has solved too big to fail. And I’m saying I don’t believe it.”2

The above reforms would require the approval of Congress. So Kashkari wants to deliver a proposal to Capitol Hill, with input from “leaders from policy and regulatory institutions [and] the financial industry.” All of these parties would convene to “offer their views and to test one another’s assumptions” pursuant to a bill.1

Is this kind of reform necessary? Many voices on Wall Street contend that Dodd-Frank was actually unnecessary, that the credit crisis of the late 2000s never would have occurred if markets, regulators, and Congress had simply abided by existing rules.1,2,3,4

Others have called for big bank downsizing before this, including some Fed officials. In 2012, the Dallas Fed put out an annual report entitled Choosing the Road to Prosperity: Why We Must End Too Big to Fail – Now. Its president, Richard Fisher, has talked of restructuring large banks into “multiple business entities.” St. Louis Fed president James Bullard once introduced the idea of limiting the size of individual U.S. banks to a percentage of annualized GDP.3,4

Of course, not too long ago the federal government helped make the biggest banks even bigger. As it decided certain financial institutions were “too big to fail” during the credit crisis, it also brokered some deals: Bank of America bought up Merrill Lynch and JPMorgan acquired Washington Mutual and Bear Stearns. JPMorgan and Bank of America both received significant help from TARP as a consequence. Taxpayers made a profit on TARP, and Kashkari says TARP was the right move at the right time. However, he prefers that history not repeat.1,5

 The “too big to fail” idea contends that the nation’s largest banks need a federal backstop if threatened with collapse, because their failure would wreck the economy. Its adherents argue that a giant bank is a better bank, providing more services here and in emerging markets, benefiting from economies of scale that make their services cheaper than services of smaller banks. These banks, the thinking goes, deserve a safety net in a catastrophe.1,2,3,4

To other observers, the top U.S. banks have grown frighteningly large. An analysis conducted by SNL Financial last year found that just five banks held almost 45% of the U.S. banking industry’s total assets in 2014, about $7 trillion. To put this in perspective, World Bank data shows the entire 2014 U.S. GDP at $17.4 trillion.6,7

 In time, market forces may actually accomplish what Kashkari would prefer to see. With TARP long gone, the largest banks have had to bolster their capital ratios, a potential disadvantage as they compete with smaller banks and online lenders. So new competitors (and new lending and financial services platforms) could soon emerge to take away some of their business.1

Kashkari does not want to wait. With the economy in comparatively good health, “the time has come to move past parochial interests and solve this problem,” Kashkari said in his February 16 speech. “The risks of not doing so are just too great.”5

 

 

 Top image: Flick: Cynthia Cheney
1 – bloomberg.com/gadfly/articles/2016-02-17/let-s-make-sure-neel-kashkari-s-right-before-splitting-up-banks [2/17/16]
2 – washingtonpost.com/news/wonk/wp/2016/02/17/neel-kashkari-oversaw-the-bailout-of-the-big-banks-now-he-wants-to-break-them-up/ [2/17/16]
3 – business.time.com/2012/03/22/break-up-the-banks-dallas-fed-president-calls-for-the-end-of-too-big-to-fail/ [3/22/12]
4 – bloomberg.com/news/articles/2016-02-16/fed-s-kashkari-floats-breaking-up-big-banks-to-avert-melt-down [2/16/16]
5 – money.cnn.com/2016/02/17/news/economy/neel-kashkari-breaking-up-too-big-to-fail-banks/ [2/17/16]
6 – cnbc.com/2015/04/15/5-biggest-banks-now-own-almost-half-the-industry.html [4/15/15]
7 – data.worldbank.org/indicator/NY.GDP.MKTP.CD [2/18/16]
This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. 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. 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 material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates.  This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

    

 

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Economic Recovery: Reagan vs Obama http://www.johnrothe.com/economic-recovery-reagan-vs-obama/ http://www.johnrothe.com/economic-recovery-reagan-vs-obama/#comments Mon, 22 Feb 2016 17:28:05 +0000 http://www.johnrothe.com/?p=5680 Much has been written in recent years along the lines of “if this is an expansion, why does it feel like we’re still in a recession?” Young people and low-wage workers in particular have felt this way...

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Much has been written in recent years along the lines of “if this is an expansion, why does it feel like we’re still in a recession?”  Young people and low-wage workers in particular have felt this way.

One answer is that the expansion in the years since the recent recession has been very weak, and nothing like the expansions that have followed many other recessions.

For example, President Ronald Reagan took office in 1981 in the midst of raging inflation and a deep recession.  Similarly, President Barack Obama took office in 2009 in the midst of the recent global financial crisis.  

reagan vs obama

President Reagan’s first 7 years in office averaged +7.9% GDP growth, while President Obama’s first 7 years in office have averaged less than half as much, at +2.9%.  

The worst year of GDP growth in Pres. Reagan’s first 7 years, at +4.2%, was greater than the best year of growth under Pres. Obama’s first 7 years, which was +4.1%.  The recovery during President Obama’s tenure has been so comparatively anemic that the “why does it feel like we’re still in a recession” question becomes much more understandable.

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Gold Is Making The News Again http://www.johnrothe.com/gold_prices_rise_2016/ http://www.johnrothe.com/gold_prices_rise_2016/#comments Wed, 17 Feb 2016 15:06:43 +0000 http://www.johnrothe.com/?p=5676 The rise in the price of gold has been making the news this week. Is gold about to get out of its multi-year downtrend?

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The rise in the price of gold has been making the news this week. Is gold about to get out of its multi-year downtrend?

Today’s chart provides some long-term perspective on this millennium’s gold market.

As today’s chart illustrates, the pace of the bull market in gold that began back in 2001 increased over time. In 2011, however, the parabolic trend in gold prices came to an end and a new downtrend began.

Over the past 32-months, gold has traded within the confines of a mildly sloped downward trend channel and is currently testing resistance.

via Chart of the Day

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2016: Don’t Listen To Wall Street This Year http://www.johnrothe.com/2016-dont-listen-to-wall-street-this-year/ http://www.johnrothe.com/2016-dont-listen-to-wall-street-this-year/#comments Tue, 19 Jan 2016 16:33:52 +0000 http://www.johnrothe.com/?p=5663     Investors have been faced with extremely volatile markets this year. As a result, investors have been looking for guidance — from news outlets like CNBC, and Wall Street strategists. However, as 2008 has shown us, this may not be the best approach for investors to take…   The Problem With Wall Street’s Predictions Continue Reading

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Investors have been faced with extremely volatile markets this year. As a result, investors have been looking for guidance — from news outlets like CNBC, and Wall Street strategists.

However, as 2008 has shown us, this may not be the best approach for investors to take…

 

The Problem With Wall Street’s Predictions

wallst

For years, BusinessWeek magazine’s last issue of the year contained a feature in which leading Market forecasters gave their predictions for the coming year.

Here are their predictions for the S&P 500 for 2008, published on the very last day of 2007.  In other words, these predictions were for the year that began the very next day, so it’s not exactly a group of long-range predictions.

In spite of that – of these 13 well-known, high-profile and highly-paid forecasters – 11 predicted a positive 2008, and some even a great 2008!

One predicted a slightly-down 2008, and the most-negative prediction suggested just a modest decline, only 8%!

The average prediction was for almost a 10% gain. The actual result of the S&P 500 index was -38.5%, so to say they were a bit off-the-mark is an understatement!

Yet investors by the millions continue to hang on every word uttered by this elite group.

 

News Outlets

Predictions, Opinions, Outlooks and Forecasts are embedded in practically every segment that’s broadcast on the financial-news channels such as CNBC.

Guests on CNBC are knowledgeable, well-spoken, completely rational … and frequently wrong.

Here is a sampling of what was said in 2008, when investors needed good guidance the most:

tvheads

Even many CEOs – who should know more than anyone about the prospects for their own companies – were tragically wrong .

Supposedly-objective analysts like Larry Kudlow, in the upper right, and the Financial Times guy in the lower left, were terribly wrong.

The Wall Street Journal Study

Are the predictions of Market experts and forecasters usually right?  Or are we picking on them by displaying a handful of rare and unusual misfires?

Not according to a study reported on by the Wall Street Journal in October of 2010.

Professor Phillip Tetlock, of the University of Pennsylvania, studied 20 years of predictions from 284 experts in the fields of politics and finance (which, of course, includes the Stock Market), and carefully catalogued the outcomes of a staggering 82,361 predictions.

He concluded that experts are more often wrong than right, … and would have done better flipping a coin!


wsj

He further found that the more degrees experts have, the more likely their predictions are to be wrong – and even worse, to stay wrong – evidently because they think so much of their own opinions, that they refuse to change them, even in the face of facts to the contrary!

So, sadly, misfires in predicting – even from highly-paid experts – seem to be the rule, not the exception.

 

 

Featured image: Flickr/Anthony Wong

 

 

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Chart Of The Day: Oil http://www.johnrothe.com/chart-of-the-day-oil/ http://www.johnrothe.com/chart-of-the-day-oil/#comments Wed, 09 Dec 2015 14:19:27 +0000 http://www.johnrothe.com/?p=5659 With a crude oil now trading under $40 dollars a barrel, today's chart presents the current, long-term trend of West Texas Intermediate crude.

As today's chart illustrates, crude oil traded within the confines of a long-term upward sloping trend channel since the late 1990s. However, with the dramatic 59% plunge from mid-2014 to March 2015, crude oil broke below support ...

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With a crude oil now trading under $40 dollars a barrel, today’s chart presents the current, long-term trend of West Texas Intermediate crude.

As today’s chart illustrates, crude oil traded within the confines of a long-term upward sloping trend channel since the late 1990s. However, with the dramatic 59% plunge from mid-2014 to March 2015, crude oil broke below support (green line) of its 17-year long-term trend channel.

That decline was followed by a relatively short rally that brought oil back up to what was once long-term support.

Today, largely as a result of economic reports that indicate that the Chinese economy continues to slow and the fact that the US has become the defacto swing producer, crude oil is once again pulling away from resistance (red line) of its two-year downtrend channel and has just made new post-financial crisis lows.

Via: Chart of the Day

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WEEKLY ECONOMIC UPDATE – December 7, 2015 http://www.johnrothe.com/weekly-economic-update-december-7-2015/ http://www.johnrothe.com/weekly-economic-update-december-7-2015/#comments Mon, 07 Dec 2015 16:21:27 +0000 http://www.johnrothe.com/?p=5654 JOBS REPORT GIVES THE FED A GREEN LIGHT The economy created 211,000 jobs in November – a healthy hiring total that could prompt the Federal Reserve to tighten for the first time since 2006. Job growth has averaged 218,000 over the past three months (the Labor Department just revised October and November job gains upward Continue Reading

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JOBS REPORT GIVES THE FED A GREEN LIGHT

The economy created 211,000 jobs in November – a healthy hiring total that could prompt the Federal Reserve to tighten for the first time since 2006. Job growth has averaged 218,000 over the past three months (the Labor Department just revised October and November job gains upward by a total of 35,000 hires). Unemployment remained at 5.0% in November while underemployment (the U-6 rate) ticked up to 9.9%. Yearly wage growth was at 2.3%. Economists polled by Briefing.com expected 196,000 November payroll additions.1,2

 

SERVICE SECTOR GROWS, FACTORY SECTOR SHRINKS

According to the Institute for Supply Management, U.S. manufacturing contracted last month. The ISM factory PMI came in at a troubling 48.6, down from 50.1 in October (anything over 50 denotes growth). The Institute’s service sector PMI declined 3.2 points in November, but its 55.9 mark indicated solid expansion.2

 

PENDING HOME SALES INDEX IMPROVES

Housing contract activity increased 0.2% in October, representing a turnaround for the pending home sales index maintained by the National Association of Realtors. The index had retreated 2.3% in September.2

 

OIL SETTLES AT $39.97

Light sweet crude closed below the $40 level Friday, losing 2.7% for the day. Gold, on the other hand, gained $22.90 on the COMEX Friday to close at $1,084.10.3

 

A FRIDAY RALLY LEADS TO A WINNING WEEK

Two things turned a down week into a slightly positive one on Wall Street: the latest jobs report and European Central Bank president Mario Draghi’s comment that the ECB’s stimulus effort had “no particular limit.” The Dow rallied 369.96 Friday. Across five trading days, the Nasdaq gained 0.29%, the Dow 0.28% and the S&P 500 0.08%. The Friday settlements: Nasdaq, 5,142.27; Dow, 17,847.63; S&P, 2,091.69.3

 

THIS WEEK: Diamond Foods and H&R Block present earnings Monday. Tuesday offers earnings news from AutoZone, Casey’s General Stores, Dave & Buster’s, Krispy Kreme, Smith & Wesson and Toll Brothers. Wednesday brings earnings from Costco, Lululemon Athletica, Men’s Wearhouse and Pep Boys. In addition to a new initial jobless claims report, Thursday will also see earnings announcements from Adobe and Restoration Hardware. The November PPI, November retail sales numbers and the initial December University of Michigan consumer sentiment index will all be released on Friday.

 

% CHANGE Y-T-D 1-YR CHG 5-YR AVG 10-YR AVG
DJIA +0.14 -0.29 +11.36 +6.47
NASDAQ +8.58 +7.82 +19.69 +12.78
S&P 500 +1.59 +0.95 +14.16 +6.57
REAL YIELD 12/4 RATE 1 YR AGO 5 YRS AGO 10 YRS AGO

10 YR TIPS

0.68% 0.48% 0.86% 2.17%

 

Featured image: GotCredit
Sources: wsj.com, bigcharts.com, finance.yahoo.com, treasury.gov – 12/4/154,5,6,7,8

Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year TIPS real yield = projected return at maturity given expected inflation.

1 – forbes.com/sites/samanthasharf/2015/12/04/solid-jobs-report-211000-jobs-added-in-november-unemployment-rate-unchanged-at-5/ [12/4/15] 2 – briefing.com/investor/calendars/economic/2015/11/30-04 [12/4/15] 3 – cnbc.com/2015/12/04/us-markets.html [12/4/15] 4 – markets.wsj.com/us [12/4/15] 5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=12%2F4%2F14&x=0&y=0 [12/4/15] 5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=12%2F4%2F14&x=0&y=0 [12/4/15] 5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=12%2F4%2F14&x=0&y=0 [12/4/15] 5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=12%2F3%2F10&x=0&y=0 [12/4/15] 5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=12%2F3%2F10&x=0&y=0 [12/4/15] 5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=12%2F5%2F05&x=0&y=0 [12/4/15] 5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=12%2F5%2F05&x=0&y=0 [12/4/15] 5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=12%2F5%2F05&x=0&y=0 [12/4/15] 6 – finance.yahoo.com/q/hp?s=^DJI&a=11&b=4&c=2010&d=11&e=10&f=2010&g=d [12/4/15] 7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [12/4/15] 8 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [12/4/15]This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. 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. 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 neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment. 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. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Past performance is no guarantee of future results.  Investments will fluctuate and when redeemed may be worth more or less than when originally invested. 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.

 

 

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Yellen: Economic Outlook and Monetary Policy http://www.johnrothe.com/yellen-economic-outlook-and-monetary-policy/ http://www.johnrothe.com/yellen-economic-outlook-and-monetary-policy/#comments Wed, 02 Dec 2015 19:09:28 +0000 http://www.johnrothe.com/?p=5647 "Let me now turn to where I see the economy is likely headed over the next several years. To summarize, I anticipate continued economic growth at a moderate pace that will be sufficient to generate additional increases in employment, further reductions in the remaining margins of labor market slack, and a rise in inflation to our 2 percent objective. I expect that the fundamental factors supporting domestic spending that I have enumerated today will continue to do so, while the drag from some of the factors that have been weighing on economic growth should begin to lessen next year. Although the economic outlook, as always, is uncertain, I currently see the risks to the outlook for economic activity and the labor market as very close to balanced."

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Here is a link to today’s commentary from Fed Chair Janet Yellen-

yellen comments dec 2 2015

 

Probably the most important paragraph of her outlook:

“Let me now turn to where I see the economy is likely headed over the next several years. To summarize, I anticipate continued economic growth at a moderate pace that will be sufficient to generate additional increases in employment, further reductions in the remaining margins of labor market slack, and a rise in inflation to our 2 percent objective. I expect that the fundamental factors supporting domestic spending that I have enumerated today will continue to do so, while the drag from some of the factors that have been weighing on economic growth should begin to lessen next year. Although the economic outlook, as always, is uncertain, I currently see the risks to the outlook for economic activity and the labor market as very close to balanced.”

 

Here’s a link to the full PDF:  http://www.federalreserve.gov/newsevents/speech/yellen20151202a.pdf

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Chart Of The Day: Gold http://www.johnrothe.com/chart-of-the-day-gold/ http://www.johnrothe.com/chart-of-the-day-gold/#comments Wed, 02 Dec 2015 14:06:50 +0000 http://www.johnrothe.com/?p=5638 Timely chart on gold as investors will be keeping a close eye on today's lineup of Fed speakers. Over the past two years, gold has traded within the confines of a mildly sloped downward trend channel and is currently testing support...

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Timely chart on the trend in gold prices as investors will be keeping a close eye on today’s lineup of Fed speakers.

“Gold-bugs” love to watch gold prices as an indication of future inflation. (And will typically use gold as a hedge against inflation.)

Today’s Fed speakers:

8:10am: Lockhart

8:30am: Yellen

9:00am: Tarullo

12:25pm: Yellen

3:40pm: Williams

 

From Chart of the Day:

Today’s chart provides some long-term perspective on this millennium’s gold market.

As today’s chart illustrates, the pace of the bull market in gold that began back in 2001 increased over time.

In 2011, however, the parabolic trend in gold prices came to an end and a new downtrend began.

Over the past two years, gold has traded within the confines of a mildly sloped downward trend channel and is currently testing support.

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