Monday, October 24, 2016

New Record for Income

Here's another statistic showing the economy on the right path: The inflation-adjusted weekly income of the typical full-time American worker hit an all-time high in the third quarter of 2016, according to data released last week by the Bureau of Labor Statistics.

Median weekly earnings of the nation's 112.8 million full-time wage and salary workers were $827 in the third quarter of 2016. That was 3.0 percent higher than a year earlier.

Median weekly earnings had been approximately stagnant for the first 15 years of the 21st century,  but earnings have rebounded sharply over the past 18 months. That’s the result of a mix of an improving labor market, giving workers additional bargaining power, and cheap energy prices keeping inflation low.

Friday, October 21, 2016

The Business Banking Slowdown

Banks are beginning to feel the impact of a slowdown in commercial lending, with regional lenders taking the hardest hit but growth slowing across the board. Commercial lending slipped 0.1 percent by  in the July-to-September period. That's not much, but it's  the first drop in six years. Some specific examples: 
  • Fifth Third Bancorp said Thursday that its commercial and industrial loans fell 2 percent since the prior quarter. 
  •  Comerica's average loans fell by $331 million at the business bank in the third quarter.  
  • BB&T  said that average balances on its commercial and industrial loans fell by 1.1 percent in the third quarter. 
  • Regions Financial's business-lending balances fell by $979 million to $50.2 billion, leading a drop of 1 percent in average loans and leases across the bank.

Thursday, October 20, 2016

Charging It, Still

The humble old credit card isn't just holding its own with new forms of payment - its use is actually growing. That's what consultants at Accenture PLC found when they surveyed over 4,000 American and Canadian consumers in July. Credit cards were the only form of consumer payments used to pay in person becoming more commonly used, versus cash, debit cards, and—surprisingly—mobile phones.

The percentage of people using credit cards weekly jumped from 50 percent in a survey last year to 53 percent this year. That contrasts to a flat 19 percent usage rate for mobile devices, and slight drop from 59 percent to 58 percent for debit cards.

The biggest loser in all of this has been cash. The percentage of people who use cash at least once weekly has dropped from 67 percent last year to 60 percent now.

Wednesday, October 19, 2016

What's Driving Inflation

U.S. consumer prices recorded their biggest gain in five months in September. The biggest drivers of the increase? The cost of both gasoline and rents surged.

The Consumer Price Index increased 0.3 percent last month after rising 0.2 percent in August. For the 12 months through September, the CPI has risen by 1.5 percent, the biggest year-on-year increase since October 2014. The CPI rose 1.1 percent in the year to August.

The so-called core CPI, which strips out food and energy costs, gained 0.1 percent last month after climbing 0.3 percent in August. Rents, which account for a larger share of the core CPI, recorded their biggest monthly increase in nearly 10 years.

Tuesday, October 18, 2016

Bouncing Off the Bottom

It's hard to recall now, but eight months ago, the markets bottomed out and it looked like 2016 was going to be a rough year. Since the S&P 500 reached its low point on February 11, several stocks have shown incredible gains.  Amazon tops the list with a 63 percent rally in the stock and a whopping $153 billion increase in its market cap.

The other leading S&P stocks since that market bottom:

  • Qualcomm, up 52.8 percent
  • Charter Communications, up 46.0 percent
  • Bank of America, up 43.4 percent
  • Intel, up 32.7 percent
  • IBM, up 31.1 percent

Monday, October 17, 2016

Mutual Funds in the Third Quarter

The mutual fund leaderboard for the third quarter is now out, and it was a good quarter for investors. There was money to be made in every category.

Here are the median return for funds in each category:
  • Small-cap growth: 7.6 percent
  • Small-cap value: 7.2 percent
  • Small-cap blend: 6.8 percent
  • Large-cap growth: 5.7 percent
  • Mid-cap value: 4.7 percent
  • Mid-cap blend: 4.6 percent
  • Mid-cap growth: 4.5 percent
  • Large-cap blend: 3.8 percent
  • Large-cap value: 3.5 percent

Thursday, October 13, 2016

Earnings Season Looking Grim

Earnings season started this week, and it's off to a very uninspiring start. And things could get worse before they get better. Alcoa, the traditional kickoff stock for each earnings quarter, delivered weak third-quarter results, and its stock dropped 11 percent on the day - its biggest one-day loss in five years.

S&P Global Market Intelligence warned that earnings season is likely to suffer as a result of tepid growth, which was down 1.2 perecnt for the third quarter. S&P expects the consumer-discretionary sector to report its lowest quarterly results since 2012

Overall, S&P 500 companies are expected to post their sixth straight quarter of declining earnings, according to FactSet.  Alcoa could be just the beginning.