Monday, March 19, 2018

Bad Day at the Market

It was a rough day on Wall Street yesterday, headlined by Facebook's woes. Facing charges of misusing customer data, the social media giant dropped 7 percent and had its biggest one-day percentage decline since September 2012.

While the tech sector was the biggest decliner on the day, losing 2.8 percent, the day's losses were broad. All 11 of the primary S&P 500 sectors were lower on the day, as were all 30 Dow components. The Dow's decline of 1.4 percent erased its year-to-date gain and pushed the index into the negative for 2018.

Not surprisingly, the market's Volatility index also jumped on Monday. The VIX gained 38 percent to 21.82, a level that is above its long-term average of 20. The VIX is up nearly 100 percent so far in 2018.

Positive Sentiment Almost Everywhere

Most investor sentiment is pretty strong right now. The University of Michigan's consumer sentiment index hit the highest level since 2004 in March, helped by a record favorable assessment of current economic conditions. At 102, it is well above the long-term average of 86,

The good vibes haven’t just been isolated to consumers. A reading on small-business optimism hit its second-highest level ever in February, behind only to a reading from 1983 and extending a surge that started with the 2016 U.S. presidential election.

Is there anything to be nervous about? There's one thing: According to Saxo Bank’s head of commodity strategy Ole Hansen, the Geopolitical Risk Index is at its highest level since 2003, during the invasion of Iraq.

Friday, March 16, 2018

Misunderstanding HSAs

Do you understand health savings accounts? A new survey by the LIMRA Secure Retirement Institute and the Insured Retirement Institute finds that 51 percent of Americans believe they are knowledgeable about HSAs, which indicates there is much to be done to educate consumers, advisors and employers about these vehicles.

And that 51 percent probably overstates the case. According to the survey, many Americans are unaware that they can use their HSA assets — accumulated in their working years — to pay for health care and long-term care expenses in retirement.

Two in five Americans mistakenly believe that balances must be spent by the end of the year or forfeited. This may explain why 74 percent of the 294 non-retired workers participating in an HSA said they use it to pay for current health care expenses. The remaining 26 percent said they plan to save their HSA assets for future health care expenses.

Thursday, March 15, 2018

The Madness of March

Have you filled out our brackets yet? A whopping 70 million tournament brackets were completed last year, amounting to about $10.4 billion wagered in total, according to a report by WalletHub. That's about twice as much as during the Super Bowl.

But across the U.S., all that time spent on sports brackets instead of actual work has a serious impact on the bottom line. In fact, unproductive workers during March Madness amounted to an estimated $6.3 billion in corporate losses last year, WalletHub said. A separate survey by Seyfarth Shaw at Work found that March Madness ranked third among tech-related office distractions, directly behind texting and Facebook.

Although 81 percent of human resource professionals said their organizations don't have policies to police office pools, employees are happy to leave well enough alone. Ninety percent of workers agreed March Madness was good for employee morale, WalletHub says.

Wednesday, March 14, 2018

A Sleepy Inflation Report

Inflation appears to be under control, despite fears earlier this year that it might be accelerating. The last major consumer-price report before Fed officials meet next week, released yesterday, indicated that inflation is gradually picking up without a big breakout.

The Labor Department said its Consumer Price Index rose 0.2 percent last month after jumping 0.5 percent in January. In the 12 months through February, the CPI rose 2.2 percent, up just a tick from 2.1 percent in January.

Excluding the volatile food and energy components, the CPI gained 0.2 percent, down slightly from a 0.3 percent increase in January. The year-on-year rise in the so-called core CPI was unchanged at 1.8 percent in February.

Tuesday, March 13, 2018

The Pre-Meltdown Losers

As we noted yesterday, during the nine years of the current bull market, some stocks have done extremely well. But it's worth remembering that the bull run was preceded by a disastrous meltdown in the financial sector.

If you look not at the past nine years but back to July 13, 2007, when the market's previous high point was reached, there have been some terrible losers in the market. Some of the worst performers over that 10-plus-year period:

  • AIG, down 95 percent
  • Office Depot, down 92 percent
  • MBIA, down 86 percent
  • Citigroup, down 84 percent
  • ETrade, down 76 percent

Monday, March 12, 2018

The Bull's Biggest Winners

It was nine years ago that the S&P 500 turned around and began the bull run that has lasted to this very day. The S&P itself is up more than 300 percent over that time period.

Here are the biggest winners among the individual stocks in the S&P over that time frame:

  • Netflix, up 6,998.5 percent
  •, up 2,321.4 percent
  • Align Technology, up 2,316 percent
  • Regneron Pharmaceuticals, up 1,869.6 percent 
  • Booking Holdings, up 1,738.9 percent
Netflix and Amazon are familiar names. Align technology makes the Invisalign dental device; Regneron makes a variety of pharmaceuticals; and Booking Holdings owns, OPenTable, and other fare aggregators.