Friday, November 16, 2018

Black Friday Preview

Black Friday is a week from today. About 38 percent of American consumers plan to shop on Black Friday this year, and six in 10 of those shoppers anticipate making at least half of their holiday purchases on that day, according to a new Reuters/Ipsos poll.

Fifty-nine percent of the people who plan to shop Black Friday deals intend to finish at least half of their holiday shopping that day. The poll showed 37 percent of consumers intend to do their shopping primarily or totally online, while 16 percent expect to shop primarily in a physical store.

American consumers are less interested in buying clothing, jewelry, electronics, toys and gift cards this year compared to years past, the survey found, but they are eager to spend more on food. By 2022, online grocery shopping could be a $100 billion industry, and as many as 70 percent of consumers could be doing a portion of their food shopping online.

Thursday, November 15, 2018

The Natural Gas Bounce

Oil prices finally finished higher on Wednesday, with U.S. benchmark crude putting an end to its record 12-session streak of declines. But the real story was in natural gas, which settled at its highest price since February 2014.

Natural-gas futures saw a spectacular climb of about 18 percent on the day—their biggest gain in more than 14 years. The rise was fueled by cold weather forecasts that continued to feed concerns about tight U.S. supplies.

December natural gas  jumped 73.6 cents, or about 18 percent, higher to $4.837 per million British thermal units. That was the largest one-day percentage gain since September 29, 2004, and the largest gain in dollar terms since January 30, 2007. Wednesday’s rally also took natural gas futures to their highest settlement since February 26, 2014.

Wednesday, November 14, 2018

How Prepared Is the Middle Class?

Middle-class Americans’ own assessment of financial security suggests they may be too optimistic, according to a new survey from CUNA Mutual Group. It found that many middle-class people  have a disconnect between their aspirations and their resources.

The survey finds that Americans with an annual income of $35,000 to $100,000 tend to feel positive about their prospects for upward mobility. Some 62 percent say they feel somewhat or very confident about their personal financial situation, and nearly half (46 percent) believe it is very unlikely that they will miss a loan payment over the next one to two years.

However, the survey finds that this cautious optimism belies a more troubling financial picture. More than half of the respondents were ill-equipped for a serious financial emergency, with 23 percent saying they have no emergency savings and 30 percent saying they only have one to three months’ worth.

Tuesday, November 13, 2018

Blowout in Oil & Gas

More than 90 percent of S&P 500 companies have now reported results for this earnings season, and the numbers look good. S&P Global Market Intelligence expects S&P 500 companies to report a 24.7 percent increase in earnings per share from a year earlier.

A little deeper inside those numbers, the biggest story in sales came from the energy sector. The top six S&P 500 companies in quarterly sales growth were all oil & gas companies. They include:

  1. Pioneer Natural Resources, up 92 percent
  2. Concho Resources, up 90 percent
  3. EQT Corp., up 86 percent
  4. EOG Resources, up 78 percent
  5. Occidental Petroleum, up 73 percent
  6. Newfield Exploration, up 62 percent

Monday, November 12, 2018

Worries Over Wages

In a strong quarter for earnings results, climbing labor costs have become a growing future concern, with more than a dozen companies in the S&P 500 mentioning them in conference calls so far this earnings season. That is up from just a handful of companies that noted these concerns over a similar period in the year-ago quarter.

In the recent U.S. jobs report for October, wages recorded their largest annual gain in nine and a half years. The Employment Cost Index, the broadest measure of labor costs, increased 0.8 percent in the third quarter after a 0.6 percent rise in the second quarter, putting the year-on-year rate of increase at 2.8 percent.

These wage pressures are widely expected to be a factor in declining earnings growth in 2019. Earnings growth for S&P 500 companies has been forecast to slow to about 9 percent next year following 2018’s tax-fueled earnings gains, estimated at 24 percent, according to IBES data.

Friday, November 9, 2018

Oil in Bear Territory

The news just gets worse for oil, or better for consumers, depending on how you want to look at it. The five-week rout for oil prices officially turned into a bear market yesterday, ending the longest bull run in oil since 2015.

West Texas Intermediate crude for December delivery fell $1, or 1.7 percent, to settle at $60.67 a barrel, marking its ninth straight losing session. That's the lowest close for U.S. oil since March. That left the U.S. oil benchmark down 21 percent from its October 3 peak, exceeding the widely applied definition of a bear market.

WTI is still clinging to a gain for the year, up 0.5 percent so far in 2018. Brent crude, the international benchmark, is still up 6.1 percent. Thursday’s close means that the bull market peaked on October 3, ending a 324-day run that began on June 21, 2017.

Thursday, November 8, 2018

Retirement Savings Hit a New High

Americans are saving more for retirement than ever before, according to a new report from Fidelity Investments. At the end of the third quarter of 2018, average retirement account balances reached record highs in all categories. Those September 30 average balances were:

  • $106,500 in 401(k) plans, up 2.4 percent from the second quarter
  • $111,000 for individual retirement accounts, up 3.8 percent
  • $85,500 for 403(b) plans, up 2.5 percent

Those averages are nearly double from where savers were a decade ago, at the start of the financial crisis. The average employee contribution reached its highest level since late 2006, at 8.7 percent, and average rates among women hit a record of 8.5 percent.