Monday, January 15, 2018

The Full Employment Question

Are we at full employment? The vast majority of economists surveyed this month by The Wall Street Journal think we're just about there. Asked if the U.S. economy has reached full employment, 42 percent said yes and an additional 48 percent said no, but that it’s close.

“Full employment” doesn’t necessarily mean every American who wants a job has one. Economists use the term to describe the point where unemployment can’t go any lower without generating price and wage pressures.

The U.S. unemployment rate was 4.1 percent in December, remaining at its lowest level in 17 years. It has come down from a peak of 10 percent in the immediate aftermath of the 2007-09 recession.

Friday, January 12, 2018

The Dow's Midpoint Record

The Dow Jones Industrial Average knocked out yet another record yesterday in its rise to new heights. After knocking out a round-number milestone at 25,000, the index then posted its fasted run to a midpoint milestone. It reached 25,500 in just seven trading sessions.

The previous record for such a midpoint advance was the move to 24,500, hit after December 12 after a blistering eight sessions for the Dow. By contrast, the Dow took 17,476 days to reach its first midpoint, when it went from zero to 500, which it finally hit on March 12, 1956.

Perhaps a more fair comparison would be when the Dow took 1,423 trading sessions to go from 14,000 to 14,500. That took place after the Dow crashed at the outset of the recession; it hit 14,000 in July 2007, but didn't reach 14,500 until March of 2013.

Thursday, January 11, 2018

Money Woes and Marriage

Do you and your spouse fight about money? Nearly half of Americans (48 percent) who are married or living with a partner say they argue with the person over money, according to a survey of more than 1,000 people by The Cashlorette.

Most of those fights are about spending habits, with 60 percent saying that one person spends too much or the other is too cheap. The scary part: At least two studies show that this could lead to divorce. Data released Wednesday by financial firm TD Ameritrade found that 41 percent of divorced Gen Xers and 29 percent of Boomers say they ended their marriage due to disagreements about money.

The worst time to be doing this is early on in your relationship, watch out: That may be the No. 1 predictor of whether or not you’ll end up divorced, according to a study of more than 4,500 couples published in the journal Family Relationships.

Wednesday, January 10, 2018

The Worries of Gen X

Gen X investors are worried about retirement but aren't well-equipped to address their plans, according to a study released Monday by Jefferson National. The study showed that 52 percent of Gen X investors do not have an advisor, and are least likely to seek advice even though they are in their prime earning years, between the ages of 37 to 52.

Of particular note for advisors was the survey finding that 30 percent of Gen Xers said their number one reason for having an advisor was concern about saving enough for retirement. Their second main reason — feeling confident in their financial future — trailed by 10 percentage points.

In contrast, 36 percent each of baby boomers and older investors and 27 percent of millennials cited feeling confident in their financial future as the number one reason for seeking financial advice. Only 15 percent of millennials and 12 percent of boomers said retirement saving was their chief reason.

Tuesday, January 9, 2018

The Credit Boom

One sign of a hot economy: Consumer borrowing rose in November by the largest monthly amount in 16 years, the Federal Reserve said yesterday. Total consumer credit increased by a solid $28 billion in November to a record high of $3.83 trillion. The annual growth rate was 8.8 percent.

Credit-card borrowing powered the increase. Revolving credit, which is mostly made up of credit-card loans, expanded to an annual rate of 13.3 percent in November, the fastest pace since last December and well above the 9.9 percent gain in October.

Nonrevolving credit, which covers loans for education and cars, rose at an annual rate of 7.2 percent in November. That's the fastest pace for that figure since October 2016.

Monday, January 8, 2018

Tough Year for Carmakers

Last year was a banner year for the stock market, but not so much for automakers. The seven-year winning streak that began after the recession in 2010 fell short in 2017 with sales down 1.8 percent compared to 2016. All told, the year saw 17.2 million vehicles sold.

The full-year results for individual automakers:

  • Subaru, up 5.3 percent
  • Nissan, up 1.9 percent
  • Honda, up 0.2 percent
  • Toyota, down 0.6 percent
  • Ford, down 1.1 percent
  • General Motors, down 1.3 percent
  • Fiat Chrysler, down 8.2 percent
  • Hyundai-Kia, down 8.9 percent

Friday, January 5, 2018

December's Jobs Report

The pace of hiring slowed in December, with employers adding 148,000 jobs, the lowest number since September, the Labor Department said this morning. That brought employment gains for the year to 2.1 million. The headline unemployment rate remained at 4.1 percent.

Employers added better than 2 million jobs for the seventh straight year in 2017. It is only the second time on record—the other being in the 1990s—when the economy has produced jobs at that pace for that long.

An unexpected loss of 20,000 retail positions during the holiday season held back the December jobs number. The biggest gains came from health care (31,000), construction (30,000) and manufacturing (25,000). Bars and restaurants added 25,000, while professional and business services grew by 19,000.

Thursday, January 4, 2018

Sector Scorecard for 2017

Wrapping up our scorecard for 2017, here is how each of the industry sectors performed in 2017, courtesy of Bespoke Investing:

  • Technology up 34.3 percent
  • Materials up 24.01 percent
  • Industrials up 23.97 percent
  • Consumer discretionary up 22.8 percent
  • Financials up 22.0 percent
  • Health care up 21.8 percent
  • Consumer staples up 13.0 percent
  • Utilities up 12.0 percent
  • Energy down 0.9 percent
  • Telecom down 11.8 percent

Wednesday, January 3, 2018

2017's Winners and Losers

The S&P 500 index ended 2017 up 19 percent, after closing at a fresh record high more than 60 times over the course of the year. Here are the index's biggest winners for the year:

  • NRG Energy,  up 132 percent
  • Align Technology, up 131 percent
  • Vertex Pharmaceuticals, up 103 percent
  • Wynn Resorts, up 95 percent
  • Boeing, up 89 percent

And the biggest losers:

  • Envision Healthcare,  down 45 percent
  • Scana,  down 46 percent
  • Under Armour, Class A down 50 percent, Class C down 47 percent
  • Range Resources, down 50 percent
  • Baker Hughes, a GE Company, down 51 percent

Tuesday, January 2, 2018

Scorecard for 2017

Happy new year, and a fond farewell to 2017. For most investors, 2017 was the best year for stocks since 2013. Here are the final numbers for the year:

  • The Nasdaq composite was the biggest winner among the major indexes, with a gain of 28.2 percent. 
  • The Dow Jones industrial average rose by 25.1 percent. 
  • The large-company Standard & Poor's 500 increased 19.4 percent.
  • The relative laggard was the small-cap Russell 2000. It gained 13.1 percent, which was less than its 19.5 percent return from 2016.

Monday, January 1, 2018

Thoughts for the New Year

"Hope smiles from the threshold of the year to come, whispering, 'It will be happier.'" ~ Alfred Lord Tennyson

"The object of a new year is not that we should have a new year. It is that we should have a new soul.” ~ G.K. Chesterton

"We will open the book. Its pages are blank. We are going to put words on them ourselves. The book is called Opportunity and its first chapter is New Year’s Day.” ~ Edith Lovejoy Pierce