We're off to a pretty good start in the stock market so far in 2013,. The Standard & Poor's 500 Index increased by 5.5 percent in the month of January, which is about half of a good return for an entire year.
But perhaps more importantly, that kind of performance bodes well for the rest of the year. Birinyi Associates looked at the past 50 years, and found only eight other years in which the S&P had risen by 5 percent or more in January. In the ensuing 11 months, not even counting that January increase, the market has added an additional 12.7 percent.
The one time it missed over that period, though, is kind of a cautionary tale. In 1987, the S&P was up 13.2 percent in January. But come October, there was a market crash, and as a result, over the remainder of the year, the S&P was down 9.9 percent. Let's hope we don't see that again.
Monday, February 11, 2013
Friday, February 8, 2013
Why Borrowing Matters
We generally look to consumer confidence surveys to take the pulse of the American economy, but it's probably better to look at what the nation is doing, as opposed to what it's saying. And according to figures released yesterday by the Federal Reserve, Americans are feeling more and more confident about their money.
Consumer borrowing rose in December for the fifth month in a row. The total amount of consumer debt jumped by $14.6 billion for the month, following a $15.9 billion rise in November. Much of that was for new car purchases; non-revolving debt, which is primarily auto loans and college tuition loans, increased by more than $18 billion in December.
This is the reason we measure consumer confidence to begin with, because we need people to spend money to keep our economy humming. If people have enough confidence to take out loans to buy bg-ticket items - well, that's a very positive sign.
Consumer borrowing rose in December for the fifth month in a row. The total amount of consumer debt jumped by $14.6 billion for the month, following a $15.9 billion rise in November. Much of that was for new car purchases; non-revolving debt, which is primarily auto loans and college tuition loans, increased by more than $18 billion in December.
This is the reason we measure consumer confidence to begin with, because we need people to spend money to keep our economy humming. If people have enough confidence to take out loans to buy bg-ticket items - well, that's a very positive sign.
Thursday, February 7, 2013
The Unlikely Jump at the Pump
Gasoline prices tend to go down over the winter, as Americans drive less in the colder months of the year. That's why the recent rise in gas prices has been so surprising: The cost of a gallon has risen by 18 cents nationwide in the past week. That's the biggest weekly gain we've seen in two years.
Here in New Jersey, we're right at those national averages. Whereas the national average for a gallon of gas is $3.51, a gallon of gas costs an average of $3.52 in New Jersey right now. A week ago, that same average was $3.39 a gallon.
Why is this happening? For one thing, oil prices are now as high as they have ever been. Although the price fluctuates quite a bit, for 2012, the average cost of oil was $112 a barrel, the highest annual average ever. Prices have stayed at those levels through the early part of 2013.
Here in New Jersey, we're right at those national averages. Whereas the national average for a gallon of gas is $3.51, a gallon of gas costs an average of $3.52 in New Jersey right now. A week ago, that same average was $3.39 a gallon.
Why is this happening? For one thing, oil prices are now as high as they have ever been. Although the price fluctuates quite a bit, for 2012, the average cost of oil was $112 a barrel, the highest annual average ever. Prices have stayed at those levels through the early part of 2013.
Wednesday, February 6, 2013
The Great Rotation
For years now, domestic stock funds have been hemorrhaging money as investors have sought the safer haven of bond funds. But now that seems to be turning around, in what some financial pundits are calling "The Great Rotation." After equity funds lost more than $350 billion in net outflows for 2012, they took in $29.9 billion in the first three weeks of January. By comparison, bond funds took in $28.1 billion over that same period, which shows that investors may finally be developing some confidence in this market.
Overall inflows into mutual funds of all types have reached a new high as well. Long-term funds took in $64.8 billion in the first three weeks of January; unless those numbers seriously reverse themselves, we will break the monthly record set back in May 2009, when net inflows into funds reached $52.6 billion.
Will any of this matter to investors? It could very well have a practical effect on the market. If there is more money being invested in the stock market, it stands to reason that that could help drive up stock prices.
Overall inflows into mutual funds of all types have reached a new high as well. Long-term funds took in $64.8 billion in the first three weeks of January; unless those numbers seriously reverse themselves, we will break the monthly record set back in May 2009, when net inflows into funds reached $52.6 billion.
Will any of this matter to investors? It could very well have a practical effect on the market. If there is more money being invested in the stock market, it stands to reason that that could help drive up stock prices.
Tuesday, February 5, 2013
The State of New Jersey
What do you make of New Jersey's economic well-being? It has been a rough time recently, especially given the effects of Sandy, but most residents still have a fair amount of confidence in the state. According to a Gallup poll released this week, New Jersey's self-reported economic confidence score, -21, is that same as that given to the nation as a whole.
Obviously, a positive number would be better than a negative, but none of the fifty states reported a positive figure for economic confidence, although the District of Columbia did. The worst reporting from among the 50 states belongs to West Virginia, which reported a -42, or twice as bad as New Jersey.
Maybe the best news for the Garden State is that the number shows a long-term trend of moving in the right direction. Back in 2008, our economic confidence reading was at a dismal -53, but it has improved in three out of the four years since then.
Obviously, a positive number would be better than a negative, but none of the fifty states reported a positive figure for economic confidence, although the District of Columbia did. The worst reporting from among the 50 states belongs to West Virginia, which reported a -42, or twice as bad as New Jersey.
Maybe the best news for the Garden State is that the number shows a long-term trend of moving in the right direction. Back in 2008, our economic confidence reading was at a dismal -53, but it has improved in three out of the four years since then.
Monday, February 4, 2013
Super Bowl Fallout
Did you bet on the Super Bowl? If so, I hope you put some money down on the Ravens - or even better, on there being a power outage in the middle of the game. The odds on that must have been pretty long.
If you did make a friendly bet, you're not alone. According to the Wall Street Journal, 40 percent of all Americans have bet on the big game at one point or another. The most common bet was between $1 and $25 - 60 percent of those who had placed a bet said they had lost that amount.
Sixteen percent of those who had placed a bet claimed to have won $100, while just 7 percent said they had lost a $100 bet. Maybe the Journal should have also asked how many people had ever lied about the amount of money they'd won betting on the Super Bowl.
If you did make a friendly bet, you're not alone. According to the Wall Street Journal, 40 percent of all Americans have bet on the big game at one point or another. The most common bet was between $1 and $25 - 60 percent of those who had placed a bet said they had lost that amount.
Sixteen percent of those who had placed a bet claimed to have won $100, while just 7 percent said they had lost a $100 bet. Maybe the Journal should have also asked how many people had ever lied about the amount of money they'd won betting on the Super Bowl.
Friday, February 1, 2013
The Jobs Report Looks Backward
In contrast to the disappointing GDP figure released earlier in the week, the January unemployment figures released this morning by the Bureau of Labor Statistics show the economy to be continuing along as it has been for months now. We added 157,000 new jobs in January, and the unemployment rate remained unchanged at 7.9 percent.
Perhaps more significant is that the numbers for the previous two months were revised upward significantly. December's new job output, previously reported at 155,000, is now thought to have been 196,000, and the November jobs figure has been revised from 161,000 to 247,000.
Those two monthly revisions were enough to make a significant change to the overall new jobs rate of 2012. Initially, just after the year ended, the BLS reported that the economy had added 153,000 new jobs per month over the course of the year. But today's revisions mean that the number is now being reported as 181,000 new jobs per month.
Perhaps more significant is that the numbers for the previous two months were revised upward significantly. December's new job output, previously reported at 155,000, is now thought to have been 196,000, and the November jobs figure has been revised from 161,000 to 247,000.
Those two monthly revisions were enough to make a significant change to the overall new jobs rate of 2012. Initially, just after the year ended, the BLS reported that the economy had added 153,000 new jobs per month over the course of the year. But today's revisions mean that the number is now being reported as 181,000 new jobs per month.
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