Where the Wealthy Are

The wealthy keep on growing: According to the U.S. Wealth Report 2015 released yesterday by Capgemini, the population of U.S. high net worth individuals, or HNWIs - defined as those with at least $1 million in investable assets aside from their residence - reached a record 4.4 million in 2014.That figure grew by 8.6 percent last year,  and overall U.S. HNWI wealth expanded by a 9.4 percent increase to reach $15.2 trillion.

While New York remains the city with the highest HNWI population overall, the numbers are actually growing much faster in other parts of the nation. The top six cities for HNWI growth were in Texas and the West Coast, driven in large part by a strong real estate markets there.

The city with the fastest growing HNWI population in 2014 was Houston, at 14 percent. Seattle was second  at 12 percent. Chiccago was the major city with the slowest HNWI growth.

Another Blow to the Energy Sector

Just when you thought it couldn't get worse for energy stocks, they took another beating yesterday. Light, sweet crude dropped nearly 6 percent, to $37.65 a barrel, and several oil & gas stocks plummeted by 10 percent or more on the day. What happened?

• OPEC announced Friday that it was going to continue producing oil at near-record levels, despite the glutted market.
• Weather forecasts released Monday continued to show above-average temperatures in the next two weeks, putting a damper on expected purchases of heating fuel.
• Many oil and gas companies had taken on large debt loads to fund domestic drilling projects when prices were higher; oil companies with heavy debt loads saw their stocks hit especially hard in the downturn.

Happy in Retirement

We talk a lot about preparing financially for retirement, but there's some good news in the University of Michigan's recent Health and Retirement Study that should help ease a lot of worries. According to the survey, about 56 percent of retirees say they are very satisfied with retirement. Another 34 percent say they are satisfied, while only 9 percent say they aren’t at all satisfied.

On top of that, retirees also tend to become increasingly happy as they age in retirement. In the most recent survey, 21 percent of retirees aged 60 reported that they were not satisfied at all with retirement, as opposed to only 3 percent of retirees aged 90.

Not surprisingly, retirement happiness increased with wealth, income, and education level. But the most important driver of retirement satisfaction was self-assessed health status.

The November Jobs Report

November's jobs report couldn't have been more on the nose with recent trends. The Bureau of Labor Statistics said nonfarm payrolls increased by 211,000 jobs in November; the economy has added an average of 210,000 jobs a month this year. The headline unemployment rate was unchanged at 5 percent. 

On top of that, the October number was revised upward to 298,000  from the previous estimate of 271,000, and September was revised from 137,000 to 145,000. The consensus seems to be that the report gave the Federal Reserve plenty of confidence in the economy, and enough reason to raise rates later this month.

The construction industry led last month’s job creation, adding 46,000 jobs, while retailers added 31,000. But mining, which includes oil and gas extraction jobs, continues to reel: It lost 11,000 jobs last month, and is down 123,000 since December 2014.

State Spending

Personal consumption expenditures grew by about 3.5 percent in New Jersey in 2014, below the national average of 4.2 percent, according to a new study released by the Commerce Department. One reason our spending grew more slowly than those of other states is that it was already very high: At $9,128, New Jersey's annual spending on housing and utilities per capita is second highest in the nation, trailing only Maryland.

Expenditures on housing and utilities were the fastest-growing category in the nation last year, rising by 4.1 percent. Spending on health care was close behind, at 3.9 percent. Spending on gasoline and energy, meanwhile, dropped by 2.9 percent nationwide.

The state where overall spending grew the fastest in 2014 was North Dakota, where it was up 7.2 percent. In West Virginia, spending grew by just 2.1 percent, dead last among the 50 states.

Let's Make a Deal

The volume of mergers & acquisitions hit an all-time high in October of this year, a record that lasted all the way until November, when another new mark was reached. According to Dealogic, announced M&A volume for the month of November came in at $606.6 billion, which was up 7 percent from  October's record amount.

The biggest driver was the $160 billion merger between pharmaceutical titans Pfizer and Allergan, which is the second-largest deal on record. But there were a total of 11 deals valued at $10 billion or more last month, the highest such number on record.

Not surprisingly, we're headed for an annual record as well. By the end of November, Dealogic said that global M&A had hit $4.26 trillion, and the record for full-year volume is just $4.3 trillion, reached in 2007.

A Good Month for Small Caps

As we turn the calendar into December, if you're looking for a bargain in stocks, small companies appear to be the best bet. The market as a whole has posted positive returns 18 out of the past 20 years in the period between November 20 and the end of the year, but the Russell 2000, the benchmark for small-cap stocks, has risen an average of 5.6 percent during that period. The Russell 1000 large-cap index has risen by just 3.4 percent in that same stretch.

If you're not ready to get into the market just yet, that's all right. Research has found that most of that growth happens in the second half of the month. Since 1987, the Russell 2000 gains 3.5 percent on average in the last half of December versus 1.9 percent for the Russell 1000.

And the small-cap effect even limps along into January. Gains for that month since 1987 are 0.6 percent for the Russell 2000, and 0.5 percent for the Russell 1000.