Where are the wealthy putting their money? According to one new report, it's not hedge funds. Wealthy members of the Tiger 21 peer-to-peer learning network instead increased their allocations to real estate and commodities in the first quarter, according to the organization's latest report.
Real estate allocations hit a new high of 32 percent in the first quarter, two percentage points above the previous high in the fourth quarter. Members also allocated 1 percent to commodities in the first quarter, their first commodity exposure since the third quarter of 2014.
Allocations to private equity, fixed income and hedge funds each fell by one percentage point from the fourth quarter to 20 percent, 9 percent and 5 percent, respectively. At 5 percent, hedge funds have tied their historic low for members’ allocations.
Thursday, June 8, 2017
Wednesday, June 7, 2017
The Jobs Mismatch
U.S. job openings surged to a record high in April, but employers appeared to have trouble finding suitable workers. The Labor Department's monthly Job Openings and Labor Turnover Survey, or JOLTS, published on Tuesday also suggests that a recent slowdown in job growth could be the result of a skills mismatch.
Job openings increased 259,000 to a seasonally adjusted 6.0 million in April, the highest since the government started tracking them in 2000. The monthly increase was the largest in just over a year and pushed the jobs openings rate to 4.0 percent, its highest level since last July.
Hiring, however, decreased by 253,000 jobs in April. The gap between job openings and hiring points to a growing skills mismatch; a report from the National Federation of Independent Business last week showed the share of small business owners reporting job openings they could not fill in May was the highest since November 2000.
Job openings increased 259,000 to a seasonally adjusted 6.0 million in April, the highest since the government started tracking them in 2000. The monthly increase was the largest in just over a year and pushed the jobs openings rate to 4.0 percent, its highest level since last July.
Hiring, however, decreased by 253,000 jobs in April. The gap between job openings and hiring points to a growing skills mismatch; a report from the National Federation of Independent Business last week showed the share of small business owners reporting job openings they could not fill in May was the highest since November 2000.
Tuesday, June 6, 2017
The Scars of the Financial Crisis
Ten years after the financial crisis hit, it is still having a major psychological impact on investors, even those too young to have lost money in the crash. According to a new survey from Legg Mason Global Asset Management, millennial investors in the United States report that the financial crisis and subsequent recession strongly influence their investment decisions, leaving them more risk-averse than any other age group.
The survey finds that 82 percent of the surveyed millennials said their investment decisions are influenced by the financial crisis, with 57 percent saying they are “strongly influenced.” By comparison, 39 percent of Gen X, 13 percent of baby boomers, and 14 percent over age 65 said their investment decisions are still “strongly influenced” by the global financial meltdown.
A similar number of millennial investors said they are conservative investors (85 percent), with 52 percent calling themselves “very conservative.” Only 30 percent of Gen X, 29 percent of baby boomers, and 28 percent over age 65 consider themselves “very conservative.”
The survey finds that 82 percent of the surveyed millennials said their investment decisions are influenced by the financial crisis, with 57 percent saying they are “strongly influenced.” By comparison, 39 percent of Gen X, 13 percent of baby boomers, and 14 percent over age 65 said their investment decisions are still “strongly influenced” by the global financial meltdown.
A similar number of millennial investors said they are conservative investors (85 percent), with 52 percent calling themselves “very conservative.” Only 30 percent of Gen X, 29 percent of baby boomers, and 28 percent over age 65 consider themselves “very conservative.”
Monday, June 5, 2017
Amazon's Big Year
Amazon’s stock ended at $1,007 Friday, the first time it closed in four figures. It briefly pushed above $1,000 during Tuesday’s trading session before finishing at $997. Google parent Alphabet also came within pennies of $1,000, ending the week at $996.
Though it is a retailer, Amazon stock is acting much more in line with the other big tech firms. Amazon shares have climbed more than 34 percent this year, trouncing shares of traditional retailers. The SPDR Retail exchange-traded fund, which tracks more than 100 stocks, is down more than 6 percent on the year.
Amazon is keeping pace with the big gains that have been posted by tech stalwarts like Facebook and Apple. Each of those stocks has climbed 34 percent this year.
Though it is a retailer, Amazon stock is acting much more in line with the other big tech firms. Amazon shares have climbed more than 34 percent this year, trouncing shares of traditional retailers. The SPDR Retail exchange-traded fund, which tracks more than 100 stocks, is down more than 6 percent on the year.
Amazon is keeping pace with the big gains that have been posted by tech stalwarts like Facebook and Apple. Each of those stocks has climbed 34 percent this year.
Friday, June 2, 2017
May's Jobs Report
In May, the economy added a mildly disappointing 138,000 jobs, but the unemployment rate fell to 4.3 percent, according to this morning's data from the Bureau of Labor Statistics. This is a new post-recession low for the unemployment rate — which is now at its lowest level since May 2001.
Employment in health care rose by 24,000 in May, while mining added 7,000 jobs. Employment in mining has risen by 47,000 since reaching a recent low point in October 2016, with most of the gain in support activities for mining.
The economy has seen an average monthly gain of 181,000 over the prior 12 months. With today's figures, the number of jobs added for March was revised down from 79,000 to 50,000, and the change for April was revised down from 211,000 to 174,000. With these revisions, employment gains in March and April combined were 66,000 less than previously reported.
Employment in health care rose by 24,000 in May, while mining added 7,000 jobs. Employment in mining has risen by 47,000 since reaching a recent low point in October 2016, with most of the gain in support activities for mining.
The economy has seen an average monthly gain of 181,000 over the prior 12 months. With today's figures, the number of jobs added for March was revised down from 79,000 to 50,000, and the change for April was revised down from 211,000 to 174,000. With these revisions, employment gains in March and April combined were 66,000 less than previously reported.
Thursday, June 1, 2017
The Broad-Based Tech Rally
The market-cap weighted index
of tech stocks in the S&P 500 is up 20 percent in 2017, more than double
the 7.8 percent advance of the S&P itself. It's tempting to think this is the result of a few big tech stocks: Apple, Microsoft, Alphabet and Facebook by themselves account for 43 percent of the S&P 500’s tech sector market capitalization.
But it’s worth noting that the majority of tech stocks in the S&P 500 are having stellar years as well. An equally weighted iteration of the S&P 500 tech sector, in which Apple carries the same sway as software company Adobe Systems, is itself up more than 17 percent this year; the median tech stock in the S&P 500 is up 18%.
Even smaller tech stocks are outperforming. More than half of the 303 tech stocks in the Russell 3000 Index, a measure of large-, medium- and small-cap companies, have recorded at least double-digit percentage gains this year.
But it’s worth noting that the majority of tech stocks in the S&P 500 are having stellar years as well. An equally weighted iteration of the S&P 500 tech sector, in which Apple carries the same sway as software company Adobe Systems, is itself up more than 17 percent this year; the median tech stock in the S&P 500 is up 18%.
Even smaller tech stocks are outperforming. More than half of the 303 tech stocks in the Russell 3000 Index, a measure of large-, medium- and small-cap companies, have recorded at least double-digit percentage gains this year.
Wednesday, May 31, 2017
Surprises in Consumer Confidence
Consumer confidence showed an unexpected decline for the month of May, falling from 119.4 down to 117.9. With that drop, consumer confidence saw its first back-to-back drop since May of last year, although it still remains well above its long-term average of 93.
There's a fascinating divergence in confidence based on income levels in the past two months. Sentiment among consumers with incomes greater than $50,000 has dropped over 10 percentage points in the last two months, which is the largest two-month decline in two years. But confidence levels among consumers with incomes between $35,000 and $50,000 actually increased this month and is barely down in the last two months.
But for lower-income folks, it's a completely different story. For consumers with annual incomes below $15,000, confidence is at its highest level in nearly 16 years.
There's a fascinating divergence in confidence based on income levels in the past two months. Sentiment among consumers with incomes greater than $50,000 has dropped over 10 percentage points in the last two months, which is the largest two-month decline in two years. But confidence levels among consumers with incomes between $35,000 and $50,000 actually increased this month and is barely down in the last two months.
But for lower-income folks, it's a completely different story. For consumers with annual incomes below $15,000, confidence is at its highest level in nearly 16 years.
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