Hyre Weekly Commentary March 12, 2012The MarketsAn important key to support the stock market is starting to fall into place.You may have guessed that key is JOBS. Last week, the Labor Department reported an increaseof 227,000 new jobs in February. Over the past six months, 1.2 million new jobs have beencreated – the highest six-month total since 2006. More jobs could lead to more spending whichcould boost corporate sales, earnings, and, possibly, stock prices.While the recent employment numbers look pretty good, leave it to Fed Chairman Ben Bernanketo rain on the parade. In testimony to Congress on February 29, he said, “Notwithstanding thebetter recent data, the job market remains far from normal: The unemployment rate remainselevated, long-term unemployment is still near record levels, and the number of persons workingpart-time for economic reasons is very high.”On a different note, last week marked the three-year anniversary of the March 9, 2009 stockmarket low. Since the low: The S&P 500 index has risen just over 100 percent Corporate operating earnings per share have risen just under 100 percent Corporate revenue per share has risen a meager 1 percent Source: Barron’sSo, how can corporate earnings nearly double while corporate revenue barely budges? Theanswer… cost cutting – and a big chunk of the cost cutting came from whacking jobs. Eventhough we’ve added over a million jobs in the past six months, we’re still down about six millionjobs from the peak, according to Barron’s.The good news is the recent spurt in job growth may suggest that corporations have aboutreached the limit of cutting jobs and now have to add staff to support even small gains in revenuegrowth.
Data as of 3/9/12 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year Standard & Poors 500 (Domestic Stocks) 0.1% 9.0% 5.1% 26.5% -0.5% 1.6% DJ Global ex US (Foreign Stocks) -1.2 11.2 -9.7 23.0 -3.3 5.2 10-year Treasury Note (Yield Only) 2.0 N/A 3.5 2.9 4.6 5.3 Gold (per ounce) -1.1 7.2 17.9 22.2 20.9 19.2 DJ-UBS Commodity Index -1.6 3.3 -12.8 11.5 -2.8 4.1 DJ Equity All REIT TR Index 0.2 6.0 8.3 46.8 -1.1 10.2 Notes: S&P 500, DJ Global ex US, Gold, DJ-UBS Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT TR Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods. Sources: Yahoo! Finance, Barron’s, djindexes.com, London Bullion Market Association. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.THE AGGREGATE NET WORTH OF U.S. HOUSEHOLDS WAS $58.5 TRILLION atthe end of last year, according to data from the Federal Reserve Flow of Funds report. To put thatnumber in context, household net worth peaked at $66.8 trillion in the third quarter of 2007. It hita five-year low of $50.5 trillion in the first quarter of 2009 – the same quarter as the bear marketlow, according to Bloomberg.The aggregate net worth of U.S. households is still $8.3 trillion below the all-time high set backin 2007.Net worth is the difference between total assets and total liabilities. Investment holdings and realestate typically account for the bulk of households’ assets so any change in the financial or realestate markets can cause big swings in net worth.Parsing the data a bit further shows these two interesting numbers: 1. Household debt as a percent of disposable income fell to 113 percent at the end of last year. This ratio peaked at 130 percent in 2007 and has been steadily declining. It’s good to see this number drop because it means households are deleveraging and have more income to support their debt level, according to The Wall Street Journal. 2. Debt payments as a percent of households after-tax income (the debt-service ratio), fell to a 17-year low of 11.1 percent. Again, a lower number is better because this means consumers are allocating less of their monthly income to pay off debts. With more money left over, they can spend it on things that could propel the economy.Some of the decline in these debt ratios may be due to the debts being written off as opposed toconsumers actually having the money to pay them off. Either way, household balance sheetsseem to be improving.We don’t want to get too caught up in numbers here because that can distract from the key pointwhich is this – consumers are deleveraging, they’re spending less of their income paying offdebts, and that may bode well for the economy.
Weekly Focus – How to InnovateSome of the most innovative new ideas are developed by simply connecting an existing idea tosomething new says author Jonah Lehrer. For example, the Wright Brothers were bicyclemanufacturers whose first plane was akin to a bicycle with wings. Johannes Gutenberg used hisknowledge of wine presses to create the printing press. And, more recently, the founders ofGoogle took the existing idea of ranking the importance of academic articles by the number ofcitations and applied it to their search engine algorithm. The result – web pages that have lots ofother web pages linking to it tend to score high in a Google search.The next time you need to come up with a creative solution to a problem, try taking an idea froman unrelated field and apply it to your situation. Who knows, it might become the next billion-dollar idea!Best regardsJim Hyre, CFP®Registered PrincipalP.S. Please feel free to forward this commentary to family, friends, or colleagues. If you wouldlike us to add them to the list, please reply to this e-mail with their e-mail address and we willask for their permission to be added.Securities offered through Raymond James Financial Services, Inc., Member FINRA/SIPC.* The Standard & Poors 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market ingeneral.* The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks.* The NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on theNational Association of Securities Dealers Automated Quotation System.* Gold represents the London afternoon gold price fix as reported by www.usagold.com.* The DJ/AIG Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. TheIndex is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seenas a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.* The DJ Equity All REIT TR Index measures the total return performance of the equity subcategory of the Real Estate InvestmentTrust (REIT) industry as calculated by Dow Jones* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict futureperformance.* Consult your financial professional before making any investment decision.* You cannot invest directly in an index.* Past performance does not guarantee future results. mc101507* This newsletter was prepared by PEAK for use by James Hyre, CFP®, registered principal* If you would prefer not to receive this Weekly Newsletter, please contact our office via e-mail or mail your request to 2074 ArlingtonAve, Upper Arlington, OH 43221.* The information contained in this report does not purport to be a complete description of the securities, markets, or developmentsreferred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee thatthe forgoing material is accurate or complete. Any opinions are those of Jim Hyre and not necessary those of RJFS or RaymondJames. Expressions of opinion are as of this date and are subject to change without notice. This information is not intended as asolicitation or an offer to buy or sell any security to herein. Tax or legal matters should be discussed with the appropriateprofessional.
Jim Hyre, CFP®Registered PrincipalRaymond James Financial Services, Inc.Member FINRA/SIPC2074 Arlington Ave.Upper Arlington, OH 43221614.225.9400614.225.9400 Fax877.228.9515 Toll Freewww.hyreandassociates.comFind Us Here:Raymond James Financial Services does not accept orders and/or instructions regarding your account by email, voice mail, fax orany alternate method. Transactional details do not supersede normal trade confirmations or statements. Email sent through theInternet is not secure or confidential. Raymond James Financial Services reserves the right to monitor all email. Any informationprovided in this email has been prepared from sources believed to be reliable, but is not guaranteed by Raymond James FinancialServices and is not a complete summary or statement of all available data necessary for making an investment decision. Anyinformation provided is for informational purposes only and does not constitute a recommendation. Raymond James FinancialServices and its employees may own options, rights or warrants to purchase any of the securities mentioned in email. This email isintended only for the person or entity to which it is addressed and may contain confidential and/or privileged material. Any review,transmission, dissemination or other use of, or taking of any action in reliance upon, this information by persons or entities otherthan the intended recipient is prohibited. If you received this message in error, please contact the sender immediately and deletethe material from your computer. 2074 Arlington Avenue, Columbus, Ohio 43221 614.225.9400 local | 877.228.9515 toll-free | 614.225.9400 fax www.hyreandassociates.com | email@example.com Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC.