Hyre Weekly Commentary April 16, 2012The MarketsIt‟s back. Volatility, that is.Like a yo-yo, the market bounced around and the S&P 500 index ultimately ended down 2.0percent for the week and 3.4 percent from this year‟s closing high, according to Reuters. Despitethe drop, the market is still showing a solid 9.0 percent gain for the year.Once again, debt issues in Europe made headlines as Spain became the latest problem country.That, along with some disappointing economic growth data from China, helped spark the volatileweek. Because of its massive size, any slowdown in China is closely watched by marketparticipants.As a sign of the big swings this week, the Dow Jones Industrial closed the day up or down by atleast 100 points on four out of the five days last week, according to Barron‟s.Highlights from the week included: China‟s economy expanded at the weakest pace in over three years last quarter, missing consensus economic forecasts. Yields on debt in Spain jumped due to a weak debt auction, renewing fears that the European debt crisis could start affecting the global markets again. Several U.S. banks reported earnings that underwhelmed investors, resulting in weakness in financial stocks. U.S. inflation remained under control which may leave open the possibility for further Federal Reserve intervention should economic data deteriorate. Sources: The Wall Street Journal, Yahoo! FinanceThe quarterly corporate earnings season is now underway so we wouldn‟t be surprised to seemore market volatility as investors digest the latest read on the health of corporate America.
Data as of 4/13/12 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year Standard & Poors 500 (Domestic Stocks) -2.0% 9.0% 3.8% 16.9% -1.2% 2.1% DJ Global ex US (Foreign Stocks) -1.0 7.4 -13.8 12.5 -5.1 5.1 10-year Treasury Note (Yield Only) 2.0 N/A 3.5 2.9 4.8 5.1 Gold (per ounce) 2.2 5.8 14.3 23.4 19.6 18.7 DJ-UBS Commodity Index -1.6 -0.9 -17.7 7.2 -4.4 3.8 DJ Equity All REIT TR Index -1.2 8.0 11.2 31.7 -0.7 9.5 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 “SHOVE IT” INDICATOR as highlighted by CNBC made a noteworthy gain inFebruary suggesting consumer confidence may be increasing. You‟re probably wondering,“What in the world is the „shove it‟ indicator?” Well, every month the government conducts aJob Openings and Labor Turnover Survey, or “JOLTS” for short. One of the data points in theJOLTS report is the number of workers who quit their job as opposed to being laid off. And, inFebruary, for the first time since September 2008, the quitters were in the majority.What does this mean? Generally speaking, people who quit their job are typically more confidentthat there is another job waiting for them when they voluntarily leave a position. Nicholas Colas,chief market strategist at ConvergEx Group says, “Quits go hand-in-hand with consumerconfidence.”This positive JOLTS data point follows a disappointing government jobs report for the month ofMarch where only 120,000 new jobs were created. Also, the preliminary March reading of theUniversity of Michigan‟s consumer confidence survey showed a decline from the previousmonth. Analysts had expected confidence to stay flat, according to International Business Times.This conflicting economic data gave the bulls and the bears ample ammunition to bolster theirrespective case. And, conflicting data like this may lead to a continuation of the yo-yo asinvestors try to predict which direction the economy is headed.Weekly Focus – Think About It“Expectation is the root of all heartache.” --William ShakespeareBest regards,Jim Hyre, CFP®Registered Principal
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