The document summarizes market volatility in 2011 and discusses the Chinese government's crackdown on freedom of speech through restrictions on social media. Specifically:
- The stock market has seen high volatility in 2011, with the VIX hitting a record high and large intraday swings in the Dow Jones Industrial Average.
- Investors have been frustrated by the lack of direction in uncertain markets affected by European debt problems and US budget issues.
- China limits freedom of speech to control social unrest, recently requiring real name registration and verification for users of the popular Weibo social media platform.
- The government fears social media could enable mass organization that leads to instability, as seen in the Arab Spring, given China's
The S&P 500 has risen 12.6% since early October due to a lack of bad news. Three pieces of news that could be considered lacking in bad news are: 1) 75% of companies reporting earnings so far this quarter have beaten estimates. 2) Economic news has generally supported the idea that the economy is not collapsing. 3) European leaders may finally take action to address the sovereign debt crisis. Whether this lack of bad news continues remains uncertain.
The document provides a weekly market commentary for February 27, 2012. It notes that the markets have been calm recently as fears have declined. The S&P 500 reached its highest level in over 3.5 years and volatility is low. However, it warns of potential risks on the horizon from rising oil prices and geopolitical tensions in oil producing regions that could cause a market correction. The commentary emphasizes that investors should focus on long term trends rather than short term fluctuations.
Spain requested a $125 billion bailout to rescue its failing banks as its economy struggles with high unemployment and recession. If Spain's financial troubles escalate, it could destabilize the entire eurozone economy. Meanwhile, Greece will hold a pivotal election that could lead to it leaving the eurozone, an unprecedented event that would plunge the region into uncharted territory. Federal Reserve Chairman Ben Bernanke stated the Fed stands ready to take action if European and global economic problems worsen.
The stock market ended 2011 right where it started despite significant volatility. The S&P 500 opened and closed at 1,257.6 but saw daily swings totaling over 3,000 points. Key events in 2011 included the European debt crisis, falling interest rates, political upheaval in the Middle East, Apple's rise led by Steve Jobs, and natural disasters like the Japanese earthquake. Foreign markets declined more sharply than the flat U.S. market. Gold rose while commodities fell on the year.
The document summarizes the reaction of markets to a recent agreement by European leaders to address the sovereign debt crisis. It notes that stock prices rose significantly as investors were relieved by the three-point deal involving Greek debt relief and boosting the bailout fund. However, details remain unclear and challenges loom with the U.S. debt panel deadline approaching. Overall investors were in a relief rally but surprises can still occur as with sudden market moves or unexpected weather, much like the forecasting abilities of analysts and meteorologists.
Margaret Thatcher accurately predicted problems with the euro 17 years before the 2010 crisis. She argued that Germany would prioritize low inflation while the euro would devastate poorer countries' inefficient economies. True to her prediction, the shared currency is causing imbalances between countries with different economic and political systems. Resolving the eurozone's structural problems is very difficult given it requires agreement among 17 countries and their various political parties.
Volatility returned to the markets as the S&P 500 fell 2% for the week due to concerns over the European debt crisis and slowing growth in China. Spain became the latest problem country in Europe, while China's economy expanded at its weakest pace in over three years. Additionally, weak earnings reports from several U.S. banks led to weakness in financial stocks. Conflicting economic data from the U.S. also contributed to uncertainty and market swings. The "quitters" indicator from the JOLTS report provided a positive signal about consumer confidence, despite a disappointing jobs report and decline in consumer sentiment surveys.
The weekly commentary discusses the recent performance of the stock market and economy. It notes that Apple's strong earnings helped the S&P 500 gain 1.8% despite disappointing economic data from the US, Spain, and UK. The housing market continues to struggle with home prices at their lowest point since 2002, but sales have increased recently due to declining inventory levels. Overall the economy is growing modestly but not enough to indicate a clear direction.
The S&P 500 has risen 12.6% since early October due to a lack of bad news. Three pieces of news that could be considered lacking in bad news are: 1) 75% of companies reporting earnings so far this quarter have beaten estimates. 2) Economic news has generally supported the idea that the economy is not collapsing. 3) European leaders may finally take action to address the sovereign debt crisis. Whether this lack of bad news continues remains uncertain.
The document provides a weekly market commentary for February 27, 2012. It notes that the markets have been calm recently as fears have declined. The S&P 500 reached its highest level in over 3.5 years and volatility is low. However, it warns of potential risks on the horizon from rising oil prices and geopolitical tensions in oil producing regions that could cause a market correction. The commentary emphasizes that investors should focus on long term trends rather than short term fluctuations.
Spain requested a $125 billion bailout to rescue its failing banks as its economy struggles with high unemployment and recession. If Spain's financial troubles escalate, it could destabilize the entire eurozone economy. Meanwhile, Greece will hold a pivotal election that could lead to it leaving the eurozone, an unprecedented event that would plunge the region into uncharted territory. Federal Reserve Chairman Ben Bernanke stated the Fed stands ready to take action if European and global economic problems worsen.
The stock market ended 2011 right where it started despite significant volatility. The S&P 500 opened and closed at 1,257.6 but saw daily swings totaling over 3,000 points. Key events in 2011 included the European debt crisis, falling interest rates, political upheaval in the Middle East, Apple's rise led by Steve Jobs, and natural disasters like the Japanese earthquake. Foreign markets declined more sharply than the flat U.S. market. Gold rose while commodities fell on the year.
The document summarizes the reaction of markets to a recent agreement by European leaders to address the sovereign debt crisis. It notes that stock prices rose significantly as investors were relieved by the three-point deal involving Greek debt relief and boosting the bailout fund. However, details remain unclear and challenges loom with the U.S. debt panel deadline approaching. Overall investors were in a relief rally but surprises can still occur as with sudden market moves or unexpected weather, much like the forecasting abilities of analysts and meteorologists.
Margaret Thatcher accurately predicted problems with the euro 17 years before the 2010 crisis. She argued that Germany would prioritize low inflation while the euro would devastate poorer countries' inefficient economies. True to her prediction, the shared currency is causing imbalances between countries with different economic and political systems. Resolving the eurozone's structural problems is very difficult given it requires agreement among 17 countries and their various political parties.
Volatility returned to the markets as the S&P 500 fell 2% for the week due to concerns over the European debt crisis and slowing growth in China. Spain became the latest problem country in Europe, while China's economy expanded at its weakest pace in over three years. Additionally, weak earnings reports from several U.S. banks led to weakness in financial stocks. Conflicting economic data from the U.S. also contributed to uncertainty and market swings. The "quitters" indicator from the JOLTS report provided a positive signal about consumer confidence, despite a disappointing jobs report and decline in consumer sentiment surveys.
The weekly commentary discusses the recent performance of the stock market and economy. It notes that Apple's strong earnings helped the S&P 500 gain 1.8% despite disappointing economic data from the US, Spain, and UK. The housing market continues to struggle with home prices at their lowest point since 2002, but sales have increased recently due to declining inventory levels. Overall the economy is growing modestly but not enough to indicate a clear direction.
Central banks around the world have created over $2.5 trillion since 2008 through quantitative easing programs. This involves banks creating money to purchase government and mortgage debt, with the goal of increasing money supply and stimulating the economy. However, low interest rates have resulted in a "stealth tax" on savers as interest earned is below inflation. While helping debtors, quantitative easing may be keeping the economy dependent on unsustainable monetary policy.
The stock market continued rising last week driven by optimism over a Greek bailout and better economic data. However, higher gas prices and tensions in the Middle East could impact consumer spending. In China, slowing housing prices following measures to boost lending have raised concerns. Surveys found Americans view $150,000 in annual income or $1 million in net worth as amounts needed to feel "rich", which has policy implications.
The markets had a strong week with the S&P 500 and Dow posting their largest gains since December. Unemployment claims matched a four-year low and the Federal Reserve signaled it will keep interest rates low to support the economy. Meanwhile, Mongolia has emerged as one of the fastest growing economies due to its natural resources, but faces challenges in converting this wealth into long-term educational gains like more developed countries.
The document discusses the interconnectedness of global economies and markets. It notes that problems in countries like China can have worldwide repercussions. It also discusses the ongoing sovereign debt problems in Europe weighing on US stock prices. While the US economy is performing reasonably well, its recovery remains fragile due to uncertainty around Europe's debt situation. The document advocates for international diversification given the declining dominance of the US in global stock market capitalization.
Warren Buffett and Bill Gross, two legendary investors, disagree on bonds. Buffett sees bonds as risky in times of inflation while Gross favors bonds in the short term due to low interest rates. Their views may differ based on timeframe, with Buffett looking 7-10 years out and Gross a couple years. Additionally, indexes may not fully reflect market performance due to decisions around their construction.
The document summarizes recent negative news headlines about weak global financial markets and slowing economies. While the headlines seem dire, the advisor argues they are designed primarily to generate readership rather than provide an accurate portrayal of the long-term economic situation. The advisor believes their role is to look beneath headlines and discern the real issues to help clients stay on track with their goals despite short-term market volatility.
The Federal Reserve Chairman Ben Bernanke outlined two major risks facing the US economy: 1) the ongoing Eurozone fiscal and banking crisis and its potential effects on the US, and 2) the unsustainable path of the US fiscal situation including the looming "fiscal cliff". While the US has little control over Europe, the fiscal cliff is within Congress's power to address. If no action is taken, the automatic spending cuts and tax increases could throw the economy back into recession according to estimates. Bernanke stated the Fed is ready to take further action if needed to support the recovery.
The document summarizes the strong performance of the stock market in the first quarter of 2012, with the S&P 500 rising 12% which was its best start since 1998. Analysts attributed the gains to an easing of Europe's debt crisis, a strengthening global economy, rising US consumer sentiment, and supportive Federal Reserve policy. However, some warn that the market could falter later in the year as it has in recent years, due to potential risks like renewed European debt issues or a slowing US economy.
Republicans and Democrats in Congress are struggling to reach an agreement to raise the federal debt ceiling before an August 2 deadline, which could trigger a default on US debt obligations. Former Treasury Secretary Larry Summers warned that a US debt default would cause widespread financial panic and uncertainty, similar to or even worse than the 2008 global financial crisis. While politicians recognize the risks, most analysts believe a last-minute deal will be reached to raise the debt ceiling and avoid default, though it may only provide a temporary solution.
The jobs recovery from the 2007 recession has been painfully slow compared to previous recessions. Over 4 years after employment peaked, only half the jobs lost have been recovered. Possible reasons for the slow recovery include financial crises typically resulting in slow recoveries, policy uncertainty in Washington, extended unemployment benefits, and eurozone crisis uncertainty dampening business demand. However, record corporate profits and cash levels could eventually provide a boost to hiring and the broader economy if companies begin spending more on new hires.
- Greece and Italy recently replaced their political leaders in hopes that new leadership can help calm financial markets and drive structural reforms.
- The new leaders in Greece and Italy, Lucas Papademos and Mario Monti respectively, are expected to help lead their countries out of debt crises.
- If the new leaders take swift action and gain credibility, it could help boost the markets. However, it remains to be seen if political changes in Europe will be enough to significantly improve the markets.
The Federal Reserve announced "Operation Twist" to lower longer-term interest rates by selling short-term Treasuries and buying long-term ones. While interest rates declined as intended, stocks fell over 6% due to fears of a Greek default, global financial crisis, slowing growth in China, and declining copper prices indicating weaker global growth. Dividends have provided over a third of the S&P 500's total return over 80 years and can enhance returns and provide stability, especially in a low interest rate environment.
The document summarizes recent economic data and stock market performance. It notes that less than three weeks ago, the economy appeared to be weakening and falling into a new recession, but recent data on auto sales, retail sales, and job growth has been better than expected, helping the stock market rise over 11% in two weeks. However, the author cautions it is too early to say the economy has fully turned around and still has improvements to make before a full recovery.
The document discusses uncertainty in the current economic situation and markets. It notes there is uncertainty in Washington over budget issues, the economy's recovery from recession, the value of the dollar, and the war on terrorism. As financial advisors, the author's firm tries to account for uncertainty by considering best and worst case scenarios and balancing investments. The document also notes that despite weak economic growth, corporate profits are at record levels, but middle-class spending remains stagnant, holding back stronger growth.
Elections in France, Greece, and Germany could impact markets as voters chose candidates favoring changes over austerity. French and Greek voters rejected incumbent parties, bringing political uncertainty. This document discusses the economic issues facing Europe, including recession, high unemployment, and low business confidence. Traders who actively communicated with their network were more successful at "connecting the dots" of information and making profitable trades.
The European Union summit helped fuel a stock market rally by delivering more fiscal integration steps than expected. While the second quarter saw stock market gains reduced due to concerns over Europe, the US economy, and the Federal Reserve, the S&P 500 is still up 8.3% for the year. Investors remain cautious watching the US presidential election and looming fiscal cliff at the end of 2012.
- Stocks took a hit last week due to ongoing concerns about the European debt crisis, a potential economic slowdown in China, and JPMorgan's $2 billion trading loss.
- Investors are frustrated that after two years and 17 eurozone summits, the European debt issue is still not resolved and may be worse as options are running out.
- The US faces potential economic challenges including a presidential election and fiscal deadlines by the end of the year.
The document summarizes recent market contradictions and distortions that are contributing to investor risk aversion and confusion. Government interventions like stimulus programs, quantitative easing, and bailouts have generated unintended side effects in markets. Politicians debate the merits of intervention versus free markets. Falling stock prices may paradoxically reduce risk as valuations decline, setting up markets for better long-term returns according to some analysts. Overall, distortions and political debates are causing uncertainty, stagnation, and falling stock prices.
The document discusses rising consumer prices, including the price of coffee. It provides three reasons for higher coffee prices: increasing costs of fertilizer and farm goods, rising affluence in developing countries leading to higher demand, and adverse weather affecting coffee production. While core inflation remains low, food and energy prices are rising. The yield curve is also discussed as a potential indicator of future recessions.
The document summarizes recent economic developments and market performance. It notes that while stock prices doubled from early 2009 lows, the underlying economy has seen only modest growth with issues like high unemployment and government debt. It discusses PIMCO's view that advanced economies will see sluggish growth and high unemployment for the next 3-5 years, while emerging markets prosper, which is playing out. The latest economic data is keeping policymakers up at night as they try to stimulate the economy amid an end to QE2 and fiscal policy difficulties in Congress.
Este documento resume las normas de citación y referencias bibliográficas del estilo APA (American Psychological Association). Explica que el formato APA se utiliza convencionalmente en ciencias sociales y que los textos deben estar en doble espacio. Detalla los tres niveles de títulos y cómo citar cuando hay uno o varios autores. También cubre citas textuales, el orden alfabético de referencias y ejemplos de referencias para revistas, libros y medios electrónicos.
Central banks around the world have created over $2.5 trillion since 2008 through quantitative easing programs. This involves banks creating money to purchase government and mortgage debt, with the goal of increasing money supply and stimulating the economy. However, low interest rates have resulted in a "stealth tax" on savers as interest earned is below inflation. While helping debtors, quantitative easing may be keeping the economy dependent on unsustainable monetary policy.
The stock market continued rising last week driven by optimism over a Greek bailout and better economic data. However, higher gas prices and tensions in the Middle East could impact consumer spending. In China, slowing housing prices following measures to boost lending have raised concerns. Surveys found Americans view $150,000 in annual income or $1 million in net worth as amounts needed to feel "rich", which has policy implications.
The markets had a strong week with the S&P 500 and Dow posting their largest gains since December. Unemployment claims matched a four-year low and the Federal Reserve signaled it will keep interest rates low to support the economy. Meanwhile, Mongolia has emerged as one of the fastest growing economies due to its natural resources, but faces challenges in converting this wealth into long-term educational gains like more developed countries.
The document discusses the interconnectedness of global economies and markets. It notes that problems in countries like China can have worldwide repercussions. It also discusses the ongoing sovereign debt problems in Europe weighing on US stock prices. While the US economy is performing reasonably well, its recovery remains fragile due to uncertainty around Europe's debt situation. The document advocates for international diversification given the declining dominance of the US in global stock market capitalization.
Warren Buffett and Bill Gross, two legendary investors, disagree on bonds. Buffett sees bonds as risky in times of inflation while Gross favors bonds in the short term due to low interest rates. Their views may differ based on timeframe, with Buffett looking 7-10 years out and Gross a couple years. Additionally, indexes may not fully reflect market performance due to decisions around their construction.
The document summarizes recent negative news headlines about weak global financial markets and slowing economies. While the headlines seem dire, the advisor argues they are designed primarily to generate readership rather than provide an accurate portrayal of the long-term economic situation. The advisor believes their role is to look beneath headlines and discern the real issues to help clients stay on track with their goals despite short-term market volatility.
The Federal Reserve Chairman Ben Bernanke outlined two major risks facing the US economy: 1) the ongoing Eurozone fiscal and banking crisis and its potential effects on the US, and 2) the unsustainable path of the US fiscal situation including the looming "fiscal cliff". While the US has little control over Europe, the fiscal cliff is within Congress's power to address. If no action is taken, the automatic spending cuts and tax increases could throw the economy back into recession according to estimates. Bernanke stated the Fed is ready to take further action if needed to support the recovery.
The document summarizes the strong performance of the stock market in the first quarter of 2012, with the S&P 500 rising 12% which was its best start since 1998. Analysts attributed the gains to an easing of Europe's debt crisis, a strengthening global economy, rising US consumer sentiment, and supportive Federal Reserve policy. However, some warn that the market could falter later in the year as it has in recent years, due to potential risks like renewed European debt issues or a slowing US economy.
Republicans and Democrats in Congress are struggling to reach an agreement to raise the federal debt ceiling before an August 2 deadline, which could trigger a default on US debt obligations. Former Treasury Secretary Larry Summers warned that a US debt default would cause widespread financial panic and uncertainty, similar to or even worse than the 2008 global financial crisis. While politicians recognize the risks, most analysts believe a last-minute deal will be reached to raise the debt ceiling and avoid default, though it may only provide a temporary solution.
The jobs recovery from the 2007 recession has been painfully slow compared to previous recessions. Over 4 years after employment peaked, only half the jobs lost have been recovered. Possible reasons for the slow recovery include financial crises typically resulting in slow recoveries, policy uncertainty in Washington, extended unemployment benefits, and eurozone crisis uncertainty dampening business demand. However, record corporate profits and cash levels could eventually provide a boost to hiring and the broader economy if companies begin spending more on new hires.
- Greece and Italy recently replaced their political leaders in hopes that new leadership can help calm financial markets and drive structural reforms.
- The new leaders in Greece and Italy, Lucas Papademos and Mario Monti respectively, are expected to help lead their countries out of debt crises.
- If the new leaders take swift action and gain credibility, it could help boost the markets. However, it remains to be seen if political changes in Europe will be enough to significantly improve the markets.
The Federal Reserve announced "Operation Twist" to lower longer-term interest rates by selling short-term Treasuries and buying long-term ones. While interest rates declined as intended, stocks fell over 6% due to fears of a Greek default, global financial crisis, slowing growth in China, and declining copper prices indicating weaker global growth. Dividends have provided over a third of the S&P 500's total return over 80 years and can enhance returns and provide stability, especially in a low interest rate environment.
The document summarizes recent economic data and stock market performance. It notes that less than three weeks ago, the economy appeared to be weakening and falling into a new recession, but recent data on auto sales, retail sales, and job growth has been better than expected, helping the stock market rise over 11% in two weeks. However, the author cautions it is too early to say the economy has fully turned around and still has improvements to make before a full recovery.
The document discusses uncertainty in the current economic situation and markets. It notes there is uncertainty in Washington over budget issues, the economy's recovery from recession, the value of the dollar, and the war on terrorism. As financial advisors, the author's firm tries to account for uncertainty by considering best and worst case scenarios and balancing investments. The document also notes that despite weak economic growth, corporate profits are at record levels, but middle-class spending remains stagnant, holding back stronger growth.
Elections in France, Greece, and Germany could impact markets as voters chose candidates favoring changes over austerity. French and Greek voters rejected incumbent parties, bringing political uncertainty. This document discusses the economic issues facing Europe, including recession, high unemployment, and low business confidence. Traders who actively communicated with their network were more successful at "connecting the dots" of information and making profitable trades.
The European Union summit helped fuel a stock market rally by delivering more fiscal integration steps than expected. While the second quarter saw stock market gains reduced due to concerns over Europe, the US economy, and the Federal Reserve, the S&P 500 is still up 8.3% for the year. Investors remain cautious watching the US presidential election and looming fiscal cliff at the end of 2012.
- Stocks took a hit last week due to ongoing concerns about the European debt crisis, a potential economic slowdown in China, and JPMorgan's $2 billion trading loss.
- Investors are frustrated that after two years and 17 eurozone summits, the European debt issue is still not resolved and may be worse as options are running out.
- The US faces potential economic challenges including a presidential election and fiscal deadlines by the end of the year.
The document summarizes recent market contradictions and distortions that are contributing to investor risk aversion and confusion. Government interventions like stimulus programs, quantitative easing, and bailouts have generated unintended side effects in markets. Politicians debate the merits of intervention versus free markets. Falling stock prices may paradoxically reduce risk as valuations decline, setting up markets for better long-term returns according to some analysts. Overall, distortions and political debates are causing uncertainty, stagnation, and falling stock prices.
The document discusses rising consumer prices, including the price of coffee. It provides three reasons for higher coffee prices: increasing costs of fertilizer and farm goods, rising affluence in developing countries leading to higher demand, and adverse weather affecting coffee production. While core inflation remains low, food and energy prices are rising. The yield curve is also discussed as a potential indicator of future recessions.
The document summarizes recent economic developments and market performance. It notes that while stock prices doubled from early 2009 lows, the underlying economy has seen only modest growth with issues like high unemployment and government debt. It discusses PIMCO's view that advanced economies will see sluggish growth and high unemployment for the next 3-5 years, while emerging markets prosper, which is playing out. The latest economic data is keeping policymakers up at night as they try to stimulate the economy amid an end to QE2 and fiscal policy difficulties in Congress.
Este documento resume las normas de citación y referencias bibliográficas del estilo APA (American Psychological Association). Explica que el formato APA se utiliza convencionalmente en ciencias sociales y que los textos deben estar en doble espacio. Detalla los tres niveles de títulos y cómo citar cuando hay uno o varios autores. También cubre citas textuales, el orden alfabético de referencias y ejemplos de referencias para revistas, libros y medios electrónicos.
Portafolio de trabajo para la actividad de la semana 2, para el curso Innovacion educativa con recursos abiertos - Tecnológico de Monterey - Coursera Septiembre de 2014
The document discusses four categories of reasoning that teachers demonstrated when deciding how to respond to students who need help solving problems: 1) the student's mathematical thinking, 2) the teacher's mathematical thinking, 3) the student's affect, and 4) general teaching moves. It analyzes sample responses from teachers who watched a video of a student, Rex, solving math problems. The best response focused on Rex's mathematical thinking by noting strategies he used and how to build on that thinking, while others focused more on teaching strategies or Rex's emotions.
This document provides an overview of common French greetings and customs. It begins by explaining formal and informal ways to say hello and goodbye in French. Next, it discusses how to introduce yourself and ask someone's name. The document then provides details about cultural greetings in France, including handshakes between men and kisses on the cheek between friends and family. It includes a practice section matching greetings with their meanings and ordering a sample conversation. The document concludes with contact information for the author.
The jobs recovery from the 2007 recession has been painfully slow. Over 4 years after employment peaked, only half the jobs lost have been recovered, unlike previous recessions where recovery took 2-3 years. Reasons for the slow recovery include financial crisis-related slowdowns, policy uncertainty, extended unemployment benefits, and euro crisis uncertainty. However, record corporate profits and cash levels could eventually spark new hiring if companies begin spending on growth.
The document summarizes economic and market data from early February 2012. It reports that January job growth and unemployment data surprised to the upside, pushing stock prices higher. Services sector growth also accelerated. However, housing prices continued to decline sharply from their 2006 peak. Interest rates on mortgages fell to a new record low. Overall, the economy appeared to be gaining momentum after a slowdown in late 2011, though questions remained about sustainability versus stimulus-driven growth.
Central banks around the world coordinated actions to provide liquidity support to the global financial system in response to deteriorating liquidity conditions. This caused stock markets to soar as investors saw it as a sign that central banks will do what is needed to prevent the world economy from stalling. However, the actions only address short-term issues and do not solve the long-term problems of too much debt and too little growth faced by some countries. A long-term solution will require agreement on fiscal discipline from European political leaders.
Central banks around the world coordinated actions to provide liquidity support to the global financial system in response to deteriorating liquidity conditions. This caused stock markets to soar as investors saw it as a sign that central banks will take aggressive actions to prevent the world economy from stalling. However, the actions only address short-term issues and do not solve the long-term problems of too much debt and too little growth faced by some countries. A long-term solution will require agreement on fiscal discipline policies from European political leaders.
The document summarizes a weekly commentary from Hyre Weekly dated April 23, 2012. It discusses how corporate earnings in the US have overtaken concerns about the European debt crisis as the focus of investors. While most US companies reported better than expected earnings, earnings growth was only 3.7% compared to a year ago. Interest rates increased again in troubled European countries like Spain and Italy, suggesting their debt problems remain. The commentary concludes by noting the interconnection of global markets and how European problems could eventually impact the US.
The document discusses stock performance in 2011 and analyzes high-dividend stocks from the past. It finds that in 2011, stocks with the highest dividend yields were the only ones to experience positive returns, with gains of 10.4%, 6.4%, and 8.7% respectively. The document also examines "Nifty Fifty" stocks from the 1970s that were seen as guaranteed growth companies but have had varying performance over 40 years, with some like Eastman Kodak struggling in their transition to digital. Key lessons are that some iconic stocks remain so, promoting "one decision" stocks is not a sound strategy, and all stocks can decline to zero.
Jamie Dimon, the CEO of JP Morgan who is known as one of the smartest bankers, revealed that the bank recently lost $2 billion on risky derivative bets. This loss shows that even experts can make mistakes, and provides three important lessons: keep strategies simple, closely monitor all investments, and remain humble, as even the smartest people can fail. The large loss damages JP Morgan's reputation of being well-managed during the financial crisis.
The European debt crisis continues as Greece's government remains unstable and Italy's borrowing costs rise sharply. While Greece has received bailouts, it is running out of money and time. Italy's rising bond yields suggest investors are losing faith in its ability to pay debts, and Italy is a much larger economy than Greece. High debt levels worldwide continue to cause market volatility until reduced to more manageable levels. Recent data shows that U.S. government bonds outperformed stocks over the past 30 years for the first time since the Civil War, though low current bond yields mean they cannot provide the same returns going forward. History shows there are no guarantees in investing and the appropriate asset class depends on economic conditions.
- The US stock market has seen its best start to the year since 1991, with the S&P 500 rising 8.9% so far in 2012. Some analysts attribute this to improving economic data, solid corporate earnings, and a stronger job market.
- However, the S&P 500 would still need to rise about 15% to match its all-time high from 2007. Looking at total returns including dividends, the gap is smaller at just 3.5% below the 2007 peak.
- When measuring the broader stock market using the Wilshire 5000 index, which tracks over 3,700 US stocks, the index reached a new record high last week when accounting for reinvested dividends, marking a
The stock market rose sharply in the first quarter of 2011, with the S&P 500 increasing 5.4%. Commodity prices also increased, driven in part by political instability in the Middle East, which caused oil prices to rise over 16% and settle above $100 per barrel. The US dollar continued to weaken against other major currencies during the quarter. Investor fear, as measured by the volatility index, ended the quarter flat despite events that caused spikes in concern during the period. Overall, strong economic growth and expected corporate earnings seemed to outweigh geopolitical and disaster related worries in the markets.
Silver prices have risen more than gold prices and stock prices over the past 10 years. Silver is seen as an alternative investment during times of economic uncertainty like the current issues with sovereign debt in Greece, Portugal, and Ireland. While rising precious metals prices and debt problems are interesting to financial professionals, they can also impact everyday investors which is why advisors are trying to profit from these situations and protect clients.
- The Federal Reserve announced it would sell short-term Treasury securities and buy longer-term securities to lower interest rates and stimulate the economy, which succeeded in lowering bond yields. However, the stock market declined 6.4% as fears grew of a Greek default and slowing global economic growth.
- While price appreciation gets more attention, dividends have accounted for about one-third of stock market returns over 80 years and allowed investors to benefit in both rising and falling markets. Receiving and reinvesting dividends added an average of 2.3% annually to S&P 500 returns over the past decade.
The document summarizes the performance of various markets in the past week. Commodity prices like oil and silver saw large declines, with oil falling 14.7% and silver dropping 27%, reflecting increased volatility in commodity markets. Broader commodity indexes also declined sharply. The declines were attributed to speculators exiting positions rapidly in response to changing market conditions. The commentary notes that successful investors adapt to changing times, just as AM radio adapted by changing formats over the decades to remain relevant amid new technologies.
1. Hyre Weekly Commentary
December 19, 2011
The Markets
If it feels like the stock market has been volatile this year, you’re right. Here are a few examples:
Three-month historic volatility for the “fear” gauge known as the VIX hit a record on
October 31, surpassing the prior peak from December 2008.
Intraday swings in the Dow Jones Industrial Average have averaged 261 points since
August 1, an exceptionally large number.
On four consecutive days back in August, the Dow Jones Industrial Average alternated
between gains and losses of more than 400 points, the longest streak ever.
Source: Bloomberg
All this volatility and the lack of a clear, sustained direction in the market have frustrated many
investors.
The problems in Europe and the budget wrangling in the U.S. have kept investors in a risk-on,
risk-off mode throughout much of this year. As a result, many stocks have traded in herd-like
fashion without much regard to individual company fundamentals, according to investment
manager Duke Buchan, III.
At times like this, it’s important to have patience and as Warren Buffett says, wait for that “fat
pitch.”
Data as of 12/16/11 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor's 500 (Domestic Stocks) -2.8% -3.0% -2.0% 10.1% -3.0% 0.7%
DJ Global ex US (Foreign Stocks) -3.9 -18.8 -16.7 8.3 -5.5 4.3
10-year Treasury Note (Yield Only) 1.9 N/A 3.5 2.4 4.6 5.3
Gold (per ounce) -6.7 13.0 16.9 23.9 21.0 19.1
DJ-UBS Commodity Index -4.2 -15.6 -10.8 6.4 -3.8 4.4
DJ Equity All REIT TR Index 0.2 3.6 9.2 19.6 -2.0 9.8
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.
WHAT IS THE PRICE OF ECONOMIC GROWTH in China and how does it affect us in
the U.S.? Ever since 1978 when Chinese leader Deng Xiaoping laid out a vision of economic
reform, China has been on a growth spurt of massive proportion. However, that growth comes
with a huge price in the form of limited freedom. Last week, Chinese leaders clamped down
again on freedom of speech in an effort to control the spread of social unrest.
2. In China, the government blocks access to the microblog service “Twitter” and, instead, a
Chinese version called “Weibo” has become popular. In total, more than 300 million Chinese
people use microblogs, with Weibo the most popular, according to Bloomberg.
Regarding last week’s clampdown, Chinese officials announced that users of Weibo in Beijing
will have to register their real names and be verified by government authorities before posting on
the service. In addition, users are banned from posting anything that could lead to disrupting the
social order, according to The Wall Street Journal.
This isn’t the first government crackdown on freedom of speech. Earlier in the year, the
government blocked citizens’ access to searches on the “Arab Spring” that was rumbling through
the Middle East. Prior to that, the government blocked access to Facebook, YouTube, and
Google.
What’s the government’s problem with freedom of speech?
As the “Arab Spring” uprising in the Middle East demonstrated, social media can enable millions
of people to communicate and mobilize in short order. China seems to be very afraid of letting its
citizens have this capability for fear that a popular uprising could lead to chaos in a sprawling
country of 1.3 billion people.
With China still a major growth engine for the world economy, we have to pay close attention to
any social trends affecting the country. If the government clamps down too hard and its citizens
rise up, it could quickly morph from a social/political movement to one that has major worldwide
economic implications. On top of that, China is gearing up for a once in a decade leadership
change in 2012 and, given the country’s history, a smooth transition is not guaranteed.
When investing money, you have to consider possible “black swan” events that have a low
probability of occurring, but, if they do occur, could wreak havoc. A Chinese uprising could be
one of those and we want you to know that it’s on our radar.
Weekly Focus – Think About It
“If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the
slaughter.” --George Washington, U.S. President
Best regards,
Jim Hyre, CFP®
Registered Principal
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