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Market Commentary
Economic Updates
Recent News |
Weekly
Commentary
March 29,
2010
The
Markets
The
stock market seems to be climbing the proverbial "wall of worry."
Despite
potential road hazards such as sovereign debt issues, rising interest rates, a
weak job market, and a stalled housing recovery, investors bid up stock prices
last week to an 18-month high, according to MarketWatch. Of course, these
things could eventually affect stock prices, but, for now, stocks are riding
the momentum of improving earnings and some underlying stability in the economy.
Lack
of job growth has been a major problem for our economy the past couple years,
but that could change this week. On April 2, the government will release the
March employment report and, according to CNBC, economists expect it to show a
rise of about 200,000 non-farm jobs. That would be a small down payment on the
8.4 million jobs lost since December 2007, according to Bloomberg. The fact
that the S&P 500 has risen for four consecutive weeks may suggest that the
market has been anticipating a good report. Ironically, on the day the
employment report is released, the U.S. stock market will be closed for the
Good Friday holiday, so we won't know the market's reaction until the following
Monday.
Fear
of a double-dip recession seems to be fading, too. In its final revision, the
Commerce Department said fourth quarter 2009 GDP increased at a 5.6% annualized
rate, which is the fastest rate in six years. For 2010, economists surveyed by
MarketWatch expect GDP to expand at a non-recessionary 3% rate. On a regional
note, the Great Lakes commercial shipping season has started early partly due
to increased demand for iron ore and coal. "Things are moving quicker,
sooner than a year ago. And it seems like more ships are involved," said
Eric Reinelt, Port of Milwaukee executive director as quoted in the March 28
edition of the Milwaukee Journal Sentinel.
So,
despite the worries, there is some good economic news supporting stock prices.
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Data
as of 3/26/10
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1-Week
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Y-T-D
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1-Year
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3-Year
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5-Year
|
10-Year
|
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Standard
& Poor's 500 (Domestic Stocks)
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0.6%
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4.6%
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43.0%
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-6.7%
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-0.1%
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-2.6%
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DJ Global
ex US (Foreign Stocks)
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-0.2
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0.5
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50.6
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-6.9
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3.6
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0.5
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10-year
Treasury Note (Yield Only)
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3.9
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N/A
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2.7
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4.6
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4.6
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6.2
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Gold (per
ounce)
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-0.8
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-0.7
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16.9
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18.3
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20.8
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14.5
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DJ-UBS
Commodity Index
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-2.0
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-6.8
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14.9
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-8.5
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-3.9
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2.8
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DJ Equity
All REIT TR Index
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1.2
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11.0
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100.5
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-10.2
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4.5
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12.0
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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 or not available.
THE DAY OF
RECKONING due
to our country's ballooning deficits may be getting closer. Back in 2008, the
Congressional Budget Office (CBO), projected the U.S. would run a budget surplus of $247 billion for the years
2009 through 2018. Now, just two years later, CNBC and the CBO have crunched
the numbers again and project that we will incur a $7.4 trillion deficit during that 10-year period,
according to a March 26 CNBC article.
How
could the situation deteriorate so much in just two years?
The
CBO said 57% of the projected deficit increase was due to lower government
revenues--much of which is due to the decline in our economy and projected
sluggish economic growth. The other 43% included expenses such as, "the
stimulus bill, a change in accounting for the war, extended unemployment
benefits, and additional interest on debt."
At
the end of 2009, the U.S. national debt stood at $12.3 trillion, according to
the Treasury Department. Tack on the projected deficit over the next 10 years
and we could be close to $20 trillion in the hole 10 years hence.
Like
chocolate chip cookie dough, a spoonful of annual deficit and national debt is
fine, but gorging our country on borrowed money may eventually cause
significant problems. Too much government debt could lead to rising interest
rates and slower economic growth, according to Fortune Magazine. In a worst-case scenario, it could lead to
economic collapse.
We
have several options to solve the budding debt problem before it gets
completely out of hand. First, we could grow our way out of it. This is the
preferred method and the least painful. Second, we could raise taxes. Third, we
could cut government spending. Most likely, we'll see a combination of the
three.
Given
the magnitude of our swelling deficits, we will likely have pain in our future.
Whether that pain happens in our generation, our children's, or our
grandchildren's, remains to be seen.
Weekly
Focus - Think About It
"The
way to wealth depends on just two words, industry and frugality."
--Benjamin
Franklin
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Monthly Lifestyle Newsletter
April 2010
Don't
Worry. Be Happy.
Are you a
happy person? Studies have found that a variety of factors directly influence
our day-to-day happiness. For instance, researchers have found that hereditary
personality traits - such as sociability, conscientiousness, and a tendency not
to worry - which directly influence our level happiness, are linked to specific
genes. Although we cannot change our genetic make-up, we can control other factors
that have the potential to increase our happiness. Here are a few:
Practice
optimism.
Optimism is defined as 'an inclination to put the most favorable
construction upon actions or events or to anticipate the best possible
outcome. In one research study, participants were asked to imagine ideal
situations and describe them in journal entries. After several weeks of
journaling, participants reported having a heightened sense of well-being.
By practicing optimism, some people can train themselves to have a
positive outlook - and that can make them happier.
Be
kind to others.
It turns out, Mom was right. There is a benefit to being kind to others - it
can make you happy. Research has found that acts of kindness and
demonstrations of gratitude - such as shoveling a neighbor's driveway, doing
volunteer work, or writing a letter of thanks to a mentor or friend - can
make you measurably happier. In fact, research has found that one act of
kindness can inspire feelings of happiness that linger for as long as
three months.
Listen
to music. Music can
jumpstart certain parts of our brains by releasing endorphins and
melatonin, and sparking feelings of happiness and relaxation. In studies,
patients who listened to music during surgeries had lower blood pressure, reduced
heart rates, and lower anxiety levels than patients who did not listen to
music. In one study, surgical patients who listened to music required less
sedation.
Have
a good laugh.
Laughter is an endorphin trigger. It releases stress hormones and actually
can strengthen your immune system, in addition to making you feel happier.
Whether you prefer a funny television show, the shtick of your favorite
comedian, or a dinner with entertaining friends, make sure you get a
regular dose of laughter.
There is no
reason to mope around in life. If you're feeling blue, take action - make
yourself happy!
Skillet
Bread
Skillet bread
was a staple in the diet of pioneers who traveled by covered wagon across our
great nation. They generally carried just the essentials required for survival.
In terms of food, that might have included coffee, salt, sugar, beans, rice,
and baking soda. Often, their meals were prepared in a skillet over an open
fire. Try this modern day skillet bread recipe if you want to get a flavor of
the old west. Cook it in grandma's cast iron skillet, if you still have it.
Skillet Bread
2 tablespoons
olive oil
1 small
onion, thinly sliced
1 Yukon gold potato,
peeled and thinly sliced
1 tablespoon
rosemary
1 teaspoon sea
salt
¼ teaspoon black
pepper
1 package
refrigerated pizza dough
Cornmeal
Directions
Heat oven to
450° Fahrenheit. Add the oil to a cast iron skillet over medium heat. Add the
onion and sauté until golden. Transfer the onion to a bowl. Add the potato,
rosemary, salt, and pepper to the bowl. Mix these ingredients thoroughly.
Wipe the
skillet clean and turn it upside down. Sprinkle the bottom (which will be your
cooking surface) with the cornmeal to prevent sticking. Shape the pizza dough to
fit the skillet bottom and put the dough on the bottom of the skillet, which
has been sprinkled with cornmeal. Arrange the potato mixture evenly over the
dough, leaving a 1-inch border. Bake for about 20 minutes. Serve in wedges.
What Do You
Know About Citrus X Paradisi?
Citrus X Paradisi was called the forbidden fruit when it was discovered
in the mid-1700s in Barbados
and Jamaica.
Today, we know it as the grapefruit!
1. Grapefruit are believed to be an
accidental hybrid of which two fruits?
a. Limes and oranges
b. Lemons and oranges
c. Pummelos and grapes
d. Pummelos and oranges
2. Grapefruit peel is:
a. An important source of pectin
b. Squeezed and the oil is used for soft
drink flavoring
c. A source of flavoring for tonic water
and bitter chocolate
d. Combined with dried pulp and used as
cattle feed
e. All of the above
3. Why was this fruit nicknamed
grapefruit?
a. It is the color of wild grapes
b. It is the shape of a large grape
c. It is a hybrid of a grape and a
pummelo
d. It grows in bunches
4. A grapefruit is what percentage juice?
a. 25%
b. 50%
c. 75%
d. 90%
How Does Your
City Stack Up?
If you're
thinking of moving to another city once you retire, or are considering living
somewhere else for part of the year, it's important to do some research and
make an informed decision about your new hometown. A website called Sperling's Best Places can help. It provides
all kinds of valuable information about cities and states across America. You
can compare the cost of living, population characteristics, current and
projected economic conditions, cost of housing, and other information about
cities, counties, and states across America. For example, did you know
that:
Tucson, Arizona
has significantly better air quality than Phoenix
or Sedona, Arizona, but worse water quality than
both of those cities?
The median home price in Punta Gorda, Florida
is almost 40% higher than the median home price in Homosassa, Florida
and that the value of homes in Punta Gorda fell significantly further than
the value of homes in Homosassa during the housing crisis?
During the next 10 years, Gardnerville
Ranchos, Nevada - a popular retirement
community - is expected to experience more robust jobs growth than Pahrump, Nevada?
However, the cost of living in Pahrump is generally lower than the cost of
living in Gardnerville Ranchos.
Even if
you're not planning to move, it can be interesting to see how your town
compares to others. It's possible that a nearby locale may have a more
attractive profile - such as lower cost of living, more stable home values, or
better economic prospects - than the area you currently live in. Check it out
on Sperling's website.
Answers:
1d. Pummelos and oranges
2e. All of the above
3d. It grows in bunches
4c. A grapefruit is 75% juice
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Best regards,
Jim Forcella, CFP®, CFS
LPL Branch Manager
LPL Investment Adviser Representative
CA Insurance License #0635256
P.S. - Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this e-mail with their e-mail address and we will ask for their permission to be added.
Closing Reminders - Should your personal or financial situation change (i.e. Marital or employment status, beneficiary changes or income needs) please contact us at 530.222.6301 or 800.546.5573 for either a phone review, or an appointment. We want to ensure that your current financial objectives meet your personal circumstances.
Forcella Wealth Management Information - Are you receiving too much mail regarding your investments? You now have the option to receive your LPL Financial communications electronically! LPL Financial is pleased to offer the convenience of viewing shareholder communications, including the fund prospectus, annual reports, and proxy statements online. Visit the link below to be directed to a secure website where you will enter your LPL Financial account number and Email address. You will no longer receive shareholder communications information through the mail but can request a hard copy at any time. Please feel free to contact us if you have any questions regarding this form.
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Forcella Wealth Management
1600 Victor Ave ● Redding, CA 96003
Phone 530.222.6301 ● Toll Free 800.546.5573 ● Fax 530.226.1677
jim.forcella@lpl.com ● www.forcellawealth.com
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* This newsletter was prepared
by PEAK.
* The Standard & Poor's 500
(S&P 500) is an unmanaged group of securities considered to be
representative of the stock market in general.
* The DJ Global ex US is an
unmanaged group of non-U.S. securities designed to reflect the performance of
the global equity securities that have readily available prices.
* The 10-year Treasury Note
represents debt owed by the United States Treasury to the public. Since the
U.S. Government is seen as a risk-free borrower, investors use the 10-year
Treasury Note as a benchmark for the long-term bond market.
* Gold represents the London
afternoon gold price fix as reported by the London Bullion Market Association.
* The DJ Commodity Index is
designed to be a highly liquid and diversified benchmark for the commodity
futures market. The Index is composed of futures contracts on 19 physical
commodities and was launched on July 14, 1998.
* The DJ Equity All REIT TR
Index measures the total return performance of the equity subcategory of the
Real Estate Investment Trust (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 future performance.
*
Past performance does not guarantee future results.
*
You cannot invest directly in an index.
*
Consult your financial professional before making any investment decision.
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Securities Offered Through LPL Financial Member FINRA/SIPC
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