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Millard & Company Briefing 
Monday, December 15, 2014

Consider this:
C. Andrew Millard, CFP�
Your worst day ever might not have been so bad.

 

1 - I gassed-up my nearly-empty Prius Saturday for just $22. Gas is getting really cheap -- is that a good or bad thing? What consequences might it have for the world economy? It just so happens that this week's article tackles that very question below. 


 
2 - Remember the Billy Crystal movie City Slickers? In one scene, Crystal and his buddies share their best and worst days ever. I got to thinking about that topic, and the result is this week's video.

 

3 - Michael's note this week is especially poignant. I commend it to your attention.


 
Have a joyous week!

                                                                                 

~Andy

 Events

A Note From Michael

Michael Baughman, CFP�
An attitude of gratitude.

 

This past week we celebrated my daughter, Ellie's, 7th birthday. I've written before about her exciting entrance into this world. Bottom line - it was scary and beautiful and there were moments when I thought I'd be raising Ellie alone given some pretty major complications with her birth.

 

I try to remind myself often just how lucky I am. Many days I get caught up in the day to day stresses of being a father and husband while trying to make a positive impact on my community and forget about those tumultuous few weeks when Ellie joined our family seven years ago.

 

Happy Birthday Ellie! I wish your birthday was every day. If it was, I would be a better husband, father, son and friend.

 

Here's hoping you find someone to honor and remember today, and every day for the rest of your life.


This Week's Video
Your worst day might not have been so bad after all.

You may or may not know that Andy was a school principal in a former life. Both his "best" and "worst" days ever involved that long-ago career. Funny how how neither one worked out as anticipated.

(2 min 38 sec; click on the image to watch.)

marriage

Should We Fear or Cheer Plunging Oil Prices?

Some of our least-favorite countries stand to suffer the most.

by Bob Veres

 

Chances are, you're celebrating today's lower gas prices. AAA reports that the national average price of gas is $2.60 today, the lowest since December 2009. The result: an estimated $70 billion in direct savings for U.S. consumers over the next 12 months. At previous prices, the average American was spending about $2,600 a year on gasoline, so the 20% price decline would result in $520 more to save or spend.

 

It gets better.  Even though gas prices (and, therefore, the cost of driving) have plummeted, the Internal Revenue Service is raising the standard mileage rates that people can deduct on their tax return for business travel, from 56 cents in 2014 to 57.5 cents per business mile driven next year.

 

Only the investment markets seem to think that cycling an extra $70 billion into the U.S. economy is a bad thing. This past week, large cap stocks, represented by the S&P 500 index, saw their prices fall by 3.5%-their biggest drop since May 2012. Why? The only possible explanation is that rapid Wall Street traders believe that lower oil prices will harm the economies of America's trading partners, and therefore impact the U.S. economy indirectly.

 

So let's take a closer look.  While U.S. consumers are cheering the decline in oil prices, and non-energy producing nations like Japan and countries in the Eurozone are seeing a boost in their economies, who's NOT celebrating?

 

Some of the biggest losers are American domestic shale oil producers, who basically break even when oil prices are at their current $50-$60 a barrel levels. Any further drop in prices would slow down domestic energy production, and probably create a floor that would keep prices from falling much further.

 

Another big loser is the socialist government in Venezuela (remember Hugo Chavez?), which needs oil prices above $162 a barrel to pay for all of its social programs. You can also sympathize with Iran, which reportedly needs oil prices to move up to $135 barrel to stay in the black, due to continuing sanctions from the world community over its nuclear program, and the high cost of supporting Hezbollah and its own military ventures in the Middle East.

 

  The biggest loser is probably Russia, which requires oil prices of at least $100 a barrel for its budget to withstand international sanctions and finance its own military adventures against neighboring nations. Economists are projecting that Russia will fall into a steep recession next year, when GDP could decline as much as 6%. The nation is experiencing what economists call "capital outflows" of $125 billion a year-a fancy way of saying that wealthy Russians are taking money out of Russian banks and either investing abroad or putting their rubles in banks located in more stable foreign jurisdictions. And in the process, they are exchanging their rubles for local currency, as a way to protect against the recent free-fall in Russia's currency. Bloomberg News recently published a graphic-shown here-which many Americans will find entertaining, but which is probably not happy news for Russian President Vladimir Putin.

 

It's interesting that the markets seem to be worrying about low oil prices when the economies with the most to lose are not merely non-major trading partners, but actual political enemies of U.S. interests. Cheaper oil will eventually be regarded as a plus for our economic-and political-interests, but the downturn suggests that Wall Street traders are hair-trigger ready to be spooked by anything they regard as unusual.

 

 

http://www.marketwatch.com/story/5-countries-that-will-be-the-biggest-losers-from-oils-slide-2014-11-20?page=2

 

http://blogs.piie.com/realtime/?p=4644

 

http://www.accountingtoday.com/news/irs-watch/irs-raises-standard-mileage-rate-for-businesses-72990-1.html?ET=webcpa:e3476082:a:&st=email&utm_content=buffer4179f&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer

This Week's Economic Headlines

 

Americans buy more as sentiment index soars

Commerce Department data showed retail sales jumping 0.7% for November - the best monthly advance recorded in a year. More good news came from the University of Michigan - its initial December consumer sentiment index came in at 93.8, way up from 88.8 at the end of last month. The improvement may reflect relief at falling gas prices as well as added belief in the economy.1

   

When will oil hit bottom?

Last week saw the International Energy Agency lower its estimates for 2015 global oil demand, and so NYMEX crude for January delivery finished Friday's trading day at just $57.81 a barrel. At Friday's close, oil was down 12.94% MTD and 25.90% over the past 30 days. COMEX gold futures, on the other hand, were up 4.75% MTD and settled at $1,222.50 Friday.2,3

           

Wholesale prices dip

The Producer Price Index is yet another indicator affected by cheap oil. It declined   0.2% in November, taking the annualized gain down to 1.4%. The core PPI was flat last month and up 1.8% in a year.1

 

This week's tip

A credit card's 0% APR interest is not necessarily set in stone. A missed monthly payment may lead to it being rescinded.   

 

 

1 - investing.com/economic-calendar/ [12/12/14]

2 - proactiveinvestors.com/companies/news/58785/dow-drops-over-300-pts-to-end-worst-week-in-3-years-58785.html [12/12/14]

3 - money.cnn.com/data/commodities/ [12/12/14] 


Art in the Depot
Mary Lou Diekmann
Landscapes, portraits and mixed media

December 2 through January 10

Mon-Fri 9-5 in the Depot Room


 

 

"In recent years I've been fortunate enough to travel this country as well as Europe to paint some of the most beautiful scenery in the world. Among my favorites are the lakes and ponds of the Adirondacks, beaches in Maui, the northern California coast and the deserts of Arizona."

 

 

(Millard & Company is proud to provide the Depot Room as an exhibit space for local artists. The public is welcome!)

Contact
Millard & Company
22 Depot Street, Tryon, NC 28782
828.859.7001 ● 888.832.2821
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This week's quote:

  

"Happiness is different from pleasure. Happiness has something to do with struggling and enduring and accomplishing."

     

- Dr. George Sheehan 

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All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards.

 

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