In this month’s recap: equities rally here and around the world, economic fundamentals look solid, the pace of home sales slows, and oil surges.
THE MONTH IN BRIEF
During a month marked by political impasses in the United States and United Kingdom, equities performed well around most of the world. On Wall Street, the S&P 500 advanced 7.87% in January, with a new earnings season as well as trade and monetary policy developments providing tailwinds. Most of the economic data that rolled in was good; the partial federal government shutdown may have negatively impacted some of the numbers. Home sales fell off abruptly. Many commodities advanced. All in all, investors focused on the potential of the markets more than disputes.1
DOMESTIC ECONOMIC HEALTH
The Congressional Budget Office believes that the 35-day federal government shutdown cost the economy about $11 billion. The silver lining is that roughly $8 billion of that loss is potentially recoverable, presuming federal spending and consumer spending bounce back in the coming months.2
Due to the length and breadth of the shutdown, a few key economic reports did not appear last month. Nevertheless, there were plenty of attention-getting news items.
As expected, the Federal Reserve left interest rates alone in January. What really intrigued investors was the dovish tone of the Fed’s latest policy statement. It noted that the Federal Open Market Committee would be “patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate” for the economy. The central bank appeared newly cautious: language implying that rate hikes might be merited was now absent.3
In mid-January, China made a move in the U.S.-China trade dispute. It offered a plan to address the U.S. trade deficit, with an objective of cutting it to $0 by 2024. China would undertake a strategy to buy greater amounts of American goods: $45 billion more during 2019, and gradually, more in each of the following five years, with the multiyear increase reaching $1 trillion. Bloomberg News reported that U.S. negotiators wanted China to try and wipe out the trade imbalance within two years, not six. American demand for Chinese-made products is so strong, however, that making any real dent in the trade deficit might be a tall order, given current free market conditions.4
Main Street seemed a bit unsettled by the shutdown and recent stock market volatility. The most respected U.S. monthly consumer confidence gauge, maintained by the Conference Board, fell sharply in January to 120.2, a good reading that still represented its lowest level since July 2017. Its future expectations sub-index hit a 27-month low. At mid-month, the University of Michigan’s consumer sentiment index slipped from its final December mark of 98.3 to 90.7.5,6
The Institute for Supply Management’s twin purchasing manager indices also fell; those numbers exclusively concerned December. In the last month of 2018, ISM’s manufacturing sector index slipped 5.2 points to 54.1; its services sector PMI declined 3.1 points to 57.6. Both readings indicated solid sector expansion, just to a lesser degree than a month before.7
One word summed up the latest jobs report from the Department of Labor: fantastic. In December, employers added 312,000 net new workers to their payrolls. The main unemployment rate rose 0.2% to 3.9%, but that was an effect of more Americans looking for work. The U-6 rate, counting both the unemployed and underemployed, held at 7.6%. Wages were up 3.2% year-over-year, the best annual advance in a decade.8
The Consumer Price Index retreated 0.1% during December after a flat November; the core CPI rose 0.2% in the final month of 2018, replicating its November move. December also brought a slight slip for both the headline (0.2%) and core (0.1%) Producer Price Index.6
As January drew to a close, some significant data was still pending: the first estimate of Q4 GDP, plus the latest reports on personal spending as well as income and durable goods orders. This backlogged data could appear in the first half of this month.
GLOBAL ECONOMIC HEALTH
Would the Brexit be delayed? After the crushing 230-vote defeat of Prime Minister Theresa May’s withdrawal deal in Parliament, the United Kingdom faced six possible options: an extension of the March 29 Brexit deadline set by the European Union, a renegotiation of May’s withdrawal deal, a general election that could bring about a change in U.K. leadership, a “hard” Brexit with no trade agreements with the E.U., another national vote on the matter, or no Brexit at all with the U.K. staying in the E.U. As January ended, May faced a February 13 deadline to return to Parliament with either an altered deal or a statement of which other course of action she wanted the U.K. to pursue. While European Council President Donald Tusk tweeted that the Brexit agreement was “not open for renegotiation,” U.K. Foreign Secretary Jeremy Hunt said that a delayed Brexit could be in order. One key sticking point has been the flow of trade between Ireland and Northern Ireland, which could be disturbed if Northern Ireland leaves the E.U.9,10
China’s factory sector shrunk for a second straight month in January; the reading on the nation’s official manufacturing PMI improved 0.2 points to 49.5. The Chinese economy grew 6.6% in 2018 – a striking advance by global standards, but its smallest expansion since 1990. The effect of that slowdown was being felt in America (where major tech and heavy equipment firms reported declining sales in China) and in Japan, South Korea, and Australia, three of its other major trading partners. (Tariffs on a variety of Chinese imports to the U.S. are slated to rise from 10% to 25% before the end of the first quarter.)11,12
WORLD MARKETS
Investors felt bullish around the world last month, and the performance numbers of major equity benchmarks reflected their optimism. Europe saw broad gains: Russia’s MICEX improved 6.41% in January; Spain’s IBEX 35, 6.05%; the FTSE Eurofirst 300, 5.99%; Germany’s DAX, 5.82%; France’s CAC 40, 5.54%. Even in London, the FTSE 100 gained 3.58%.13
Indices in the Asia-Pacific region, Canada, and South America recorded even larger monthly jumps. Canada’s TSX Composite outperformed the Dow and S&P 500, surging 8.50%. The MSCI Emerging Markets index climbed 8.71% for the month, and MSCI’s World index added 7.68%. Look what two South American benchmarks did: Brazil’s Bovespa soared 11.14%, and Argentina’s Merval, 18.97%. Mexico’s Bolsa posted a monthly advance of 5.64%. Hong Kong’s Hang Seng and South Korea’s Kospi set the pace in the east, with respective gains of 8.11% and 8.03%. Australia’s All Ordinaries rose 3.99%; China’s Shanghai Composite, 3.96%; Japan’s Nikkei 225, 3.79%. The only notable retreats were minor: India’s Nifty 50 lost 0.29%; Malaysia’s KLSE Composite, 0.42%.13,14
COMMODITIES MARKETS
Oil got off to a great start for 2019. By the closing bell on January 31, a barrel of WTI crude was worth $54.04 on the NYMEX, after a 17.94% YTD gain. While natural gas futures lost 4.53% last month, unleaded gasoline improved 4.94%, and heating oil soared 11.71%.15
Among the softs, while cocoa took a 10.50% drop, other major crops rose. Sugar gained 4.16%; soybeans, 3.83%; cotton, 2.99%; wheat, 2.68%; corn, 0.47%; coffee, 0.34%. Copper led the key metals, rising 5.75%. Platinum advanced 4.35%, and silver and gold respectively added 4.05% and 3.03%. Gold ended the month at $1,319.50 on the COMEX; silver, at $16.06. The U.S. Dollar Index lost 0.80% in January.15,16
REAL ESTATE
First, the good news. January brought a significant dip in mortgage rates. In Freddie Mac’s last Primary Mortgage Market Survey of 2018 (December 27), a conventional home loan carried 4.55% interest on average. By January 31, that average interest rate had declined to 4.46%. The trend carried over to 15-year, fixed rate loans (4.01% to 3.89%) and 5/1-year, adjustable loans (4.00% to 3.96%).17,18
Additionally, delayed new home sales data from the Census Bureau showed a 17.0% jump in November to an 8-month high. (The Bureau’s report on January housing starts is still pending as a result of the shutdown.)19
Now, the bad news: existing home sales slowed. The National Association of Realtors announced that resales were down 6.4% month-over-month in December, after improving 2.1% in November. In 2018, existing home sales lagged 3.1% behind their 2017 pace; last year was the poorest year for home buying since 2015.6,20
In other real estate news, the 20-city composite S&P CoreLogic Case-Shiller home price index showed 4.7% annual appreciation in its latest edition (November), which was the slimmest gain in almost four years. The yearly advance had been 5.0% a month earlier. The NAR’s pending home sales index, which measures monthly housing contract activity, fell 2.2% to 99.0 in December; that was its worst reading since April 2014.5,20
T I P O F T H E M O N T H Recent college graduates are certainly challenged to save for the future, what with student loans, rent, and entry-level jobs. It can be tough to set anything aside. Still, saving and investing something is better than nothing, and the effort must be made. Given the power of compounding over time, starting early is smart.
LOOKING BACK, LOOKING FORWARD
Equities got off to a flying start this year. While the big three all gained 7% or better last month, the small caps outran those bullish starts: the Russell 2000 soared 11.19% in January. At the closing bell on January 31, their settlements were: Dow Industrials, 24,999.67; Nasdaq Composite, 7,281.74; S&P 500, 2,704.10; Russell 2000, 1,499.42. Leading the pack among U.S. benchmarks in terms of monthly performance, the PHLX Oil Service Sector index climbed 19.28%. The CBOE VIX declined 34.82% in January, down to 16.57 at the end of the month.1
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year TIPS real yield = projected return at maturity given expected inflation.
Patient investors sighed with relief at January’s major Wall Street advance. The S&P 500 had not rallied so strongly in January since 1987. It just goes to show that when the bears come out, the bulls are quite capable of coming right back. Going into February, investors have three preoccupations: earnings, the rate of progress in the trade negotiations between the U.S. and China, and the lingering risk of a shutdown in Washington. In the best-case scenario, this month would see a return to business as usual on Wall Street: a leveling out of extreme volatility, a fading memory of December and its anxieties. With luck, maybe we will see that this month instead of a retreat inspired by poor quarterly results or sudden headlines.23
Q U O T E O F T H E M O N T H
“Cherish all your happy moments: they make a fine cushion for old age.”
Christopher morley
UPCOMING RELEASES
What will investors interpret during the rest of 2019’s shortest month? Besides earnings, they will look at the January Consumer Price Index (2/13), the January Producer Price Index (2/14), the preliminary February University of Michigan consumer sentiment index, recent retail sales data, and January industrial output (2/15), minutes from the January Federal Reserve policy meeting as well as new and delayed reports on homebuilding activity (2/20), January existing home sales and leading indicators (2/21), a new Conference Board consumer confidence index, January new home sales, and the December S&P CoreLogic Case-Shiller home price index (2/26), January pending home sales and hard goods orders (2/27), and then, an estimate of Q4 growth (2/28). January personal spending data, the January PCE price index, and the final February University of Michigan consumer sentiment index are slated to appear on March 1.
T H E M O N T H L Y R I D D L E
Many things can make one, it can be of any shape or size, it is created for various reasons, and it can shrink or grow with time. What is it?
LAST MONTH’S RIDDLE: You can see right through me. Different lights make me strange, and for each one, my size may change. What am I?
ANSWER: A pupil.
Your Keystone Team may be reached at 920-969-0717 or admin@kfgwi.com www.kfgwi.com
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This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs, or expenses. Investors cannot invest directly in indices. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe. The CBOE Volatility Index® (VIX®) is a key measure of market expectations of near-term volatility conveyed by S&P 500 stock index option prices. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. The MICEX 10 Index is an unweighted price index that tracks the ten most liquid Russian stocks listed on MICEX-RTS in Moscow. The IBEX 35 is the benchmark stock market index of the Bolsa de Madrid, Spain’s principal stock exchange. The FTSEurofirst 300 Index comprises the 300 largest companies ranked by market capitalisation in the FTSE Developed Europe Index. The DAX 30 is a Blue-Chip stock market index consisting of the 30 major German companies trading on the Frankfurt Stock Exchange. The CAC-40 Index is a narrow-based, modified capitalization-weighted index of 40 companies listed on the Paris Bourse. The FTSE 100 Index is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. The S&P/TSX Composite Index is an index of the stock (equity) prices of the largest companies on the Toronto Stock Exchange (TSX) as measured by market capitalization. The MSCI World Index is a free-float weighted equity index that includes developed world markets and does not include emerging markets. The MSCI Emerging Markets Index is a float-adjusted market capitalization index consisting of indices in more than 25 emerging economies. The Bovespa Index is a gross total return index weighted by traded volume & is comprised of the most liquid stocks traded on the Sao Paulo Stock Exchange. The MERVAL Index (MERcado de VALores, literally Stock Exchange) is the most important index of the Buenos Aires Stock Exchange. The Mexican Stock Exchange, commonly known as Mexican Bolsa, Mexbol, or BMV, is the only stock exchange in Mexico. The Hang Seng Index is a free float-adjusted market capitalization-weighted stock market index that is the main indicator of the overall market performance in Hong Kong. The Korea Composite Stock Price Index or KOSPI is the major stock market index of South Korea, representing all common stocks traded on the Korea Exchange. The All Ordinaries (XAO) is considered a total market barometer for the Australian stock market and contains the 500 largest ASX-listed companies by way of market capitalization. The SSE Composite Index is an index of all stocks (A shares and B shares) that are traded at the Shanghai Stock Exchange. Nikkei 225 (Ticker: ^N225) is a stock market index for the Tokyo Stock Exchange (TSE). The Nikkei average is the most watched index of Asian stocks. The Nifty 50 (NTFE 50) is a well-diversified 50-stock index accounting for 13 sectors of the Indian economy. It is used for a variety of purposes such as benchmarking fund portfolios, index-based derivatives and index funds. The FTSE Bursa Malaysia KLCI Index comprises of the largest 30 companies by full market capitalization on Bursa Malaysia’s Main Board. The US Dollar Index measures the performance of the U.S. dollar against a basket of six currencies. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.
In this month’s recap: equity and commodity markets experience major losses, the Fed sends a hawkish message, home sales improve, and the economy maintains its momentum.
THE MONTH IN BRIEF
December 2018 will be remembered for its volatility and its challenges. The S&P 500 flirted with bear market territory, dropping 10.16% for the month. Appetite for risk declined here and abroad in the face of tariffs, concerns about the Federal Reserve raising interest rates too quickly, a federal government shutdown, and questions about the Brexit. It was also a difficult month for commodities. In contrast, Main Street seemed in good shape: low unemployment, high consumer confidence, and strong consumer spending were all evident.1
DOMESTIC ECONOMIC HEALTH
While the Federal Reserve certainly pays attention to Wall Street’s mood, it adjusts its monetary policy in respect to the economy, not the preferences of market participants. In December, the central bank did not exactly tell investors what they wanted to hear. Following the announcement of another quarter-point rate hike (the target range is now 2.25-2.5%), Fed chair Jerome Powell stated that monetary policy “does not need to be accommodative,” and affirmed that the Fed would continue to remove up to $50 billion per month of Treasury and mortgage-backed securities from its balance sheet. According to the latest Fed dot-plot, there would be no pause in tightening: two rate hikes were still envisioned for 2019. Major indices fell sharply after Powell’s remarks.2
To justify its stance, the Fed could point to a number of economic indicators. The manufacturing and service sectors were seeing considerable expansion, by the look of the Institute for Supply Management’s November purchasing manager indices. ISM’s non-manufacturing PMI rose 0.4 points to 60.7, and its factory PMI climbed 1.6 points to 59.3; these were great readings. (Additionally, the Federal Reserve said that industrial production rose 0.6% in November.) Department of Commerce data showed personal spending up 0.4% in October and retail sales advancing a decent 0.2%. Consumer confidence remained high. The University of Michigan’s index finished December at 98.3, higher than its final November mark of 97.5. The Conference Board’s monthly gauge came in at 128.1 – notably below its (revised) November reading of 136.4, but still at an impressive level.3,4
The Consumer Price Index was flat in November. The main reason? Cheaper fuel. Gasoline prices dropped 4.2%. Annualized inflation weakened to 2.2%, the smallest advance seen since February. Wholesale inflation, as measured by the Producer Price Index, ticked north 0.1%; in October, the gain was 0.6%. 4,5
Job creation did fall short of expectations in the eleventh month of the year. Employers added 155,000 net new workers to their payrolls in November, the Department of Labor stated, and the October increase was revised down to 237,000. A Bloomberg survey of analysts projected a November jobs gain of 198,000. Headline unemployment stayed remarkably low, just 3.7%; the U-6 rate, which also counts the underemployed, rose 0.2% to 7.6%. Annualized wage growth remained at 3.1%. Average net monthly payroll growth for the September-November period was 170,000.4,6
By December, the ongoing U.S.-China trade dispute had cooled a bit, with negotiations continuing. December 1 marked the start of a 90-day “ceasefire,” with both nations agreeing not to impose additional import taxes until late in the first quarter of 2019. China actually scaled back some tariffs as the year ended; the U.S. was set to boost tariffs on as much as $200 billion of Chinese goods effective this month.7
Lastly, the end of 2018 was very good for retailers. Mastercard Pulse measured a 5.1% year-over-year increase in retail purchases between November 1 and December 24, resulting more than $850 billion in purchases – the best holiday retail sales season in six years.8
GLOBAL ECONOMIC HEALTH
In December, the United Kingdom witnessed a parliamentary deadlock over the Brexit, with Prime Minister Theresa May withdrawing a scheduled vote over her deal with the European Union in the face of probable legislative defeat. In fact, as Christmas approached, there was no clear majority in Parliament favoring any of the Brexit options: May’s deal, the no-deal Brexit (an outcome that would dismay corporations), a “managed” no-deal, or another national vote on the matter. The U.K.’s March 29 deadline to leave the E.U. remains. In other euro area news, yearly inflation fell sharply in the region to 1.9% in November, descending from 2.2% in October.9,10
While China’s statistics bureau said recently that the country was on track to reach its 6.5% economic growth target for 2018, signs of a slowdown emerged. In December, the country’s factory output contracted for the first time in nearly three years, with its official manufacturing PMI falling to 49.4. The November Markit manufacturing PMIs for other key Asian economies indicated either minor month-over-month factory sector expansion (slightly above 50) or contraction (below 50). Japan’s Markit PMI came in at 51.8 (though it recovered to 52.4 in December); Taiwan’s, at 48.4; South Korea’s, at 48.6.11,12
WORLD MARKETS
Yes, December brought substantial losses for other major equity benchmarks – though generally speaking, the losses were smaller than the ones seen in the U.S. While the Nikkei 225 slid 10.10% last month, the common December loss was single-digit: 5.76% for the TSX Composite, 1.53% for the Bovespa, only 0.22% for the Bolsa, 6.55% for the DAX, 5.46% for the CAC-40, 3.61% for the FTSE 100, 5.92% for the IBEX 35, 2.49% for the Hang Seng, 4.14% for the Shanghai Composite, and just a respective 0.35% and 0.13% for the Sensex and the Nifty 50.13
How about some of the regional and multinational indices? Well, the MSCI World slipped 7.71%, while the MSCI Emerging Markets declined 2.92%. The FTSE Eurofirst 300 took a 5.44% loss. On a positive note, two emerging market benchmarks saw double-digit gains in 2018: Russia’s Micex advanced 12.16%; Brazil’s Bovespa, 15.03%.13,14
COMMODITIES MARKETS
Dollar strength put pressure on this sector in 2018; the U.S. Dollar Index gained 4.64% for the year, a performance better than that of many commodities. Gold and silver moved up in December. The yellow metal gained 5.11% to reach $1,284.50 on the COMEX on New Year’s Eve. Silver rose 9.90% for the month to $15.54 on the COMEX. Across 2018, gold lost 2.42%; silver, 9.14%. Copper retreated 5.17% last month, and platinum settled 1.29% lower.15,16
Oil prices kept falling. In December, WTI crude declined 9.64% to finish out the year at $45.83 on the NYMEX. For all of 2018, crude retreated 24.05%. Unleaded gasoline suffered a 7.45% December setback. Heating oil fell 7.83%. All of that paled next to natural gas, which plunged 36.01%. Most key crops also went negative on the month: soybeans lost 1.26%; wheat, 2.42%; coffee, 2.88%; sugar, 3.50%; cotton, 8.52%. Cocoa and corn were notable exceptions, the former advancing 11.85%, and the latter, 2.46%.16
REAL ESTATE
More homes sold in November – more existing homes, that is. The National Association of Realtors said that resales improved 1.9% in the penultimate month of the year, and that followed the 1.4% gain seen in October. The trend might not continue, though, as NAR’s pending home sales index retreated 0.7% in November. (Due to the federal government shutdown, the Census Bureau’s November new home sales report was still pending at this writing.) Housing starts and building permits were both up for November: groundbreaking increased 3.2%, and the pace of permits issued improved 5.0%.4
Home loans grew cheaper in December. Back on November 29, Freddie Mac’s Primary Mortgage Market Survey listed the mean interest rates on the following loans: 30-year FRM, 4.81%; 15-year FRM, 4.25%; 5/1-year ARM, 4.12%. By the December 27 Freddie Mac survey, everything was cheaper: 30-year FRM, 4.55%; 15-year FRM, 4.01%; 5/1-year ARM, 4.00%.17
The NAR reported a median existing home sale price of $257,700 in November, up 4.2% from November 2017. Another key measure of annualized gains, the 20-city composite S&P CoreLogic Case-Shiller home price index, had risen 5.0% year-over-year through October.18,19
T I P O F T H E M O N T H If you have a high-interest credit card, you may want to search to see if you can refinance the balance to a lower-interest card. A lower-interest card means a greater percentage of your payments will be applied to principal rather than interest.
LOOKING BACK, LOOKING FORWARD
During one of the most volatile months in recent Wall Street history, the S&P 500 had nine intraday moves of at least 1% (as opposed to eight such instances during all of 2017), and the Dow Jones Industrial Average gained 1,000 points in a day for the first time. The ups and downs tested the patience of investors large and small. When the month ended, the most esteemed Wall Street indices were considerably lower. The S&P 500 ended the year at 2,506.85; the Dow, at 23,327.46; the Nasdaq Composite, at 6,635.28. The small-cap Russell 2000 wrapped up 2018 at 1,348.56, taking a 12.94% December fall and losing 12.18% for the year. The CBOE VIX soared 54.62% for the month and 130.25% for 2018, settling at 25.42 on December 31.1,20
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year TIPS real yield = projected return at maturity given expected inflation.
At this moment, investors old and young are looking at their portfolios and wondering what moves might be appropriate. How about no moves at all? At its core, a saving and investment strategy for a pre-retiree is developed based on risk tolerance, time horizon, and goals, and that big-picture approach takes episodes of market instability (and market downturns) into account. A deviation from that strategy may be ill-advised. If you are wondering about the outlook for Wall Street for 2019, many prognostications are bullish, some to remarkable degree. USA TODAY recently polled a range of Wall Street investment strategists, and they thought the S&P 500 would gain about 25% this year, on average. Is this just wishful thinking, drenched in blue sky? Anything is possible, but to encourage returns like that, it might help to have a pause in tightening by the Fed, an end to the trade war between China and the U.S., a comeback for oil, and earnings calls that contradict worries about corporations becoming slightly less profitable. January will likely see more of the volatility witnessed in December, hopefully less pronounced. This month and this year, investors will appreciate the core principle of diversification, for little is certain about the next few months on Wall Street.23
Q U O T E O F T H E M O N T H
“Make your life a mission – not an intermission.”
ARNOLD GLASOW
UPCOMING RELEASES
January’s roll call of major economic news items includes the December employment report from the Department of Labor (1/4), ISM’s December non-manufacturing PMI (1/7), a new Consumer Price Index (1/10), the latest Producer Price Index (1/15), December retail sales and a new Federal Reserve Beige Book (1/16), December housing starts and building permits (1/17), December industrial output and the preliminary January University of Michigan consumer sentiment index (1/18), the latest existing home sales report from the National Association of Realtors (1/22), a fresh Conference Board leading indicators index (1/24), December new home sales and durable goods orders (1/25), the latest Conference Board consumer confidence index and the November S&P CoreLogic Case-Shiller home price index (1/29), a Federal Reserve policy decision, ADP’s January payrolls data, and NAR’s index of housing contract activity for December (1/30), and finally, the December PCE price index and consumer spending report (1/31).
T H E M O N T H L Y R I D D L E
You can see right through me. Different lights make me strange, and for each one, my size may change. What am I?
LAST MONTH’S RIDDLE: It is often surrounded by water and at risk from waves, and it has a fin rather than a sail or motor, but without water and waves, there would be no real use for it. What is it?
ANSWER: A surfboard.
Remember, we are never too busy to be a resource or sounding board for the people you care about.
Just call and let us know how we can help out.
KeyStone Team may be reached at 920-969-0717 or admin@kfgwi.com www.kfgwi.com
Know someone who could use information like this? Please feel free to send us their contact information via phone or email. (Don’t worry – we’ll request their permission before adding them to our mailing list.)
This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs, or expenses. Investors cannot invest directly in indices. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe. The CBOE Volatility Index® (VIX®) is a key measure of market expectations of near-term volatility conveyed by S&P 500 stock index option prices. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Nikkei 225 (Ticker: ^N225) is a stock market index for the Tokyo Stock Exchange (TSE). The Nikkei average is the most watched index of Asian stocks. The S&P/TSX Composite Index is an index of the stock (equity) prices of the largest companies on the Toronto Stock Exchange (TSX) as measured by market capitalization. The Bovespa Index is a gross total return index weighted by traded volume & is comprised of the most liquid stocks traded on the Sao Paulo Stock Exchange. The Mexican Stock Exchange, commonly known as Mexican Bolsa, Mexbol, or BMV, is the only stock exchange in Mexico. The DAX 30 is a Blue-Chip stock market index consisting of the 30 major German companies trading on the Frankfurt Stock Exchange. The CAC-40 Index is a narrow-based, modified capitalization-weighted index of 40 companies listed on the Paris Bourse. The FTSE 100 Index is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. The IBEX 35 is the benchmark stock market index of the Bolsa de Madrid, Spain’s principal stock exchange. The Hang Seng Index is a free float-adjusted market capitalization-weighted stock market index that is the main indicator of the overall market performance in Hong Kong. The SSE Composite Index is an index of all stocks (A shares and B shares) that are traded at the Shanghai Stock Exchange. The BSE SENSEX (Bombay Stock Exchange Sensitive Index), also-called the BSE 30 (BOMBAY STOCK EXCHANGE) or simply the SENSEX, is a free-float market capitalization-weighted stock market index of 30 well-established and financially sound companies listed on the Bombay Stock Exchange (BSE). The Nifty 50 (NTFE 50) is a well-diversified 50-stock index accounting for 13 sectors of the Indian economy. It is used for a variety of purposes such as benchmarking fund portfolios, index-based derivatives and index funds. The MSCI World Index is a free-float weighted equity index that includes developed world markets and does not include emerging markets. The MSCI Emerging Markets Index is a float-adjusted market capitalization index consisting of indices in more than 25 emerging economies. The FTSEurofirst 300 Index comprises the 300 largest companies ranked by market capitalisation in the FTSE Developed Europe Index. The MICEX 10 Index is an unweighted price index that tracks the ten most liquid Russian stocks listed on MICEX-RTS in Moscow. The US Dollar Index measures the performance of the U.S. dollar against a basket of six currencies. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.
