Week of January 4, 2016
Markets are typically quiet during the trading week between the Christmas and New Year’s holidays and this week was no different. The biggest headline occurred on the last day of 2015.
The markets ended a 6 ½ year-long bull run with the S&P 500 down 0.7% for the year. The Dow Jones Industrial Average followed suit and ended down 2.2% with the Nasdaq Composite surpassing both, closing out 2015 up nearly 6%. News remained relatively light as investors are shifting their focus to 2016. With that comes the prospect of more interest rate increases, continued market volatility and a presidential election in the United States
Improving Consumer Confidence
The Consumer Confidence Index, a monthly measure of consumer sentiment on business conditions and the job market, rose for December to settle at 96.5. This was up from November’s reading of 92.6 as consumers are feeling more optimistic about the job prospects. On average, the economy added about 210,000 jobs per month this year, nudging the unemployment rate down to 5% as of November. Consumers are also enjoying the windfall from $2 per gallon for gasoline and higher home prices. The rest of the survey was mixed as consumers are expecting little to no change in business conditions or financial markets for the first six months of 2016.
Berkshire Hathaway and its infamous figurehead, Warren Buffet, had their worst year relative to the US market since 2009. The conglomerate struggled as its subsidiaries in railroads, agriculture and manufacturing sold less products to the battered oil industry and the insurance divisions posted worse than expected results. Berkshire Hathaway was down 11% for 2015 while the S&P 500 was down just 40 basis points. This marks only the 11th negative year for the stock since Warren Buffet took over in 1965.
Fun Story of the Week
Sea creature enthusiasts and scientists were treated to an early Christmas present this year as an incredibly rare specimen made its way out of the depths and into the shallows of Toyama Bay, Japan on Christmas Eve. The Architeuthis squid, more commonly known as the giant squid, dazzled spectators and the brave few that jumped in the water to get a closer look and film the encounter. This particular squid was a juvenile and estimated at just over 12 feet long while full grown adults can measure upwards of 40 feet. Little is known about the species as they typically stay in much deeper waters. The encounter was one for the record books as there have only been two other live encounters with the species recorded on film. The first was in 2004 where researchers snapped the first ever pictures of a live giant squid and the second was in 2012 where a live adult was filmed in its natural habitat off the coast of Japan.
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* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investments may be appropriate for you, consult with your financial advisor. * 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 Nasdaq Composite Index is a market-capitalization weighted index of the more than 3,000 common equities listed on the Nasdaq stock exchange. The types of securities in the index include American depositary receipts, common stocks, real estate investment trusts (REITs) and tracking stocks. * The Dow Jones Industrial Average is an unmanaged group of securities demonstrating how 30 large publicly owned companies have traded and cannot be invested into directly. * Indexes are unmanaged, statistical composites and their returns do not include payment of any sales charges or fees an investor would pay to purchase the securities they represent. Such costs would lower performance. It is not possible to invest directly in an index. * Past performance does not guarantee future results. * Charts and graphs should not be relied upon as the sole basis for any investment decision and are for general informational purposes only. * Consult your financial professional before making any investment decision. * This newsletter was prepared by CWM, LLC. * Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
Conference Board, December 2015, https://www.conference-board.org/data/consumerconfidence.cfm
Wall Street Journal, December 2015, http://www.wsj.com/articles/consumer-confidence-rose-in-december-conference-board-says-1451401915
CNBC, December 2015, http://www.cnbc.com/2015/12/31/us-markets.html
Wall Street Journal, December 2015, http://www.wsj.com/articles/global-stocks-set-to-close-year-with-a-whimper-1451552749
CNBC, December 2015, http://www.cnbc.com/2015/12/30/warren-buffett-faces-worst-year-on-stock-market-since-2009.html
CNBC, December 2015, http://www.cnbc.com/2015/12/28/rare-giant-squid-spotted-in-japanese-harbor.html