Week of September 21, 2015
With all eyes on the Federal Reserve, markets finished the week with declines, ending down for the week. The S&P 500 finished the week down 0.2%. The Dow Jones Industrial Average fell 0.3%. And, the Nasdaq Composite rose barely by 0.1%. This pullback for the S&P 500 marks the 11th consecutive week where the index has alternated between gains and losses. This has tied the longest streak set in both 1977 and 1994.
Should I Stay Or Should I Go Now
Last week the Federal Reserve surprised several economist when it left short-term interest rates unchanged and cited weak global growth as a primary reason. Equity markets moved lower throughout the day as many interpreted this as a sign that the Fed believes the U.S. economy could be dragged down by slowing growth elsewhere. However, digging into the numbers paints a fairly positive picture for the domestic economy. It’s worth noting that the Fed’s press release pointed to an improved outlook for both capital expenditures and the labor market. The inflation forecast was lowered, but it was far from collapsing into a deflationary spiral. With this meeting over, all eyes now move toward guessing whether the next hike occurs in October or December. We would note that the last time the Fed cited global turmoil as a concern for raising rates, it didn’t hike for another ten months. Despite this, most developed equity markets moved ~30% while emerging markets soared more than 50% over this time period.
Household Wealth Grows
Rising real estate values has pushed U.S. household wealth to record levels. A report released by the Federal Reserve last week describes the net worth of U.S. households and nonprofit organizations at $695 billion. The report outlines American assets at just under $100 trillion. Nearly a quarter of this comes from housing while ~20% each stems from individual equities and retirement accounts. The growing wealth is in contrasts to reports showing declines in household income. According to the Census Bureau, the median annual income was down slightly in 2014, and the poverty rate remains unchanged over the past five years.
Source: Wall Street Journal, September 18, 2015 (subscription required), http://www.wsj.com/articles/u-s-household-wealth-hit-record-in-second-quarter-1442593339
Gasoline Prices Collapsing
Gasoline prices continue falling thanks to lower oil prices. Early last week gas futures slid to an eight-month low as the summer driving seasons comes to an end. Prices settled down nearly 5% to $1.30 per gallon. The decline comes after a surge in the first half of the year as U.S. driving hit record levels and refineries had trouble pumping out enough gasoline to meet consumption. The retail price per gallon has now fallen for 28 straight days to an average of $2.33, according to AAA. This is expected to keep falling as stations switch to winter-grade gasoline this week, which is cheaper to produce.
Fun Story of the Week
Online dating websites and apps have exploded over the past several years. Just a decade ago there were only a handful that catered to the mass market, but now there are dozens that specialize in matching specific groups of people. There are sites for religious groups, sites to match people with specific food allergies, there is farmersonly.com, and even purrsonals.com for cat lovers. Nearly every niche is covered. Almost. Last week, Oscar Mayer filled one of the last voids by creating a dating app designed exclusively for bacon lovers. The app, called Sizzl, is available for iPhone and Andriod. Like with all dating sites a user must filler out personal information such as age and gender, but your Sizzl profile also requires information about how you like your bacon (chewy, crispy, or burnt), if you prefer pork or turkey bacon, and it asks what you would do if there is only one piece of bacon on the table. If you find someone who responds “share it”, hold on to that one. He or she is a keeper.
Source: Business Insider, September 16, 2015, https://www.businessinsider.com/oscar-mayer-bacon-dating-app-2015-9
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Securities offered through Jacques Financial, LLC (JFLLC) a Broker-Dealer, Member FINRA and SIPC. Certain associates of Joseph W. Jacques, CPA, CFPTM are registered representatives of JFLLC. Joseph W. Jacques, CPA, CFPTM and JFLLC are affiliated. Investment advisory services are offered through Jacques Advisors, LLC an affiliate of JFLLC. Tax services are offered through Jacques & Associates Certified Public Accountants, LLC an affiliate of JFLLC.* 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.
Tech Crunch, September 16, 2015, https://techcrunch.com/2015/09/16/oscar-mayer-releases-sizzl-a-dating-app-for-bacon-lovers/
Wall Street Journal, September 14, 2015 (subscription required), http://www.wsj.com/articles/crude-shows-few-signs-of-lasting-recovery-1442229831
Wall Street Journal, September 21, 2015 (subscription required), http://www.wsj.com/articles/moneybeat-one-direction-for-the-s-p-500-not-so-much-1442810333
Wall Street Journal, September 21, 2015 (subscription required), http://www.wsj.com/articles/u-s-household-wealth-hit-record-in-second-quarter-1442593339
Wall Street Journal, September 17, 2015 (subscription required), http://www.wsj.com/articles/fed-leaves-interest-rates-unchanged-1442512974