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Full steam ahead

 

The major averages made all-time highs again this week, except the Nasdaq. It is just a matter of time before that tech-heavy index joins the party. But what happens after that? read more…

New fiduciary rule would benefit all of us

 

The Department of Labor is trying again. This week, a proposed new rule, backed by the president, would force all financial advisors to adopt a “fiduciary responsibility” towards their clients when overseeing retirement plans. If passed, it could substantially reduce the fees and expenses we pay for that advice. read more…

It’s still all about Greece

It was just one of those weeks. Greece remained in the spotlight while U.S. macroeconomic data gave conflicting signals on the health of the economy. Despite that, some stock indexes made new highs, before falling back on some Friday profit-taking. read more…

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Full steam ahead

 

The major averages made all-time highs again this week, except the Nasdaq. It is just a matter of time before that tech-heavy index joins the party. But what happens after that? read more…

New fiduciary rule would benefit all of us

 

The Department of Labor is trying again. This week, a proposed new rule, backed by the president, would force all financial advisors to adopt a “fiduciary responsibility” towards their clients when overseeing retirement plans. If passed, it could substantially reduce the fees and expenses we pay for that advice. read more…

It’s still all about Greece

It was just one of those weeks. Greece remained in the spotlight while U.S. macroeconomic data gave conflicting signals on the health of the economy. Despite that, some stock indexes made new highs, before falling back on some Friday profit-taking. read more…

A race to the bottom

Faced with slowing economies and sluggish employment, more and more countries throughout the world are devaluing their currencies, slashing interest rates and stimulating growth wherever they can. That should be a recipe for further global growth in the years to come. read more…

The Grecian Drama

Greece is once again on center stage as the world looks on, wondering if this time the country’s finances will finally implode. It is a play we’ve seen before and its outcome fairly predictable. read more…

The labor market is on fire

Non-farm payroll employment increased by 257,000 jobs in January and the gains for the preceding two months were revised upward as well. Even better news was hourly wages that jumped 0.5% in January to $24.75 after declining in December. That’s the biggest gain in six years and bodes well for the economy overall.
Wall Street has been debating just how fast or slow the U.S. economy is growing for months now. The faster the growth, the more likely the Fed will raise interest rates. Why is this so important?
One school of thought says interest rate hikes are ‘bad” for the stock market. In times past, when rates rose the stock market has sold off, sometimes a lot, other times not so much. Since June is supposedly the target date for a rate hike, and markets usually discount such events by six months or more, we are in ground zero–if you believe in this scenario.
Weighing in on the other side of this argument are those who believe the Fed won’t raise rates for a variety of reasons. Number one, the U.S. economy is not as strong as many think it is (thus the debate over every data point). Even if growth in America does grow a bit more, it won’t be enough to pull the rest of the world out of the doldrums. As proof, they point to the decline in oil prices.
In slow or potential recessionary economic climates, the demand for oil dries up as fewer goods and services are demanded. Most often the decline in the price of oil almost always heralds a slowing of the economy, not only here, but worldwide. In that kind of environment, the Fed would be crazy to hike rates. Some say they should actually restart the QE program before it is too late. No wonder the markets are as volatile as they are given these diametrically opposing views.
Which view is accurate, or are they both wrong? Clearly, the energy issue may have much more to do with the explosion of new energy sources brought on by breakthroughs in technology over the last decade. Weakening energy demand may not be the case at all. It may simply be that this new supply has overwhelmed demand in the short term and price declines are the adjustment vehicle to once again bring the oil market into equilibrium.
There is no question economic growth is slowing around the world, however, various governments are doing their utmost to stimulate their economies as the U.S. has done over the past several years. Their efforts should bear fruit if we use our own QE programs as a guide.
One might wonder that the fear of the unknown, of change, may be at the bottom of these issues. We have been in a low to non-existent interest rate environment for so long in this country that even a small uptick in rates makes us uncomfortable. All you need to do is look back in history prior to the financial crisis to understand that rising interest rates in a growing economy has actually been a good thing for stocks.
In any case, the markets this week have actually turned positive for the year. The oil price was the trigger for three straight days of one percent or more in gains. Unfortunately that means that oil is still the tail that is wagging this dog. I have no idea whether we actually have seen the “bottom” in oil prices, but if we have then we can expect markets to continue higher from here.

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About Bill

Bill Schmick was born in a blue-collar neighborhood of Philadelphia, just a few blocks north of “Rocky Balboa” territory where most of his Catholic schoolmates grew up to be either cops or criminals. He narrowly escaped both professions by volunteering to fight in Vietnam as a U.S. Marine... Read More

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