This has been another interesting week from a news standpoint.\u00a0 The ECB, Federal Reserve and other major central banks coordinated efforts to enhance the availability, extend the expiration date and lower the pricing of dollar loans through liquidity swaps\u2014the prices of which were lowered from 1.00% to 0.50% over the applicable \u2018OIS\u2019 (or Overnight Indexed Swap rate, a type of prime rate for such instruments).\u00a0 Secondly, these central bank policymakers offered temporary additional swap lines in any of their currencies\/jurisdictions (other than the dollar only), should they be needed.<\/p>\n
Much of the detail here is operational in nature, which isn\u2019t the important part\u2014the critical piece is the coordination and the boosted confidence such an action (and related series of actions) can bring to the global economy.\u00a0 We believe such coordinated actions and use of a \u2018backstop\u2019 is critical to market confidence (as many were in 2008).\u00a0 Last week\u2019s results were proof in point.<\/p>\n
Housing saw several data releases.\u00a0 New home sales<\/strong> rose +1.3% in October, which was slightly more than expected, but older data was revised downward, which tended to offset some of this effect.\u00a0 The Case-Shiller<\/strong> number, which lags, reported a -0.6% decline for September.\u00a0 This was a bit lower than expected and took the year-over-year number to a -3.6%.\u00a0 It is interesting t note that the seasonally-adjusted version of the index is now at its lowest level since April 2003.<\/p>\n Consumer confidence<\/strong> improved significantly in November, up from 40.9 to 56.0.\u00a0 The \u2018expectations\u2019 component of the survey was the most significant piece of the improved report, and is a positive sign.\u00a0 Job market perceptions were also improved.\u00a0 Remarkably, the overall levels of confidence now are only just below those reported during the summer\u2019s debt ceiling debacle.<\/p>\n The ISM survey<\/strong> was higher than expected in November, as it moved from 50.8 to 52.7\u2014as a result of improvement in new orders and production.\u00a0 Construction spending also rose\u2014mostly in private residential, which may help Q4 GDP growth.\u00a0 The Chicago purchasing managers\u2019 index <\/strong>also increased, which was a bit of a surprise, from 58.4 to 62.6.\u00a0 Here also, new orders and production were additive and prices paid fell (lower prices paid implies lower inflation in goods).<\/p>\n In the employment situation<\/strong> report, nonfarm payrolls were up by 120,000 and the unemployment rate unexpectedly fell to 8.6%.\u00a0 The U-6 measure of \u2018underemployment\u2019 also fell significantly.\u00a0 While part of the improvement was due to fewer labor force participants, employment growth surveys were more positive than expected.\u00a0 The ADP report<\/strong> for the week was also strong, showing an increase of 206,000 jobs.\u00a0 Overall, recent job reports, while not outstanding, have been pointing to slow improvement in employment and less labor \u2018slack,\u2019 which may, in turn, inspire better confidence.\u00a0 The snowball effect here is often subtle, but important.<\/p>\n It\u2019s also worth noting another area of seasonal interest:\u00a0 retail sales.\u00a0 A fair bulk of the nation\u2019s retail sales for the year are directly dependent on the Holiday season.\u00a0 The National Retail Federation reported a record number of shoppers visiting stores\/internet sites over the Black Friday opening weekend, which was up nearly 7% from last year (at 226,000,000 shoppers\u2014believe it or not).\u00a0 The amount spent per shopper was also up 9% from last year.\u00a0 Results from other surveys were similar, and showed decent growth from last year\u2019s Christmas figures.\u00a0 Anecdotally, company reports in the retail and electronics sectors have also been strong this season so far.\u00a0 While shopping for the Holidays over the internet has been a multi-year trend, it appears that foot traffic in malls and other \u2018brick-and-mortar\u2019 locations has also been strong so far.<\/p>\n Market Notes <\/em><\/strong><\/p>\n 1 Week (%)<\/strong><\/p>\n<\/td>\n YTD (%)<\/strong><\/p>\n<\/td>\n<\/tr>\n 7.12<\/p>\n<\/td>\n 6.47<\/p>\n<\/td>\n<\/tr>\n 7.46<\/p>\n<\/td>\n 0.87<\/p>\n<\/td>\n<\/tr>\n 10.38<\/p>\n<\/td>\n -5.11<\/p>\n<\/td>\n<\/tr>\n 9.09<\/p>\n<\/td>\n -10.44<\/p>\n<\/td>\n<\/tr>\n 9.51<\/p>\n<\/td>\n -16.55<\/p>\n<\/td>\n<\/tr>\n 0.08<\/p>\n<\/td>\n 6.88<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n <\/p>\n 3 Mo.<\/strong><\/p>\n<\/td>\n 2 Yr.<\/strong><\/p>\n<\/td>\n 5 Yr.<\/strong><\/p>\n<\/td>\n 10 Yr.<\/strong><\/p>\n<\/td>\n 30 Yr.<\/strong><\/p>\n<\/td>\n<\/tr>\n 0.12<\/p>\n<\/td>\n 0.61<\/p>\n<\/td>\n 2.01<\/p>\n<\/td>\n 3.30<\/p>\n<\/td>\n 4.34<\/p>\n<\/td>\n<\/tr>\n 0.02<\/p>\n<\/td>\n 0.28<\/p>\n<\/td>\n 0.93<\/p>\n<\/td>\n 1.97<\/p>\n<\/td>\n 2.92<\/p>\n<\/td>\n<\/tr>\n 0.02<\/p>\n<\/td>\n 0.25<\/p>\n<\/td>\n 0.92<\/p>\n<\/td>\n 2.05<\/p>\n<\/td>\n 3.03<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n <\/p>\n Nothing quite like seeing almost a year\u2019s worth of returns in five days.\u00a0 Broader U.S. equity markets experienced their best week since 2009, as decent economic\/jobs data piggybacked on the coordinated actions to assist Europe.\u00a0 U.S. markets were led by the more cyclical energy and financials sectors, while the lower-beta utilities and consumer staples sectors lagged in the S&P (the opposite of the prior week).\u00a0 Despite the good showing from U.S. large-caps, small caps performed even more strongly, and foreign issues overall (especially those in sensitive emerging markets) outperformed U.S. markets.<\/p>\n Real estate and commodity returns were also positive as a whole, but lacked the strong absolute numbers seen in equity markets.\u00a0 In the commodity world, economically sensitive industrial metals such as copper and lead saw strong gains, as did crude oil, while grains and \u2018softs\u2019 were weaker on average.<\/p>\n With rising expectations and lessening recession risks, bond yields moved higher and pressured prices on the Treasury side.\u00a0 High yield and other corporate credit fared well in the \u2018risk-on\u2019 week, as did emerging market bonds with tightening spread levels.<\/p>\n <\/p>\n Enjoy the week.<\/p>\n Karl Schroeder, RFC, CSA, CEP<\/p>\n Investment Advisor Representative<\/p>\n Schroeder Financial Services, Inc.<\/p>\n 480-895-0611<\/p>\n Sources:\u00a0 FocusPoint Solutions, Goldman Sachs, Morgan Stanley, Morningstar, Payden & Rygel, Deutsche Bank, Wells Capital Management, Bloomberg, Reuters, Standard & Poors, MSCI, Barclays Capital, JPMorgan Asset Management, Oppenheimer Funds, PIMCO.\u00a0 Index performance is shown as total return, which includes dividends.\u00a0 Performance for the MSCI-EAFE and MSCI-EM indexes is quoted in U.S. Dollar terms.<\/p>\n <\/p>\n","protected":false},"excerpt":{"rendered":" This has been another interesting week from a news standpoint.\u00a0 The ECB, Federal Reserve and other major central banks coordinated efforts to enhance the availability, extend the expiration date and lower the pricing of dollar loans through liquidity swaps\u2014the prices of which were lowered from 1.00% to 0.50% over the applicable \u2018OIS\u2019 (or Overnight IndexedRead more<\/a><\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[],"class_list":["post-686","post","type-post","status-publish","format-standard","hentry","category-finance"],"_links":{"self":[{"href":"https:\/\/dev.sunlakesofarizona.com\/blog\/wp-json\/wp\/v2\/posts\/686","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dev.sunlakesofarizona.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dev.sunlakesofarizona.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dev.sunlakesofarizona.com\/blog\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/dev.sunlakesofarizona.com\/blog\/wp-json\/wp\/v2\/comments?post=686"}],"version-history":[{"count":2,"href":"https:\/\/dev.sunlakesofarizona.com\/blog\/wp-json\/wp\/v2\/posts\/686\/revisions"}],"predecessor-version":[{"id":688,"href":"https:\/\/dev.sunlakesofarizona.com\/blog\/wp-json\/wp\/v2\/posts\/686\/revisions\/688"}],"wp:attachment":[{"href":"https:\/\/dev.sunlakesofarizona.com\/blog\/wp-json\/wp\/v2\/media?parent=686"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dev.sunlakesofarizona.com\/blog\/wp-json\/wp\/v2\/categories?post=686"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dev.sunlakesofarizona.com\/blog\/wp-json\/wp\/v2\/tags?post=686"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n\n
\n Period ending 12\/2\/2011<\/strong><\/td>\n \n \n \n DJIA<\/td>\n \n \n \n S&P 500<\/td>\n \n \n \n Russell 2000<\/td>\n \n \n \n MSCI-EAFE<\/td>\n \n \n \n MSCI-EM<\/td>\n \n \n \n BarCap U.S. Aggregate<\/td>\n \n \n \n\n
\n U.S. Treasury Yields<\/strong><\/td>\n \n \n \n \n \n \n 12\/31\/2010<\/td>\n \n \n \n \n \n \n 11\/25\/2011<\/td>\n \n \n \n \n \n \n 12\/2\/2011<\/td>\n \n \n \n \n \n