{"id":734,"date":"2012-02-13T18:21:53","date_gmt":"2012-02-14T00:21:53","guid":{"rendered":"http:\/\/www.sunlakesofarizona.com\/blog\/?p=734"},"modified":"2012-02-13T18:21:53","modified_gmt":"2012-02-14T00:21:53","slug":"economic-notes-for-the-week-of-february-13th","status":"publish","type":"post","link":"https:\/\/dev.sunlakesofarizona.com\/blog\/2012\/02\/economic-notes-for-the-week-of-february-13th\/","title":{"rendered":"Economic Notes for the Week of February 13th"},"content":{"rendered":"

It was a light week on the U.S economic side.\u00a0 December international trade data of net imports\/exports<\/strong> resulted in a widening of the trade deficit from November\u2019s $47.1 billion to $48.8 billion in December.\u00a0 Trade deficit-oriented news is often looked at negatively in the media, but should be viewed in context.\u00a0 One note likely covered very little is the fact that U.S. exports reached an all-time record high of over $2 trillion in 2011.\u00a0 We remain the world\u2019s engine, and this bodes well for upward revisions of the Q4 GDP figures.<\/p>\n

The JOLTs job openings<\/strong> rose from 3.16 million in November to 3.34 million in December, which was good news.\u00a0 Initial jobless claims<\/strong> fell to 358,000 for the week ended Feb. 4, which was down from 373,000 the previous week and was lower than consensus.\u00a0 The four-week moving average (which is looked at more closely, due to its smoothing effect of outliers) is the lowest it\u2019s been since May 2008.\u00a0 On the moving average basis, continuing claims<\/strong> are also down from the past several months.<\/p>\n

The University of Michigan Consumer Sentiment<\/strong> index declined unexpectedly from 75.0 to 72.5 for February.\u00a0 This was mostly due to the poorer measurement of \u2018current conditions,\u2019 but the overall results were not too far out of the ordinary.<\/p>\n

Much of the week\u2019s focus was on Greece.\u00a0 The resolution to the Greek debt issue has been elusive and contentious.\u00a0 There are two opposing camps, as there are in any debt relationship:\u00a0 the lenders holding the debt and the party owing\/paying back the debt.\u00a0 The debtholders would like their continued interest payments and eventual principal returned, as promised in the original agreement\u2014while avoiding situations that would prevent this from happening.\u00a0 Of course, if a default should occur, the idea is to obtain \u2018recovery\u2019 from as large an amount as possible on the debt held.\u00a0 The debtholders would also like to see a \u2018strengthening\u2019 of conditions that would lead to higher probabilities of repayment\u2014that\u2019s what the austerity measures are all about…the less money used for government expenses, the more there is available for Greek bond interest and principal payments.\u00a0 Simple as that.<\/p>\n

What that translates to is, in return for a bailout of roughly $170 billion, the nation must agree to further and deeper austerity.\u00a0 (As of early Monday, an agreement by the Greek parliament seems to be in place\u2014despite the riots taking place outside of the building.)\u00a0 Neither choice is optimal, as further austerity requires more government cutbacks and likely job losses, while an outright debt default (on a nearly $20 billion bond payment in March in the near-term) and\/or abandonment of the Euro entirely represents another option.\u00a0 Under the latter, which could be accompanied by a return to a separate (and much less valuable) currency, the shock could be severe enough to throw the nation into a deeper recession that it is in now and cause an even deeper hole to climb out of.\u00a0 This is the crux of the Europeans work in trying to keep the Greeks integrated.<\/p>\n

The size of the Greek problem is small, in relative terms, but what investors are watching closely is the ability to keep this contained and roadmap, perhaps, for future actions that might be needed in other nations.
\nMarket Notes<\/em><\/strong><\/p>\n\n\n\n\n\n\n\n\n\n
Period ending 2\/10\/2012<\/strong><\/td>\n\n

1 Week (%)<\/strong><\/p>\n<\/td>\n

\n

YTD (%)<\/strong><\/p>\n<\/td>\n<\/tr>\n

DJIA<\/td>\n\n

-0.38<\/p>\n<\/td>\n

\n

5.06<\/p>\n<\/td>\n<\/tr>\n

S&P 500<\/td>\n\n

-0.12<\/p>\n<\/td>\n

\n

6.98<\/p>\n<\/td>\n<\/tr>\n

Russell 2000<\/td>\n\n

-2.12<\/p>\n<\/td>\n

\n

9.87<\/p>\n<\/td>\n<\/tr>\n

MSCI-EAFE<\/td>\n\n

-0.29<\/p>\n<\/td>\n

\n

8.05<\/p>\n<\/td>\n<\/tr>\n

MSCI-EM<\/td>\n\n

-0.59<\/p>\n<\/td>\n

\n

13.72<\/p>\n<\/td>\n<\/tr>\n

BarCap U.S. Aggregate<\/td>\n\n

0.19<\/p>\n<\/td>\n

\n

0.63<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

 <\/p>\n\n\n\n\n\n\n
U.S. Treasury Yields<\/strong><\/td>\n\n

3 Mo.<\/strong><\/p>\n<\/td>\n

\n

2 Yr.<\/strong><\/p>\n<\/td>\n

\n

5 Yr.<\/strong><\/p>\n<\/td>\n

\n

10 Yr.<\/strong><\/p>\n<\/td>\n

\n

30 Yr.<\/strong><\/p>\n<\/td>\n<\/tr>\n

12\/30\/2011<\/td>\n\n

0.02<\/p>\n<\/td>\n

\n

0.25<\/p>\n<\/td>\n

\n

0.83<\/p>\n<\/td>\n

\n

1.89<\/p>\n<\/td>\n

\n

2.89<\/p>\n<\/td>\n<\/tr>\n

2\/3\/2012<\/td>\n\n

0.08<\/p>\n<\/td>\n

\n

0.23<\/p>\n<\/td>\n

\n

0.78<\/p>\n<\/td>\n

\n

1.97<\/p>\n<\/td>\n

\n

3.13<\/p>\n<\/td>\n<\/tr>\n

2\/10\/2012<\/td>\n\n

0.09<\/p>\n<\/td>\n

\n

0.27<\/p>\n<\/td>\n

\n

0.81<\/p>\n<\/td>\n

\n

1.96<\/p>\n<\/td>\n

\n

3.11<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

 <\/p>\n

U.S. stocks were down slightly as the Greek debt issues noted above outweighed other news of the week (and there wasn\u2019t as much of that).\u00a0 U.S. large-cap outperformed small cap and there was not much differentiation between domestic and foreign stocks.\u00a0 In the S&P, technology and consumer staples led the way, while materials and financials lagged\u2014so \u2018growth\u2019 won out over \u2018value.\u2019\u00a0 On the year so far in 2012, technology has been the best performing group, which has generally helped our portfolios.<\/p>\n

U.S. bonds were modestly higher with a small decline in yield.\u00a0 In the portfolios, government agency, investment-grade corporate and high yield debt all performed well on the week.<\/p>\n

Commodities had positive results last week, making them the best performing asset class.\u00a0 Returns were led by gains in natural gas and crude oil.\u00a0 Several industrial metals, like nickel and tin, also rose in price.<\/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

 <\/p>\n

Sources:\u00a0 FocusPoint Solutions, Barclays Capital, Bloomberg, Deutsche Bank, Goldman Sachs, JPMorgan Asset Management, Morgan Stanley, MSCI, Morningstar, Northern Trust, Oppenheimer Funds, Payden & Rygel, PIMCO, Reuters, Standard & Poor\u2019s, U.S. Federal Reserve, Wells Capital Management, Yahoo!.\u00a0 Index performance is shown as total return, which includes dividends, with the exception of MSCI-EM, which is quoted as price return\/excluding dividends.\u00a0 Performance for the MSCI-EAFE and MSCI-EM indexes is quoted in U.S. Dollar investor terms.<\/p>\n

 <\/p>\n

The information above has been obtained from sources considered reliable, but no representation is made as to its completeness, accuracy or timeliness.\u00a0 All information and opinions expressed are subject to change without notice.\u00a0 Information provided in this report is not intended to be, and should not be construed as, investment, legal or tax advice; and does not constitute an offer, or a solicitation of any offer, to buy or sell any security, investment or other product.\u00a0 Schroeder Financial Services, Inc. is a registered investment advisor.<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

It was a light week on the U.S economic side.\u00a0 December international trade data of net imports\/exports resulted in a widening of the trade deficit from November\u2019s $47.1 billion to $48.8 billion in December.\u00a0 Trade deficit-oriented news is often looked at negatively in the media, but should be viewed in context.\u00a0 One note likely coveredRead 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-734","post","type-post","status-publish","format-standard","hentry","category-finance"],"_links":{"self":[{"href":"https:\/\/dev.sunlakesofarizona.com\/blog\/wp-json\/wp\/v2\/posts\/734","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=734"}],"version-history":[{"count":1,"href":"https:\/\/dev.sunlakesofarizona.com\/blog\/wp-json\/wp\/v2\/posts\/734\/revisions"}],"predecessor-version":[{"id":735,"href":"https:\/\/dev.sunlakesofarizona.com\/blog\/wp-json\/wp\/v2\/posts\/734\/revisions\/735"}],"wp:attachment":[{"href":"https:\/\/dev.sunlakesofarizona.com\/blog\/wp-json\/wp\/v2\/media?parent=734"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dev.sunlakesofarizona.com\/blog\/wp-json\/wp\/v2\/categories?post=734"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dev.sunlakesofarizona.com\/blog\/wp-json\/wp\/v2\/tags?post=734"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}