That Was The Week That Was-1st Week July

Employment Numbers Jumped Friday! It was expected 165,000 or so jobs for June but the numbers came out to be 195,000.  The unemployment rate stayed at 7.6%. While the stock market loved the numbers and ignored problems overseas some analysts said the June numbers were not that impressive. Morningstar, in an interview with Jason Stipp and Jeremy Glaser, called it ‘no big deal.’ I have always been lead to believe that the economy needs to create a minimum of 240,000 new jobs per month to get an edge into the deficit. Rex Nutting at Morningstar wrote that the jobs markets wasn’t better yet. He went on and explained how jobs are depressed for the 25-54 year olds.

One reason that the unemployment rate didn’t drop is that 117,000 new people joined the ranks of those looking for work. Nutting doesn’t explain it but many of those could have come from high school and college graduates.Nutting explains that the new numbers indicate that the jobs market is improving and more people are willing to ‘dip’ their toe into the jobs market. In the past 12 months out of the 1.6 million people who have found jobs only 350,000 came from the 25-54 age bracket.

The Wall Street Journal had a different slant and reported that the jobs report showed ‘staying power’. And what we are seeing is strong progress. Progress that will aid the Fed in tapering it’s bond buying program. It is now guessed that the end of QE3 will begin this September. The President had his administration move the mandatory deadline of having large employers (50 plus) to add health care coverage starting in early 2014 moved to 2015. This after many employers indicated that the new rules were not only confusing but that it was tempering their hiring. Some employers considered dropping full time employees to part-time to get under the 50 employee ceiling. On the ECB front yields in Portugal jumped as high as 8%. The ECB and Bank of England are staying put at 0.5%. The ECB is also starting to better communication by giving forward guidance. It said that while the US may start tapering that it did not mean that they would begin easing anytime soon.

Morningstar commented Saturday that the jobs report had a little of something both for the bulls and the bears.  

Earning Season Begins Monday

What is the future outlook for the stock market? Heather Brilliant, CFA, with Morningstar reports at the end of the second quarter thusly:

• Stocks are trading at 94% of fair value. This is based on Morningstar analysis and coverage.
• Risk reward does not favor bond investors. Especially with the potential for higher rates looming.
• The outlook for equities is reasonably good for equities given a longer time horizon.
• There are pockets of undervaluation.
• The bond market will correct sending more assets into equities.
• Higher volatility in the short term.

 

Remember When…1999 the Roth IRA was introduced by Senator William V Roth, Jr.

On 9/17/2o01 Markets reopen following the terrorist attack and suffer their single one day biggest dollar loss of 7.13%.

Robert C. Doll, CFA, Chief Equity Strategist and Senior Portfolio Manager at Nuveen Asset Management gives his mid-year predictions:

• Real GDP will be around 2% with inflation around 2%. The private economy is growing closer to 3%.
• Signs that the European recession is becoming less of a negative.
• Earnings growth is medicore as stocks rise and P/E also rises.
• The yield curve steepens. We anticipate the 10-Year Treasury to settle in the 2.40% to 2.60%.
• US multi-nationals will outperform domestic focused companies.
• Larger cap companies outperform small cap companies and cyclical companies outperform defensive companies.
• Dividends increase at a double digit rate.
• A US manufacturing renaissance continues powered by cheap natural gas.
• The US government passes a $2-$3 trillion ten-year budget deal.

Markets all over the road Monday last. Finally finished up but off their highs. Gold made a strong come-back.

Medicare Does Not Cover Long-Term Care Costs.

Medicare will pay for short-term stays in skilled care. Basically if you qualify for need it will pay for the first 20-days. After that the patient pays $148 a day for days 21-100 and Medicare pays the balance. After that, Medicare pays nothing. There’s a great article on LT Care Insurance in the CPA Bulletin I received from my friends at Plotnick Feinberg Associates, PC.

One More Time: Things That Could Ruin Your Retirement-

• Not saving early
• Borrowing from your retirement fund
• Underestimating longevity
• Investing in the wrong places
• Cashing out 401(k) savings

Overseas Fears & Uncertainty Drove Markets Lower Tuesday. Wednesday saw more uncertainty as  MarketWatch.com reported early European stocks tumbling on global worries. Portugal assets fell as fears the government may not survive. Several ministers have already resigned. A new election in favor of anti-austerity policies would be held later in the year. Egypt is also pressuring global stocks as the military is soon to be taking over the reins of the government.

Morsi Out in Egypt Because He Forgot To Address The Economy First. This according to MarketWatch.com writer Amotz Asa-El .

Stocks closed up Wednesday even though some data was awful and global tensions increased in Egypt and Portugal. The trade deficit increased to the biggest since November, according to Bloomberg.

Payrolls climbed by 188,000 workers. Many employers are still holding new hires to part-time status, under 30 hours a week, in order to keep them from Obama Care guidelines (according to CBS News). Better than projected jobs turned the stock market around on Wednesday from a sideways action to a positive close. Europeans are holding back from buying and this partially lead to our trade deficit.

September Fed Taper. Former Fed Gov Lawrence Meyer suggested the start date in Bloomberg interview. The Ben Bernanke term end January 31st. The greatest gift that Bernanke can give the next Fed chair is the beginning date of the taper to take the heat off, said Meyer.

You Don’t See Your Grandkids as Much or Ever? In China Granny Sues! A 77 year old granny Chu did just that last April and won! In China the problem is escalated because of the distance and jobs. Low income migrant workers can not travel to see their grandkids as much as they want. In China caring for elders is still a moral imperative along with a cultural reverence. 

 

Finally- Douglas Engelhart Creator of the Computer Mouse Dies at 88. He filed his patent back in in 1967 and it was granted in 1970. Logitech International has manufactured and shipped over a billion of the instruments. Other companies have manufactured similar mouse products and yet Engelhart never received a dollar in royalties for his work. Without the mouse the world of personal computing may not be what and where it is today. Don’t feel bad since Mr. Engelhart won may awards and earned over $500,000 in his lifetime with those awards. Still, it would’ve been nice to get a dime for each mouse sold…

Questions call Paul @ 586 295 0430 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.

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