It was an interesting week last week as yields on Treasury Notes are high right now. Bespoke Investment Group says that when ever this happens in relation to stock divined yields, it is a very positive thing for the stock market.
Last week update
Last week saw a pretty volatile market but after a bad start, the market rallied big on Friday. Precious medals out performed the markets probably because of nervousness in Europe. Retail Sales numbers on Wednesday under performed, down 1%. Jobless claims rose to the highest number since February.
This week we will get data numbers on existing home sales and pending home sales. The reason these numbers are important to investors is because of the rippling effect it can have on many industries. For example, our research shows that when home sales rise, people tend to buy new furniture and services to go with that new house.
Watching gold prices
The price of gold is something we’ve been watching very closely. Commodity prices, including milk, have been going down mainly because of a rising dollar, which is based on gold. Interestingly, gold has continued to rise in spite of dropping commodity prices most likely because commodities are priced in US dollars. This means other countries have to convert their money to dollars before they can buy them.
A big week for Europe
This week could be big for Europe as we wait to see if they will initiate quantitative easing. The estimates right now are that this quantitative easing will be to the amount of 600 billion dollars. Quantitative easing will be more problematic for Europe than here in the United States because the European Union is fragmented (See our video from last week here).
The next four years
The opposite is happening here in the United States as the Fed continues to back down quantitative easing and looks to begin raising short interest rates sometime soon. The last time we saw this was in the 1990s after which the economy did quite well for the next four years. We are thinking this impact could be the same. While we don’t see interest rates going up any time soon we think treasuries could have a good year.
China is no longer a driver of growth
China’s growth numbers came out last week at 17.4%, just slightly below the government’s expectation. That is the lowest number since 1990. It has been a long time since China has not been the driver of growth. This could be why the IMF lowered their global growth down to 3.5%. We are now seeing that the US will be the driver of growth globally.
This is a lot of information we stay on top of because all of this can affect your investments. If you have any questions, please call us at (205) 989-3498 or email us below.
Greg Powell, CIMA
fi-Plan Partners is an independent investment firm in Birmingham, AL, serving clients across the nation through financial planning, wealth management and business consulting. fi-Plan Partners creates strategies in the best interest of their clients using both fee based investing and transactional investing.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
The economic forecasts set forth in the presentation may not develop as predicted.
Stock investing involves risk including potential loss of principal.