In today’s video we will discuss the news and reports coming out this holiday week that can impact the markets. We will also discuss how the housing growth and oil prices are impacting the US consumer.
Housing growth and the US consumer
As you have heard as a consistent theme here on our blog, we really need to get the consumer back. People have not been as confident since the financial crisis, so they are not as willing to take out a home equity line of credit or do a cash refinance of their home. The amount of multiplier impact that you get from that into the consumer economy is as low as it has been since the 1990s. Normally, if you have the type of pickup in housing that we have had over the last couple of years the consumer will step back in and start spending. However, we have not really seen this happening. Some of the main reasons for this that we are tracking include the fact that people don’t realize that their values are back up to pre-crisis level. Also, there is a lot of consumer debt priced more favorably than a home equity line of credit. However, one of the analysts we follow, Mark Zandi, chief economist of Moody’s Analytics, has stated in his reports, we may be close to an inflection point where we see a lot of home values actually getting above their pre-crisis value. In that case, we may see a lot of people who realize this jump back in, get the credit, and start spending. We are closely watching this possibility.
OPEC meeting and the price of oil
We continue to see oil down again this week, currently around $40 a barrel. In the past, Saudi Arabia had typically cut production to keep prices high. However, this same time last year we saw that Saudi Arabia decided they wanted market share over price and actually increased production. There is a very important OPEC meeting coming up December 4th. We are seeing a bit of contention going into this meeting from those like the Venezuelans who need the price of oil to go back up. A lot impactful decisions could be made at this meeting. We will be watching closely to see how the decisions of OPEC can impact the US consumer and worldwide trading.
The markets this week
Historically, Thanksgiving week is good for the markets. We have a busy week for economic reports including existing home sales, GDP revisions, US consumer confidence, personal income, and new home sales. Of course Friday is Black Friday where we see a lot of consumer spending.
We hope that everyone has a great Thanksgiving with family and friends.
Please continue to send us your comments and questions.
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Ashley Page, JD, MBA
Senior Vice President
Email Ashley Page here
Bobby Norman, CFP®
Email Bobby Norman here
Trey Booth, CFA®
Email Trey Booth here
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.
Economic forecasts set forth in this presentation may not develop as predicted.
Stock investing involves risk including potential loss of principal.
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