Jobs, Manufacturing, Tax Cuts & 60 Minutes… Remind You of Anything?

In the markets, as in life, there are no guarantees but everyone is entitled to their opinion. Here’s my opinion on the financial markets today.

“Excuse me, what’s going on out here?  Well, Nuke’s scared because his eyelids are jammed and his old man’s here.  We need a live, is it a live rooster?  We need a live rooster to take the curse off Jose’s glove and nobody seems to know what to get Millie or Jimmy for their wedding present.  Is that about right?  We’re dealing with a lot of STUFF here…”

Good afternoon, and welcome to our daily market blog! Around Fi Plan Partners, this is one of our favorite all-time movie scenes, and the varied market information coming at us at the end of the year certainly has art imitating life. Stocks were off Friday morning, as measured by the S&P 500, with the unemployment rate moving higher after a less-than-stellar jobs report. However, by Friday afternoon’s bell, the market had “plowed through” to some degree when the Financials sector and factory orders displayed positive data. Overall, this provided positive gains for three straight days.

Monday morning showed a mild retreat after processing Chairman Bernake’s discussions on “60 Minutes” against a further Washington “backdrop” of Bush tax cut compromise talks. Although it’s hard to know where all of this will come out, it is very clear that: (1) Bernake believes strongly in an active Fed stimulus role and (2) the President is in a tough political spot trying to decide how the “politics” and the “realities” of the tax situation should ultimately mix. And, speaking of governments, Europe is certainly still an issue impacting markets, as Moody’s cut Hungary’s rating and the Irish have a budget vote coming up.

In an effort to help give some clarity to all of this at the end of the year, here are a three things that our Fi Plan Partners Team is tracking for you this afternoon:

There will not be nearly as much economic reporting this week. Where there were many “market moving” types of reports last week, such as unemployment, there are very few this week, and those should not be impactful. During weeks like this, the market has a tendency to focus on “non-report” types of issues, such as Korea and the tax debate mentioned above.

Mid-growth stocks had a good year, and there is evidence that will continue. Mid-growth had a 24% return in 2010 versus an S&P of 12%. There seems to be good prospects for merger & acquisition activity in companies of this size. Also, over the past few years, Mid-growths have a pattern of having good January momentum continuing after a year like we’ve just seen.

The Treasury curve got steeper Friday based on the jobs data. The Treasury will auction 3-, 10-, and 30-year securities Tuesday morning. Chairman Bernake discussed the possibility of quantitative easing beyond the $600 billion to help improve the economy. Treasury yields are three to seven points lower today based on his comments.

As always, we love to hear from you and thoroughly enjoy the “intellectual debate” with our clients and friends that these opinions generate.  As this post shows, we are all dealing with a lot of “stuff” here at year end that requires our constant research and study of the markets.  We will continue to provide you with knowledge and information to help reduce your anxieties.

“Okay, well, uh…….candlesticks make a nice gift, and, uh, maybe you could find out where she’s registered and maybe a place-setting or maybe a silverware pattern……Okay, let’s get two!”

Greg Powell
Wealth Consultant

The opinions voiced in this material are for general information only and are not intended to provide specific advice recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. all indices are unmanaged and cannot be invested into directly.

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