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It Was A Busy Week

November 5, 2012 — Leave a comment

It Was a Busy Week
Weekly Update – November 5, 2012

It was a busy week as Hurricane Sandy pounded the East Coast; securities exchanges were forced to close on Monday and Tuesday; and a slew of economic reports were released. Stocks ended the shortened week with a selloff Friday, erasing gains made earlier, and finishing basically flat. For the week, the S&P gained 0.16% and the Dow climbed 0.12%, while the Nasdaq trimmed 0.19%.[i]

Although the economic impact of Hurricane Sandy won’t be known for weeks or months, the true cost of a disaster like this is always the human suffering. It is painful to see beautiful homes and townships devastated by natural forces, and our thoughts go out to all those impacted. If you or someone you love has been affected in any way, and if there is anything we can do, please don’t hesitate to let us know.

On the bright side – without making light of this disaster – it should be noted that major storms rarely have a lasting impact on the U.S. economy. Generally, even large disasters like this one aren’t costly enough to damage the enormous economic machine that is the U.S. economy. Insurance companies may be stuck footing a large bill, and the government may have to pay for relief efforts, but economic snags of this type are usually temporary. The major exception to this general rule was Katrina, which devastated New Orleans and caused over $100 billion in estimated damages. One of the major reasons Katrina was so expensive was because of the area’s economic importance as a major shipping port and oil and gas hub. Although the effects of Sandy are widespread, the storm would have had to shut down major cities for weeks to achieve similar effects.[ii] Fortunately, it passed somewhat quickly, and major recovery efforts are underway.

One note of positive news could be found in last week’s Labor Department report showing that employers added 171,000 new jobs last month. Although the unemployment rate ticked slightly upwards to 7.9%, the increase was attributed to discouraged workers restarting job searches, which is a positive sign for the economy.[iii] This good news combined with recent consumer confidence highs indicate that we may be able to expect consumer spending to increase during the holiday season, which would be excellent for retailers.

As earnings season continued last week, markets responded positively to some solid results. Consumer discretionary stocks edged higher as several well known travel companies and luxury retailers beat estimates.[iv] Overall, the corporate earnings picture has improved as more companies have reported; according to November 2nd data, of the 378 S&P 500 companies that have reported so far, 61.9% have beat expectations, which is in line with the 62% average since 1994. While we may see additional volatility in the weeks ahead, solid earnings and upbeat economic reports mean that investors have a lot to be pleased about right now.[v]

ECONOMIC CALENDAR:

Monday: ISM Non-Mfg. Index

Wednesday: EIA Petroleum Status Report

Thursday: International Trade, Jobless Claims

Friday: Import and Export Prices, Consumer Sentiment



[i] http://www.briefing.com/investor/markets/weekly-wrap/weekly-wrap-for-october-22-2012.htm

[ii] http://www.marketwatch.com/story/big-storms-rarely-dent-economy-for-long-2012-10-29

[iii] http://news.yahoo.com/index-futures-tread-water-ahead-jobs-report-110825182–finance.html

[iv] http://www.briefing.com/investor/markets/weekly-wrap/weekly-wrap-for-october-29-2012.htm

[v] http://news.yahoo.com/index-futures-tread-water-ahead-jobs-report-110825182–finance.html

A NOTE ABOUT HURRICANE SANDY: Sunday night, as Hurricane Sandy took aim at the heart of America’s financial district, both the New York Stock Exchange and Nasdaq stock market said they would not open for trading Monday due to the storm. Depending on how much damage is inflicted on the Eastern seaboard, there is a possibility that trading might also be halted on Tuesday.[i] With Hurricane Sandy approaching, and likely bringing high winds and flooding, its potential economic impact is a point of concern. The historic storm is thought to be the largest to hit the U.S. and could cause major damage to cities in the northeast and mid-Atlantic. Please be assured that we will keep you informed about any developments with the potential to affect your investments.[ii]

 

Markets Lower but Economy Growing
Weekly Update October 29, 2012

 

Markets got off to a slow start last week as disappointing earnings and a downgrade of Spanish debt combined to fuel bearish sentiment. Major indices closed near their seven-week low with the S&P trimming 1.48%, the Dow sliding 1.77%, and the Nasdaq losing 0.59%.[iii]

Last week’s earnings reports mostly continued the downbeat trend we’ve seen this year of top-line revenue misses and a weak earnings outlook. With earnings reports in from nearly half of S&P 500 companies, just 36.9% have reported revenue that beat forecasts, far below the 62% historical average, according to Thomson Reuters data. Earnings are faring slightly better, with 62.5% above expectations.[iv]

Moody’s downgraded the debt of five Spanish regions last week, citing limited cash reserves and upcoming interest payments. This move will make it more likely that these regions will reach out to the national government for a lifeline, worsening Spain’s already-precarious debt situation.[v] This move is an unfortunate reminder that the European debt situation is far from resolved.

On the bright side, Friday’s GDP reading showed that the U.S. economy grew at an accelerated rate in the third quarter. The Commerce Department’s initial GDP estimate clocked in at 2% growth, beating economists’ estimate of 1.9% and showing a substantial improvement over the second quarter’s 1.4% increase. The uptick in growth was a result of a last-minute surge in consumer spending and an increase in government spending. Despite the tough economy, consumers went on a shopping spree, buying up automobiles and iPhone 5s, driving up consumer spending by 2% in Q3.[vi]

ECONOMIC CALENDAR:

Monday: Personal Income and Outlays, Dallas Fed Mfg. Survey

Tuesday: S&P Case-Shiller HPI, Consumer Confidence

Wednesday: ADP Employment Report, Employment Cost Index

Thursday: Motor Vehicle Sales, Jobless Claims, Productivity and Costs, ISM Mfg. Index, Construction Spending

Friday: Employment Situation, Factory Orders

In the last presidential election, nearly 10 million more women voted than men did, according to the Census Bureau: about 70.4 million vs. 60.7 million. So what are the issues that are concerning women as we approach the 2012 presidential election?  Laura Vanderkam is providing us with her insight in this guest post.

 

Laura Vanderkam is a nationally recognized writer who questions the status quo and helps her readers rediscover their true passions and beliefs in pursuit of more meaningful lives. The article below was originally posted on DailyWorth, where she is a contributor. Follow this link to learn more about Laura Vanderkam.

 

With such a tight election, both presidential candidates are campaigning hard for women’s votes. But what are women’s issues?

Women are certainly interested in abortion and contraceptiion, however they are also mindful of topics such as Jobs, Taxes, The budget deficit, Social Security and Medicare.

Read the entire article here at What Women Care About In 2012

 

Thanks Laura for allowing me to share your work. See more of Laura’s work at  LauraVanderkam.com or connect on LinkedIn