Archives For 2012

2012 In Review

January 2, 2013

Special Update: 2012 in Review

With 2012 behinds us, it’s time to take a look at the events that shaped the year and consider what lies ahead. 2012 was a year defined by tremendous hope as well as ongoing fears about the future. Despite a painfully slow recovery, GDP growth looks like it may end up exactly where economists said it would: between 2.2 and 2.7% for the year.[i] Markets also made major strides, helped along by a last-minute rally as a fiscal cliff compromise approached. Let’s take a look at some of the major highlights of 2012:

The Fiscal Cliff

Going into 2013, the story on everyone’s mind was the fiscal cliff. Fiscal cliff debates provided budget watchers with a real nail biter as Senate discussions continued early into the morning on January 1. While the Senate and White House were able to hammer out a last-minute 2 AM compromise, the deal met resistance in the House on Tuesday, and discussions went late into the evening. The House eventually voted to approve the plan, but negotiations are by no means over. Congress must approve an increase in the $16.4 trillion debt ceiling in mid-February before current federal funding runs out, and another government shutdown threat looms.[ii] Whatever happens, we are committed to keeping you informed about this issue.

According to Congressional sources, here are a few of the major provisions of the deal:

–       Postpones for two months the start of $1.2 trillion in automatic spending cuts known as sequestration.

–       Raises $600 billion in revenue over 10 years through tax increases on wealthy Americans.

–       Permanently extends the Bush Tax Cuts for income below $400,000 per individual, or $450,000 per family. Income above that level would be taxed at the highest rate of 39.6%. For earners in the top bracket, capital gains and dividend tax rates would return to 20%  from 15%.

–       Permanently patches the AMT.

–       Extends unemployment benefits for one year for the long-term unemployed.[iii]

So although technically, we went over the fiscal cliff, it makes no difference to the economy whether the compromise was reached on December 31, or January 2, since legislation can be backdated to January 1.[iv]



Turbulence largely defined markets in 2012. Investors were battered this year by elections, concerns about a global slowdown, and fears around the fiscal cliff. However, despite some serious headwinds, equities put up respectable results, with the S&P gaining 13.41%, the Dow gaining 7.26%, and the Nasdaq gaining just under 16%.[v] Between June 4 and October 5, the Dow increased 12.31% during a summer market surge that surprised analysts who dubbed it a ‘sugar high,’ not supported by fundamentals, but by expectations of additional quantitative easing by the Federal Reserve.[vi]


The gains in U.S. equities this year were lead by homebuilders and financials, who outperformed markets as a whole. Housing remained a bright spot in the broader economy as housing starts, new home sales, and tight housing supplies contributed to sector gains. Financial stocks were able to produce significant returns despite debt worries largely because of gains in the housing sector. [vii]

The 2012 Presidential race roiled markets as candidates outlined their plans to boost the economy. The Eurozone crisis provided another headwind for markets concerned that Europe’s slowdown would affect U.S. companies. Despite Europe’s struggles, Euro region equities returned more than 15% in 2012.[viii]

The Economy

To say that the economic recovery stalled in 2012 is somewhat accurate but doesn’t tell the whole story. While the economy sprinted out of the gate during the first quarter, the momentum faded in the Spring, leading many to worry that we were seeing 2011 all over again. However, as Summer led to Fall, we saw that the economy was indeed growing, but at a slow pace. Surprising many, the economy picked up during the third quarter, posting growth of 3.1%. A bright spot in an otherwise drowsy recovery has been manufacturing, which managed to hold its own between January and October, spurred by lower energy prices.[ix]

Earnings were generally disappointing in 2012 as U.S. businesses struggled with challenging market conditions. On the positive side, while revenue was down, profits were up, indicating that companies got better at doing more with less and are poised to grow once demand increases.[x]

Unemployment started looking much better in 2012, dropping from 8.5% in January to 7.7% in November. As always, the larger unemployment number obscures a lot of detail, in that some of this decline can be attributed to discouraged jobseekers dropping their job search. However, overall, the trend is in the right direction, leaving us hopeful for 2013.[xi]

Although it’s too soon to know what final fourth quarter numbers will be, retail sales, a major driver of annual revenue for many companies, look soft. Holiday sales got off to a great start in November, but appear to have closed with a whimper. According to analytics firm Retail Metrics, December same-store sales may have grown just 1.9% over last year, well below their 2.5% estimates.[xii] These results may push down fourth quarter earnings for retailers.

The Federal Reserve

An activist Fed proved to prop up markets in 2012 by announcing multiple waves of ‘quantitative easing.’ These bond-buying programs were designed to lower interest rates and encourage lending by purchasing first Treasury bills and then mortgage-backed bonds. However, we’re not certain that Bernanke’s mojo will hold through 2013. Taking a look at past QE operations, the first QE program saw the S&P gain nearly 70%, while QE III in September 2012 has presided over a net S&P loss of nearly 4% as fiscal cliff concerns weighed on investors. The most controversial move took place on December 12, when the Fed announced QE IV, in which it promises to buy bonds until unemployment is less than 6.5%.[xiii]

In Summary

Whatever challenges we face in the year ahead, rest assured that opportunities will exist for those who look in the right places. As a firm, we will continue mining for those opportunities and will work hard to match our clients with investments designed to reach their financial goals. And, as always, we will continue to educate you and keep you informed about anything with the potential to impact your financial future. We consider it a great privilege to support you in this capacity, and we will continue fighting to protect the lifestyle you’ve worked so hard to earn – in 2013, and beyond!





Tuesday: U.S. Markets Closed for New Year Holiday

Wednesday: Motor Vehicle Sales, PMI Manufacturing Index, ISM Mfg. Index, Construction Spending, FOMC Minutes

Thursday: ADP Employment Report, Jobless Claims, EIA Petroleum Status Report

Friday: Employment Situation, Factory Orders, ISM Non-Mfg. Index


Data as of 12/31/2012





Standard & Poor’s 500




















10-year Treasury Note (Yield Only)





Notes: All index returns exclude reinvested dividends, and the 5-year and 10-year returns are annualized.
Sources: Yahoo! Finance, MSCI Barra. Past performance is no guarantee of future results.
Indices are unmanaged and cannot be invested into directly. N/A means not available.

[v] Google Finance

[vi] Google Finance

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 or connect on LinkedIn




Weekly Update – April 30, 2012

The trading week started off slowly as investors absorbed further troubling news
about the state of the global economy: Disappointing manufacturing reports from
China, France, and Germany, plus news that the Netherlands might be heading for
its own fiscal crisis.[i]

Things turned around later in the week though, as domestic equities closed higher on positive news surrounding U.S. corporate earnings. The Dow managed to recoup all its April losses, closing up 1.53% for the week, while the S&P rose 1.80%, and the Nasdaq gained 2.29%. For the moment, corporate earnings are providing a positive counterpoint to lackluster economic news.


The state of our nation’s economy was also in the spotlight last week. Gross
Domestic Product (GDP) grew by 2.2% in the first quarter, down from 3.0% in the
fourth quarter of 2011. The biggest factors in the slowdown were slower
inventory-building by private companies and less defense spending by the
federal government. Thankfully, consumer spending – the largest contributor to
GDP – is still strengthening, which should lead to ongoing improvement in our
overall economic picture.[ii]
In keeping with its upbeat tone, the Fed added 20 basis points to its 2012 GDP forecast, increasing predicted growth to between 2.4%-2.9% this year. The Fed also agreed to keep interest rates between 0.00%-0.25%, and expects inflation to remain below 2.0% for the next two years. During the follow-up press conference, Chairman Ben Bernanke stated that the Fed was still prepared to take an active role in the recovery.[iii]

Unemployment claims continue to remain near a three-month high, indicating that employers have stepped-up layoffs and are reluctant to increase hiring. However,
economists believe that the mild winter distorted first-quarter hiring, making it appear unusually strong. Overall, the economy has continued to add jobs and unemployment is falling well ahead of estimates.[iv]


Regardless of what happens with short-term market movements and news from abroad, we are
grateful to see that the U.S. economy is recovering from the financial crisis better than any other economy in the world right now. This is likely a major reason why we have seen domestic equities performing so well lately – when compared with the rest of the world, U.S. companies are the prettiest girl at the dance. While
there are sure to be bumps in the road ahead, corporate balance sheets are strong, the job market is slowly improving, consumers are still spending, and our economy is chugging along.






Personal Income and Outlays, Chicago PMI, Dallas Fed Mfg. Survey


Tuesday: Motor Vehicle Sales, ISM Mfg. Index, Construction Spending


Wednesday: ADP Employment Report, Factory Orders, EIA Petroleum Status Report


Thursday: Jobless Claims, Productivity and Costs, ISM Non-Mfg. Index

Friday: Employment Situation