Friday, July 25, 2014

The Jots of Vegetarianism

Over the past 12 months, food prices have been rising at a rate of about 2.4 percent. That's slightly higher than the overall consumer price index, which has risen by 2.1 percent over that same time span. But not all food prices are rising in lockstep.

In fact, if you're a vegetarian, you've been enjoying much less inflation than meat-eaters have had to deal with. Fresh fruit prices are up 5.8 percent in the past year, driven in large part by citrus fruits, which are up by 12.2 percent. But tomatoes, to take one example, are up just 0.6 percent.

Those increases pale in comparison to meat prices, though. Fish and seafood are up 7.3 percent in the past year; beef and veal are up 10.4 percent. Pork prices are up a whopping 12.0 percent.

Thursday, July 24, 2014

Old Tech Comes Back

We are in the middle of a bit of a high-tech boom: The S&P 500 tech sector has risen 8.5 percent this year, outperforming not only the larger S&P but the Nasdaq  and small-cap Russell 2000 as well. But this time it's not the brand-new Silicon Valley companies that are making waves.

It's the more mature, well-established tech stocks that have been leading the charge. Intel, Hewlett-Packard, Microsoft are all up by more than 20 percent on the year. Despite its mixed results yesterday, Apple has risen by 23 percent in 2014, when you adjust for its 7-for-1 split.

The best-performing of the old-tech companies this year has been Micron Technology, a Boise-based producer of semiconductors. Micron is up more than 50 percent on the year.

Wednesday, July 23, 2014

Apple's Day

For many investors, Apple is still the most exciting report of earnings season, if for no other reason than to see how the market reacts. Apple's earnings report yesterday was a mixed bag: Earnings of $1.28 a share exceeded the Wall Street consensus of $1.23 a share, but the sales figure of $37.4 billion was slightly below the $38 billion forecast, although a notch up from the $35.3 billion in the year-ago quarter.

Apple used to beat its estimates regularly, by wide margins, so those results weren't enough to excite investors. Shares didn't move much after the announcement, but it was after hours; we'll know more about the reaction today.

The better numbers were found in iPhone sales, which were up nearly 13 percent, to 35.2 million units. The biggest impact came from China, where iPhone sales were up a whopping 48 percent. Mac sales were also a positive, rising by a surprising 18 percent.

Tuesday, July 22, 2014

Gas Prices Leveling Off

Since most Americans tend to drive more in the summer, gas prices tend to go up in the summer as well. But this year has been a little different. After reaching a peak in late April, the price of a gallon of gas has actually been declining nationwide.

Nationwide, the highest that gas has been this year was $3.70 a gallon, a price that was recorded on  April 27. Since then, the national average price has dropped by just under 4 percent, to its current level of $3.57.

Gas prices reached their all-time high in July of 2008, at a national average of $4.11. After dropping off the next couple of years to less than $3.00 a gallon, the summer price has been right around where it is now each of the past four years.

Monday, July 21, 2014

Investors Moving Back to Bonds

Intermediate-term bonds have long represented a solid, relatively stable part of many investors' portfolios. Intermediates make up the largest category of bond funds by assets, with $956 billion invested in them. That's why it was a bit of a shock last year when intermediate bond funds lost, on average, 1.4 percent of their value.

But they've rebounded strongly in 2014. Those same funds have returned an average of 4.1 percent through the first half of the year. Unsurprisingly, investors are coming back to intermediate funds, putting $3.48 billion in them in June.

This is all part of a bigger move back into bond funds, which saw net outflows of $37.12 billion last year. Through the first six months of  2014, these funds have taken in flows of $70.53 billion.

Friday, July 18, 2014

Turn Down the Volume

Even as the stock market continues its upward climb, trading volume has been surprisingly low. In the second quarter, equity trading volumes fell by more than 8 percent from the first quarter, to an average of 6.03 billion shares a day, according to data from Credit Suisse. That makes it the slowest second quarter for stock trading since 2006.

We've seen that slowdown have an effect on banking revenues. On Wednesday, Bank of America reported that its second-quarter revenue from equity sales and trading fell 14 percent from a year ago. J.P. Morgan Chase reported a 10 percent drop in equity markets revenue and Citigroup's dropped 26 percent.

The low volume is one reason we've seen so little volatility in the market this year. That's the subject of the new article posted on the Echelon Wealth Strategies Web site: how that volatility is measured, and what it means for the individual investor. You can find the full article here.

Thursday, July 17, 2014

Another Problem With Jobs

The recession not only limited the number of jobs available to Americans, but there was collateral damage in that many workers were afraid to leave their jobs and move onward and upward. The number of people voluntarily leaving jobs fell  from 3.1 million in 2006 to 1.6 million in 2009, but it hasn't fully rebounded. It was at just 2.5 million in May of this year.

You can also see that workers are staying in their current jobs longer. From 2008 to 2012, the most recent year available, the median tenure of workers ages 25-34 in their current job rose by 19 percent; workers ages 35-44 saw their tenure climb by 8 percent. These things are harmful to the economy not just because they limited job growth but because many Americans who have remained employed limited their earnings growth by staying in their current jobs.

Aside from recessionary factors, Goldman Sachs has also determined that worker dynamism is also falling overall, in any type of economy. That's one more factor that might keep our economy sluggish.