Friday, July 31, 2015

Consumer Complaints of the Year

The Consumer Federation of America has released its annual list of the Top Ten most common financial complaints lodged by consumers. How many of these have you been a victim of?

1.       Auto  Misrepresentations in advertising or sales of new and used cars, lemons, faulty repairs, leasing and towing disputes
2.       Home Improvement/Construction  Shoddy work, failure to start or complete the job
3.       Credit/Debt  Billing and fee disputes, mortgage modifications and mortgage-related fraud, credit repair, debt relief services, predatory lending, illegal or abusive debt collection tactics
4.       (Tie) Retail Sales  False advertising and other deceptive practices, defective merchandise, problems with rebates, coupons, gift cards and gift certificates, failure to deliver
Utilities  Service problems or billing disputes with phone, cable, satellite, Internet, electric and gas service
5.       Services  Misrepresentations, shoddy work, failure to have required licenses, failure to perform.
6.       Landlord/Tenant  Unhealthy or unsafe conditions, failure to make repairs or provide promised amenities, deposit and rent disputes, illegal eviction tactics
7.       Home Solicitations  Misrepresentations or failure to deliver in door-to-door, telemarketing or mail solicitations, do-not-call violations
8.       (Tie) Health Products/Services  Misleading claims; unlicensed practitioners; failure to deliver
Internet Sales Misrepresentations or other deceptive practices, failure to deliver online purchases
9.       Fraud Bogus sweepstakes and lotteries, work-at-home schemes, grant offers, fake check scams, imposter scams and other common frauds
10.   Household Goods Misrepresentations, failure to deliver, faulty repairs in connection with furniture or appliances

Thursday, July 30, 2015

Second Quarter GDP Report

There's good news this morning about the American economy, not just in the present but earlier in the year as well. The Commerce Department announced that our GDP grew by 2.3 percent in the second quarter, which is roughly in line with where it's been over the past year. It also revised the first quarter estimate, turning what had been a 0.2 percent loss into a 0.6 percent gain.

The longer-term revisions were a bit disappointing though. Commerce revised down estimates for 2011 to 2014, now showing that the economy expanded by 2 percent over that period, below the previous estimates of 2.3 percent.

The strongest growth factors in the second quarter were consumer spending and exports. Consumer spending increased by 2.9 percent last quarter, up from 1.8 percent growth in the first quarter. And exports rose by 5.3 percent, after dropping by 6 percent in the first quarter.

Wednesday, July 29, 2015

Losing Home Sweet Home

Here’s an interesting sidelight to the housing recovery: After homeownership rates dropped in the first quarter to their lowest point since 1989, they fell even further in the second quarter and are now at a 48-year low. The seasonally adjusted homeownership rate is now at 63.5 percent, according to statistics released by the Commerce Department yesterday. That is the lowest that figure has been since 1967.

But the news is not all bad. The total number of households in the United States grew to 117 million in the second quarter of 2015, up from 115 million in the second quarter of 2014.

Meanwhile, the number of renter households increased by 2 million. While that can be taken as a good sign – younger people at least have enough money to move out of their parents’ homes -  it’s also a signal that incomes aren’t keeping pace with rising home prices.

Tuesday, July 28, 2015

The Nasdaq's Handful of Winners

The Nasdaq stock market has been a clear outperformer this year – it has returned 7.4 percent so far in 2015, while the S&P 500 is up by about 1 percent. But there’s more to this than meets the eye. Despite that solid return, the Nasdaq has had more falling stocks than rising stocks this year.

In fact, just six stocks constitute more than half of the rise in the Nasdaq’s market capitalization this year. Those six winners are:
  • Netflix, up 118 percent
  • Amazon, up 71 percent
  • Facebook, up 21 percent
  • Google, up 19 percent
  • Apple, up 11 percent
  • Gilead Sciences, up 6 percent

Monday, July 27, 2015

Energy in the Spotlight

Maybe the most important financial story of the coming week will be the earnings report from several big energy companies, including Exxon Mobil and Chevron. Falling oil prices have decimated the energy industry this year, so this week will be a chance to see how bad the carnage has been.

According to FactSet, the energy sector is reporting the largest year-over-year decline in earnings and revenues of all 10 S&P 500 industry sectors. Earnings among energy companies are down a whopping 54.4 percent on a year-over-year basis, while revenue has fallen 38.2 percent.

This week's numbers could put a stake into the notion that we are in an earnings recession. With 187 S&P 500 companies having reported second-quarter results, blended earnings, which combine actual results with projected estimates, are now sitting at 2.2 percent lower.

Friday, July 24, 2015

Financials on Fire

This earnings season has been a positive one for the S&P 500’s financial sector. After struggling for most of 2015, the financials have moved up to a year-to-date gain of 3 percent now, inching ahead of the broader S&P 500 index, which has risen by 2.8 percent.

The sector has benefited from generally strong earnings reports, not just for big banks like Wells Fargo but entities like the brokerage Charles Schwab and Vornado Realty Trust, one of the nation’s biggest real estate investment trusts. The results from the quarter mean that the financials’ cumulative performance for the past five years is now stronger than that of the entire S&P. Only the health care, consumer discretionary and tech sectors can also make that claim.

Wells Fargo can now claim the mantle of the world’s largest bank by market capitalization, surpassing the former leader, the Industrial & Commercial Bank of China. Its market cap has also passed up that of J.P. Morgan, which is still the largest U.S. bank by assets and hit its own all-time share price record in late June.

Thursday, July 23, 2015

Why Is Gold Sinking?

You may have noticed that this has been a rough time for gold: Yesterday, gold prices dropped for the tenth day in a row, their longest losing streak since 1996. Gold futures prices are down 7.8 percent on the year, and have fallen by nearly 35 percent since the end of 2012. Goldman Sachs is now predicting that the price of an ounce of gold will fall below $1000 for the first time in more than six years.
What’s causing all this? Gold is a worldwide commodity, so recent global events often have a significant impact on its price, and have been accelerating longer-term trends lately. One theory is that with Greece now looking as if it won’t exit the euro, and the Greek crisis subsiding for the moment, investors have less need for a defensive haven, which gold often is.
Also last week, China released data showing that its gold reserves have risen by about 60 percent since 2009. If the world’s second-biggest economy is no longer looking to buy gold, that’s going to put a damper on global prices.