Friday, July 3, 2015

First Half Scorecard: The Dow

The other day we mentioned that the S&P 500 was virtually flat in the first half of 2015, rising just 0.2 percent. But the record for the Dow Jones Industrial Average was even worse. The Dow fell 1.4 percent through the first six months of 2015.

That's the first losing first half for the Dow since 2010. But that year, when the index lost 6.3 percent in that first half, it came back to gain 18 percent in the second half and finished the year up 11 percent overall.

That's unusual, though not unheard of. In the Dow's 117-year history, it has lost ground in the first half in 45 years (38 percent of the time). Of those 45 years, the index has climbed into positive territory by the end of the year only 31 percent of the time.

Thursday, July 2, 2015

The June Jobs Report

June was another solid month for hiring in America, as the first quarter economic doldrums continue to recede into the past. The economy added 223,000 jobs in June, right in line with what we've seen over the past three months, and the headline unemployment rate dropped to 5.3 percent, according to figures released this morning by the Bureau of Labor Statistics.

Job growth in June was concentrated in services. Retailers added 33,000 jobs to payrolls, the health-care sector added 40,000 and leisure and hospitality increased by 22,000. Manufacturing jobs grew by just 4,000, and the public sector added a net of zero jobs.

One sign of caution: The labor participation rate continues to drop, falling another 0.3 percent in June to just 62.6 percent. That's the lowest that figure has been since 1977.

Wednesday, July 1, 2015

First Half Scorecard

The first half of 2015 is now in the books, and the news is pretty uninspiring. After a fair number of ups and downs, the S&P 500 has risen an almost imperceptible 0.20 percent on the year. The index actually declined by 0.2 percent in the second quarter of the year.

The malaise has been broad-based. The biggest winners among sectors have been health care stocks, up 8.4 percent, and banking stocks, up 7.7 percent. Usually, the best performing-sectors do much better than that over the course of six months.

Meanwhile, several sectors slumped during the first half. Utilities fell by 12.0 percent, transportation stocks dropped by 11.7 percent, and energy stocks, which many expected to rebound after the collapse in oil prices last year, fell by another 5.7 percent.

Tuesday, June 30, 2015

The China Collapse

Greece has taken center stage in the world economic news, as investors around the globe watch to see if the country will default and/or exit from the euro. That's taken the spotlight away from China, where the news isn't as dire but has been plenty bad for Chinese investors in recent weeks.

The Shanghai Composite Index has lost about 20 percent of its value within the space of less than three weeks. The market has lost $1.25 trillion in market capitalization in that time frame. Two other Chinese markets are already officially in bear market territory.

As a result, China's central bank has just slashed interest rates, hoping to stanch the bloodletting. On the other hand, the volatility of the Chinese market may make this swoon look worse than it is: Even with the recent sell-off, the Shanghai Composite is still up 29 percent on the year.

Monday, June 29, 2015

The Wealthy Are Buying Real Estate

What type of asset are the ultra-wealthy looking to buy right now? Real estate. A new Savills/Wealth Briefing survey of private bankers and wealth managers found that 91 percent of global high-net-worth investors were looking to increase or maintain their real estate holdings.

The choices of types of real estate are all over the map, so to speak. Seventy-two percent of wealth managers said their clients would buy residential properties over the next five years, 60 percent said they'd buy development land, and 50 percent said they would buy offices. Just 44 percent said they'd get into more retail investments.

North America remains the prime destination for investors, according to 67 percent of wealth management respondents, It's followed by 63 percent looking to the U.K. and 58 percent for both Pacific Asia and the South Asian Subcontinent.

Friday, June 26, 2015

America's Day

There's no getting around it: Americans are working more, an additional seven minutes per day, according to the Labor Department's latest American Time Use Survey. The average American worked for three hours and 35 minutes each day last year, the highest that figure has been since 2008, when the recession kicked into full gear.

Perhaps in response to that work, we're also sleeping more. Sleep was the single largest daily activity in 2014, accounting for eight hours and 48 minutes of the average day. That’s up from eight hours and 44 minutes in 2013.

Leisure and sports took up five hours and 18 minutes of the average day last year, up two minutes from the prior year - which was entirely devoted to watching television. The average day in 2014 included two hours and 49 minutes of TV time, three minutes more than in 2013.

Thursday, June 25, 2015

Where Are the Stocks Going?

If it seems like there aren't that many stocks to pick from any more, there's a reason for that. The U.S. now has half as many publicly listed companies trading on its exchanges as it did at the peak in 1996, according to a recent report from the National Bureau of Economic Research shows. Listed companies peaked at 7,322 in 1996, but that number today is down almost by half, to 3,700.

There are two forces at work. There has been a high number of delistings, which the researchers figured account for roughly 46 percent of the decline. The relatively low number of new listings - much less than on foreign exchanges - is estimated to account for 54 percent of the drop. 

From 1997 to 2012, the U.S. had 8,327 companies get delisted. The biggest reason? Mergers.  Of those more than 8000 stocks that disappeared from the markets, 4,957 were due to companies merging with other companies.