Friday, December 19, 2014

Stocks Around the World Bounce Back

While the S&P 500 index has been enjoying its biggest two-day gain since 2011, there's also good news coming in from around the world. Despite the collapse of the Russian ruble this week, there was the first good news in a long time for emerging markets stocks. After plunging to its lowest point since 2009 earlier in the week, the MSCI Emerging Markets Index had its best day in over a year yesterday, rising 1.8 percent.

There were even bigger gains in Mexico, where the primary stock index was up 3.3 percent, for its biggest daily increase in four years.  The MSCI Latin American index was up 2 percent on the day.

What's causing this? Oil prices actually turned up for part of the day, after reaching five-year lows. And Fed chair Janet Yellen offered reassuring news about the state of the American economy. All that looks like it was enough to counteract the deteriorating situation in Russia.

Thursday, December 18, 2014

The Jobs News Keeps Getting Better

More Americans feel good about their job situation than feel bad about it, for the first time in a long time. That's the upshot of a new survey from Pew Research, which reports that 26 percent of Americans are hearing good news about jobs, while 25 percent are hearing bad news.

That might not seem like such a strong trend, but it's a long way from where this survey used to be. In June of 2009, just 1 percent of those surveyed said the jobs news they were hearing was good; 71 percent said it was bad. This is the first time since then that even 20 percent of those surveyed said the jobs news was good.

News about the overall economy, though, is still mostly negative. Only 14 percent say they are hearing mostly good news on the economy, while 21 percent say it's mostly bad news.

Wednesday, December 17, 2014

The Momentum Shifts

Yesterday was one of those roller-coaster days on Wall Street: The Dow Jones Industrial Average opened the day by dropping 99 points, then gained 246 points - then dropped again, to finish the day down 112 points. There were several causes offered for this performance - the continuing drop in oil prices, the collapse of the Russian ruble - but one of the effects, as the Wall Street Journal pointed out, was a disaster for momentum stocks.

Momentum investing is the idea that you should jump on a stock that has shown an upward trend in the past, and sell a stock that has been moving downward. A simple idea, but it runs into trouble on days like Tuesday, when the market seems to be taking several left turns. And momentum issues got the worst of it.

Google, which had been having tough times lately, saw its downward slide accelerate, losing 3.6 percent of its value in a single day; it's down nearly 10 percent on the year. It's the same story for electric-car maker Tesla, which lost 3 percent yesterday and is down 22 percent in the past month. But even stocks with upward momentum got hit hard: Apple opened December up more than 40 percent on the year, but it's now down 10 percent off its recent high.

Tuesday, December 16, 2014

Three Positive Signs

In case you missed it, there were three pieces of good news last week regarding our economy, as we move further into the holiday season and toward 2015:

  • Despite mixed reports on Black Friday sales, U.S. retail sales rose by 0.7 percent in November over the prior month. The retail numbers for last month were 4.9 percent higher than those of November 2013.
  • According to the monthly University of Michigan consumer sentiment survey, Americans' consumer confidence is now at its highest level since January 2007.
  • Gallup's small business survey found that small business owners are the most optimistic they've been since the first quarter of 2008. The projection for increased hiring by small businesses in 2015 is the highest it's been in seven years.

Monday, December 15, 2014

A Second Chance at Charitable IRAs

If you're in a charitable mood this holiday season, and you have plentiful assets built up in an IRA, you may want to watch Congress in the coming weeks. The provision allowing older folks to donate up to $100,000 from an IRA to a charitable institution without reporting those funds as taxable income, which expired at the end of 2013, may be coming back.

That IRA rollover tax break was enacted in 2006, and has been extended a few times since then. In the past, even if it's extended after the New Year, it has been made retroactive, so the provision could very well still be applicable to the 2014 tax year.

The rollover has always been limited to people who are 70 and a half or older, who are required to take annual minimum distributions from their IRAs. But the charitable contribution can count toward that required minimum, and you can take the charitable contribution on your taxes even if you don't otherwise itemize deductions.

Friday, December 12, 2014

Saving for the Holidays?

Did you set aside any money for your holiday spending this year? Not many Americans are doing that these days. According to the Country Financial Security Index, only 42 percent of Americans put money away for either savings or investments over the past two months. Those aged 40 to 49 seem to be the least inclined to do so, with only 32 percent saying they saved any money for holiday shopping.

Those figures are down sharply from before the recession. Back in 2007, according to this same survey, the saving rate was significantly higher, at 55 percent.

Given how the economy has rebounded since then, it seems like this is more of a change of mind-set than anything attributable to economic factors. In general, the survey found that people were fairly confident about their personal well-being. Some 45 percent of those surveyed said their financial security was "excellent" or "good."

Thursday, December 11, 2014

The Cost of the Oil Bust

Falling oil prices have been a real boon to anyone who drives a car, but they are starting to play havoc with the stock markets. The S&P 500 index energy sector dropped 3.1 percent yesterday, spearheading the overall index's largest one-day drop in almost two months.

The price of a barrel of Brent crude oil reached a new five-year low yesterday, and there's room for it to fall even further. OPEC issued a forecast yesterday saying that global demand for the cartel's crude oil could fall in 2015 to its lowest level in more than a decade.

All that bad news has put the S&P energy sector down 14.7 percent for 2014, the worst performing of the 10 major S&P sectors. But the recent performance is even worse than that: The sector is down 25 percent from its peak on June 23, nearly six months ago.