It took 15 years, but the NASDAQ index finally recovered to its March, 2000 high by closing over 5,000. Many wondered if it ever would, and others wondered why it took so long. Some of the huge winners were obscure non-tech companies. Apple wasn't doing well at the time, and other companies, such as Facebook didn't even exist in 2000. Some of the obvious names like Cisco, Intel, and Microsoft have recovered, but not by much. For a really fascinating and fun look at this milestone, we recommend David Callaway’s March 2 USA Today article entitled “This Time Nasdaq 5000 is Different,” in which he highlights how things have changed. It really is a very different Nasdaq than 15 years ago. Read Entire Article Here
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- Economic data was mixed on the week, with housing figures relatively flat on net, inflation coming in weaker on a headline level due to the impact of lower energy prices, and tempered results in other areas. Adjusted GDP results for Q4 of 2014 notched downward a bit, which reflects this slower patch.
- Equities gained on the week, with foreign stocks outperforming domestic. Bonds generally experienced a positive week upon a retraction in longer-term interest rates. Although oil prices were mixed to lower, commodity indexes gained upon the heels of higher gasoline prices.
- Economic data on the week was mixed to lower, with several key surveys and housing reports coming in weaker than expected. Perhaps more severe winter weather in recent weeks played a bit of a role, and/or we're seeing some flattening in growth acceleration.Economic data on the week was mixed to lower, with several key surveys and housing reports coming in weaker than expected. Perhaps more severe winter weather in recent weeks played a bit of a role, and/or we're seeing some flattening in growth acceleration.
- U.S. stocks experienced a less volatile week, with prices ending up slightly above where they started after news of a potential deal between Greece and Europe at the end of the week. Interest rates rose, which was a negative for government bonds across the curve, but credit fared better. Commodities lost ground again with choppiness in the oil patch.
How are things stacking up so far for 2015?
This has been an unusual few months, with several themes working in 2014 carrying through to early January, and then reversing somewhat in recent weeks. This has surprised investors and forecasters that assumed that the momentum of 2014's trends would continue indefinitely. For one thing, indexes tracking economic surprises from Europe have now crossed over, from negative into positive territory and surpassing those of the U.S., which has seemingly lost a bit of momentum. This comes at a point where foreign assets and currencies were under intense scrutiny at year-end and were arguably hitting another round of pessimism, in keeping with 'it's different this time' in regard to the surging U.S. economy and dollar. This can be measured by not only anecdotal evidence, but also flows into such products as 'currency hedged equity' and other strategies aimed at getting the best of both worlds—retaining the benefits of a strong dollar but also tip-toeing into cheaper foreign markets as well. Unfortunately, getting the timing right and full benefits of diversification through such a narrow window of risk factors can be extremely difficult and not always straightforward.Read Entire Article Here
- In a moderately quiet week for economic releases, retail sales disappointed last month on a headline level due to lower gasoline prices. However, price recovery in recent weeks may have weighed on fickle consumer sentiment.
- Global equity markets gained ground on a variety of geopolitical events (Ukraine, Europe/Greece) resulting in better sentiment. Bonds lost ground on higher interest rates, notably on the longer-end of the curve. Commodities experienced another positive week with continued stabilization in energy prices.
How does a bond end up with a 'negative' yield?
No doubt, you've read about this happening with certain European debt recently, notably Swiss long-term bonds (which ended last week still trading at a -0.11% yield). How is this possible and why does it happen? In short, it's all in the math.Read Entire Article Here
- It was a relatively busy week for several economic reports, including a lackluster but positive ISM number and an employment report that came in better than expected.
- U.S. equity markets rebounded strongly higher on the week with an easing in geopolitical concerns between the EU and Greece, stabilization in oil prices and end to a less-than-apocalyptic earnings season. Bonds suffered one of their worst weeks in some time with interest rates shooting higher. Commodities also gained sharply on the back of oil's gains.
- Economic data was highlighted by the conclusion of the FOMC meeting (status quo), GDP for Q4 was slightly weaker than expected, and housing numbers were mixed. Consumer confidence, however, on the heels of cheap gasoline, reached new highs.
- Equity markets lost ground last week, upon a variety of geopolitical concerns, optimistic Fed sentiment and mixed corporate earnings results. Bonds again shined, as yields fell to lows not seen since mid-2012. Commodities actually rebounded a bit, as oil markets continued to search for a bottom to prices.
The January FOMC meeting ended without incident, and without major change in strategy or language, as expected. There are four new FOMC voting members this year, but this didn't change the overall tone (no dissenters this time). In the formal release, they upgraded language for economic activity as expanding from a 'moderate' to now 'solid' pace, and job gains from 'solid' to 'strong.' The decline in energy prices was noted as a positive for household purchasing power. The 'considerable time' language for a low rate regime was removed, while the 'patient' approach was retained. Read Entire Article Here
- A light week in U.S. economic data was dominated by housing numbers, which came in a little better than expected. The bigger news came from Europe, where the ECB announced a large quantitative easing program of 60 billion euro/month, targeting mostly sovereign and agency debt, in an attempt to boost inflationary impulses and economic growth.
- Domestic stock markets were higher on the week, but dwarfed by strength in foreign equities—led by the ECB announcement. Bonds were mixed upon a flatter yield curve and strength in the U.S. dollar. Crude oil was weaker again, falling to just over $45 with reports of high inventories coupled with demand uncertainty.
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