Accentuating the positive during a challenging year for Wall Street.
2015 has presented the world & the
markets with considerable challenges. Terrorist
shocks, the Russia-Turkey spat, the possibility of a fractured eurozone, the
wild ride for Chinese equities and the global manufacturing slump ... yes, they
have weighed on minds and markets, but as the year draws to a close, there is
also much to encourage us, and much we can be thankful about economically.
The “fear index” is still quite low. The CBOE VIX, the
Chicago Board Options Exchange Volatility Index that Wall Street takes as a
barometer of investor anxiety, closed at 15.12 as Thanksgiving weekend began –
down 21.25% YTD. It briefly spiked above 40 this summer, but it has remained
below 20 for most of the year.1
The “misery index” is at its lowest
level in 59 years. Does that phrase
ring a bell? If you have invested for a while, it may. The “misery index” –
simply defined as the inflation rate added to the jobless rate – has not been
this low since the Eisenhower era. (The phrase was coined back in the 1970s
when inflation and unemployment were irritatingly high.) As November turns into
December, you have a misery index of just 5.3% (5.1% unemployment, 0.2%
consumer inflation). Not since the spring of 1956 have these combined numbers
been so low. Actually, some economists would prefer greater inflation –
including economists at the Federal Reserve, which has set a 2% annual
inflation target.2
Inflation has been remarkably mild for
some time. Decades, in fact. From
1970-82, the Consumer Price Index rose an average of 7.7% per year. Since 1985,
consumer inflation has averaged only 2.8%.3
The federal budget deficit has been
reduced. While you cannot say the
same for the national debt, our federal deficit has been halved in just five
years. In FY 2015, the deficit ran $435 billion. In FY 2014, it was $483
billion. During 2009-12, it exceeded $1 trillion.3
Gas is very cheap right now. In 2012, the price of a gallon of gasoline averaged
$3.68 nationally. Fuel industry analysts forecast that the national average
price will descend to a low of $2.03 in December – that means gas will
available for less than $2 a gallon in many states – and average just $2.38
across 2016. Oil supply continues to outpace oil demand.3
We have seen 68 straight months of job
growth. In the winter of 2010, a
remarkably long streak of net monthly job gains began. Unsurprisingly, that has
taken the jobless rate down to its lowest level since early 2008.3
The S&P 500 may manage a 2015 gain
after all. We had a correction on
Wall Street this summer, but the broad benchmark is about where it was at the
end of 2014. It ended Thanksgiving weekend at 2,090.11, up 1.52% YTD. The blue
chips, too, have clawed their way back from a pronounced summer descent – the
Dow settled at 17,798.49 on November 27, down just 0.14% so far this year.
Since the infamous Black Monday – the day the Dow lost more than 22% of its
value in 1987 – the Dow’s value has increased by a factor of ten. (The index
closed at 1,738.70 on October 22, 1987.)3,4
There is much to worry about when it comes to the world and the
economy, but there is also much to be thankful for and to appreciate as we
celebrate the holidays and await 2016.
This material was prepared by MarketingPro,
Inc., and does not necessarily represent the views of the presenting party, nor
their affiliates. This information has been derived from sources believed to be
accurate. Please note - investing involves risk, and past performance is no
guarantee of future results. The publisher is not engaged in rendering legal,
accounting or other professional services. If assistance is needed, the reader
is advised to engage the services of a competent professional. This information
should not be construed as investment, tax or legal advice and may not be
relied on for the purpose of avoiding any Federal tax penalty. This is neither
a solicitation nor recommendation to purchase or sell any investment or
insurance product or service, and should not be relied upon as such. All indices
are unmanaged and are not illustrative of any particular investment.
Citations.
1 - money.cnn.com/quote/quote.html?symb=VIX
[11/27/15]
2 - time.com/money/4125877/misery-index-economy/
[11/24/15]
3 - time.com/money/4126376/thanksgiving-2015-economy/
[11/26/15]
4 - markets.wsj.com/us [11/27/15]
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