Andrew Ferrara
economics outlook 2012
Market Minute: January 29, 2012: The "January Effect" and the probabilities
for 2012
The strength in the S&P 500 this month tells more about
the performance for the rest of the year than most investors realise. Over the
last 40 years, whenever the US market has had a return above 3.75% in January,
the S&P 500 finished the year higher. Currently, the index is up 4.44%.
Since 1970, there has been 13 times when the US market has been above 3.75%
in January. Every time the index completed the year with a substantial
gain.
The 13 Januarys with returns of 3.75% or greater were in 1971, 72,
75, 76, 79, 83, 85, 87, 88, 89, 91, 97 and 99.
The average gain for the
rest of the year was a surprising 19.6%. This means that if this January can
finish above 1307.25, then there is a very strong probability of the index going
higher in 2012. And as there are only two more trading days left this month, the
US market would have to drop 10.77 points or more to cancel out the effect.
Bottom line: The S&P 500 has gained 4.44% in January. With two days
remaining, the probability of a good performing 2012 is building. If the US
index can close out the month above 1307.25, then there is a strong likelihood
of another 15% gain by year-end based on 40 years of data.
Investment
approach: The odds for a promising 2012 are mounting. If the S&P 500 does
perform well, as the last 13 Januarys with a 3.75% would suggest, then investors
may wish to remain fully invested this year to take advantage of the anticipated
rise.
From an intermarket perspective, it is also worth noting what
happens when the US markets moves up. The US dollar index and bond prices
normally move in the opposite direction to the S&P 500. Commodities are
closely coordinated with equities. If the stock market advances this year, so
should base metal, gold, silver, oil and agricultural grain prices.
Also, there is a shift out of defensive sectors such as consumer
staples, healthcare and utilities and a move to growth industries like
technology, energy, mining, consumer discretionaries, construction and basic
industry.
More research on commodities and the markets will be in the
upcoming February newsletter.
Donald W. Dony, FCSI , MFTA
WATCH GOLDMAN SACHS AGAIN???
all their forecasts go opposite direction
2011 they forecasted a great year
2012 they forecasting a down year
they are markets manipulators connected to governement
Dow Jones Shocking Prediction Forecast for 2012
There is a shocking Dow Jones predictions for 2012: (sources: internet news websites):
Analyst Goldman Sachs predicts a major military developments in late 2012 and urges its clients to dump shares.
Last year Fox Business Channel for the first time publicly announced planned for the end of 2012 the great war. A former senior analyst and forecaster of the most influential financial services company Goldman Sachs, said a leading dumbfounded that his clients should begin to dump securities, as the military events of late 2012 would entail a major meltdown of financial markets. Anviktori published translation of the article Paul Watson, Infowars.com editor of this information megabombe, fell in a studio FoxBusiness network.
Massive conflict will cause the collapse of the securities market, strategic analyst forecasts Nenner. Yesterday, when the forecaster Charles Nenner told Fox TV (Fox Business network) about what the Dow Jones (Dow Jones) come down to the level of 5.000 because of major military events that shake the world in late 2012, Fox TV hosts David and Elizabeth MacDonald, Esma froze in shock.
Ferrara outlook 2012
Our economic outlook
An editorial opinion
by Troy Frerichs, CFA® Senior Investment Officer
January 5, 2012
A fresh start is what many investors are thinking about after leaving 2011 behind. While overall returns were flat-to-positive over the full year, the headlines and associated market volatility left most feeling exhausted.
After a third quarter in which we saw the S&P 500 decline 13.9% and 10-year U.S. treasury rates drop to 1.9% over concerns in Europe, a U.S. sovereign debt downgrade, political disarray in Washington and anemic U.S. economic growth, we had a fourth quarter that reversed most of the damage. While the European overhang was and is still present, improving U.S. economic data led to the S&P 500 gaining 11.8% during the fourth quarter. The bond market told a different story, however, with rates on 10-year treasuries remaining virtually unchanged from the third quarter, seemingly unwilling to accept the better U.S. economic data in the face of the festering European debt crisis.
So once the dust settled, where did that leave us for 2011? In the stock market, virtually the same place that we started, as the S&P 500 ended the year flat, not including a return from dividends (total return of 2.11%). In the bond market, the Barcap U.S. Aggregate Bond Index (a good proxy for the overall bond market) reflected the nearly 2.00% drop in 10-year treasury yields over the course of 2011 and ended the year with a 7.84% total return. Within U.S. stocks, growth stocks outperformed value stocks, and large capitalization stocks outperformed mid- and small- capitalization stocks. Defensive economic sectors of the U.S. market performed best including utilities, consumer staples and healthcare, while more cyclical sectors -- such as materials, industrials and financials -- underperformed the broad market. U.S. stocks also outperformed those of Europe, Japan and emerging markets. Most sectors of the bond market were positive, with safe haven sectors such as treasuries, municipals, TIPS and investment grade corporates performing best.
So what will we do with our fresh start? With the major caveat that the European debt crisis doesn’t spread to the rest of the world, we anticipate 2012 to be a lot like 2011. We think stocks look relatively attractive as investors come to terms with the fact that there is some growth in the U.S. economy. There is a long list of positives going into 2012 like Real GDP that is at an all-time high, record corporate earnings, an improving employment picture, strong consumer spending, a pickup in manufacturing activity, low interest rates, tame inflation, and an election year (typically good for stocks). However, that could all be wiped out with a complete meltdown in Europe. At the same time, it is difficult to be excited about bonds, particularly treasuries, with yields near all-time lows. When everyone wants something, it usually gets expensive, and right now, we think investors are paying a premium for safety.
People who achieve financial security rarely do so alone
With all of the current economic uncertainty, this is a perfect time to contact your financial representative for an in-depth review of your situation. Backed by a team of experts, your financial representative is equipped to give you the guidance you need.
one of my favorite professors of economy is PR Nouriel Roubini
2 articles describing the global picture???
article posted by google 18 june 2011
Debt Will Haunt the Market for Years to Come
Listening to Republican presidential candidates and soon-to-be candidates earlier this week, one might conclude America is going down the tubes, or maybe already has.
Now, along comes New York University economics Prof. Nouriel Roubini, who sees a perfect storm of global events that could complete the down-the-tubes journey, not just for America, but for the rest of the global economy as well.
Among Prof. Roubini’s storm fronts is (1) a fragile U.S. economic recovery, coupled with a mushrooming debt, (2) looming economic problems in China, (3) debt issues eroding government stability in Europe, and (4) Japan’s moribund economy due to a crippling national disaster.
For those who never watched the film “The Perfect Storm,” it was a fictionalized version of a real perfect storm that stuck the U.S. Northeast coast in October 1991, when competing weather fronts clashed to create, well, the film’s title says it all — disparate forces coming together from different directions, making the whole much more devastating than the parts.
Roubini sees the global economic forces lining up for just such an event, possibly as early as 2013. In fact, sounding more like a Vegas oddsmaker than an economics professor, he insists the chances of a global collapse are one in three.
OK, he’s got our attention. But when you think about it, a one-in-three chance means there’s a two-in-three chance there won’t be a planet-wide economic meltdown. In gambler’s terms, that’s not so bad.
The problem is that the world’s decision makers continue to kick the can down the road, a point made in a Bloomberg Internet report on Roubini’s bold prediction, which provoked one ‘net blogger to opine:
“Ever feel like YOUR can is getting kicked down the road?”
He was referring to the public’s inclination to accept as fact the direst predictions from economists, turning a best-guess estimate into a full-blown, self-fulfilling prophecy.
There is one enduring fact about economists predicting future events — they usually give you the worst case, then mitigate the impact by offering various alternatives.
For example, Roubini seems particularly pessimistic about the future of the global economy — with his 33-percent chance of complete failure — while in the next breath he points out that, if the worst doesn’t happen, the global economy will continue to be anemic, but will be OK, or he can envision a scenario in which the global economy actually improves, considerably.
Like most economists, the professor is hedging his bets, which should make everyone feel better about the potential for a meltdown. Roubini was, however, the economist who first predicted, in 2006, a catastrophic global financial meltdown. Two years later, Lehman Brothers Holdings Inc. imploded, igniting the economic firestorm that sank the global economy to depths not seen since the 1930s.
So, what does all this mean? Are we to prepare for a perfect storm, full recovery or something in between?
Perhaps the answer lies not in the possible outcomes, but in the dynamics that compelled the good professor to wax gloomy in the first place — his belief that governments have been deferring the tough economic decisions for too many years, kicking the can down the road, a chain of events that has an inevitable doomsday feel to it.
The world has been on a spending spree for far too long, and Americans and their government are among the worst offenders. The bills are coming due, and we have no checks to put in the mail.
Copyright 2011 Santa Maria Times. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Posted in
Editorial on
Saturday, June 18, 2011 12:00 am Updated: 5:58 pm.
Fears over pace of global economic recovery weigh on stock markets
By Pan Pylas, The Associated Press – 5 days ago
LONDON — Concerns over the U.S. economic recovery and expectations China will raise interest rates again weighed on stock markets Monday, while the euro was steady at the start of a potentially crucial week in the Greek debt crisis.
Over the past month, the economic newsflow has turned distinctly negative, particularly out of the U.S. Investors are now worried that the mark up in share prices in the early part of the year may have been overdone — stocks are effectively a leading indicator of economic output for the period ahead.
Nouriel Roubini, a New York University economics professor notorious for predicting the 2008 financial crisis, cautioned against risky investments.
"In the last month, things have changed, the evidence is that maybe this is not just a soft patch but something worse," he said in a speech in Singapore. "If your horizon is the next two or three months, I would be a bit defensive on equities...This is time to be cautious, and safe rather than sorry."
In Europe, the FTSE 100 index of leading British shares was up 0.2 per cent at 5,777, while France's CAC-40 rose 0.1 per cent to 3,809.22. Germany's DAX fell 0.1 per cent to 7,065. Trading activity in Europe was low as many countries, including Germany and France, were on national holiday though stock markets remained open for business.
Wall Street was poised for a lacklustre opening — Dow futures were up 0.1 per cent to 11,885, while the broader Standard & Poor's 500 futures rose an equivalent rate to 1,265.
Given the public holidays in many parts of Europe and a light economic calendar in the U.S., analysts were skeptical that stocks would gain any momentum over the day.
Tuesday may have more to offer, with Chinese inflation data likely to stoke concerns that the People's Bank of China will tighten monetary policy again soon. U.S. retail sales figures for May will also provide an insight into the state of the U.S. economic recovery — consumer spending accounts for around 70 per cent of the U.S. economy.
"All stock markets remain under pressure going into this week, and in the short-term at least, it is difficult to see the catalyst that is going to spark off a sustainable rally," said David Jones, chief market strategist at IG Index.
In the currency markets, investors continue to monitor any developments surrounding the Greek debt crisis ahead of next week's meeting of eurozone finance ministers in Brussels, where a fresh Greek bailout is on the agenda.
On Friday, the euro tanked amid signs that policymakers in Europe have divergent views on how to deal with the Greek crisis, with the European Central Bank and the German government at odds on getting Greece's bondholders to share some of the pain in helping the country.
Germany's finance minister Wolfgang Schaeuble has proposed that bondholders contribute a "substantial" portion of a fresh bailout package for Greece by giving the country an extra seven years to repay existing bonds. But European Central Bank president Jean-Claude Trichet has said nothing should be done that would be deemed "a credit event" by the ratings agencies and that any private sector involvement has to be done on a voluntary basis.
"A failure to achieve a workable agreement by the end of the eurogroup meeting next Monday threatens the real risk of what Schaeuble described last week as the first unorderly default within the eurozone," said Simon Derrick, senior currency strategist at the Bank of New York Mellon.
By late morning London time, the euro was up 0.1 per cent at $1.4355. That's three cents lower than the one-month highs it reached only last Thursday.
Earlier in Asian trading, Japan's Nikkei 225 dropped 0.7 per cent to close at 9,448.21 after the government reported that core machinery orders fell unexpectedly by 3.3 per cent during April. The drop came as companies cancelled orders following a devastating March 11 earthquake and tsunami in northeastern Japan that destroyed or damaged scores of factories.
The decline was the first in four months, evidence that the twin disasters continue to take their toll on Japan's economy. The seasonally adjusted figure includes heavily electrical machinery, engines, machine tools, road vehicles and aircraft but excludes orders for ships and utilities because of their volatility.
South Korea's Kospi closed 0.1 per cent higher at 2,048.74 while Hong Kong's Hang Seng Index finished 0.4 per cent higher at 22,508.08.
But mainland Chinese shares edged lower as market players reacted to data showing a dip in bank lending and awaited the inflation figures that could show the consumer price index surging to more than 6 per cent.
The Shanghai Composite Index fell 0.2 per cent to 2,700.38 after dipping more than 1 per cent earlier in the day. The Shenzhen Composite Index fell 0.2 per cent to 1,110.89.
In the oil markets, crude continued to fall on concerns over the global economic recovery and speculation that Saudi Arabia will decide to raise production levels despite last week's surprise decision by the OPEC oil cartel to maintain current levels.
Benchmark oil for July delivery was down $1 at $98.32 a barrel in electronic trading on the New York Mercantile Exchange.
____
Pamela Sampson in Bangkok contributed to this story.
Copyright © 2011 The Canadian Press. All rights reserved.
go the dragon
