INTERPRETING A PERPLEXING JOBS REPORT
Why did the economy generate only 74,000 new jobs last month? Why did 347,000 people drop out of the job hunt to leave the labor participation rate at 62.8%, the lowest in 35 years? Was it the weather? Maybe. As a note from Capital Economics mentions, the Labor Department found that 273,000 people were unable to work last month because of weather conditions, well above the December average of 166,000. The jobless rate fell to a 5-year low of 6.7% in the final month of 2013, but that was largely due to older workers retiring and the thinning ranks of job seekers. November’s job growth was revised upward by 38,000 to 241,000.1,2
A BIT LESS GROWTH IN THE SERVICE SECTOR
December’s non-manufacturing PMI from the Institute for Supply Management came in at 53.0, down from the prior 53.9 mark. Although 53.0 is the weakest reading in six months, it signifies expansion. Data from Markit showed service-sector PMIs in China (50.9) and the euro area (51.0) also down slightly last month.3
FACTORY ORDERS REBOUND IN DECEMBER
The latest report from the Commerce Department noted a 1.8% monthly rise in orders placed with U.S. manufacturers. November’s retreat in factory orders was revised down to 0.5%.3
A MIXED WEEK ON WALL STREET
The first full trading week of 2014 brought 5-day gains for the S&P 500 (0.60%) and Nasdaq (1.03%) but a 0.20% pullback for the Dow. Friday, the big three closed as follows: DJIA, 16,437.05; NASDAQ, 4,174.67; S&P, 1,842.37.4
THIS WEEK: Nothing major is scheduled for Monday. Tuesday offers Q4 results from Wells Fargo and JPMorgan Chase and December retail sales numbers. Wednesday, Bank of America, Kinder Morgan, Fastenal, CSX and Plexus announce earnings, and a new Federal Reserve Beige Book and the December PPI arrive. Thursday brings the December CPI, the January NAHB Housing Market Index, the latest initial jobless claims, remarks by Ben Bernanke at a special Brookings Institution conference on central banking, and earnings from UnitedHealth, BB&T, American Express, Intel, Goldman Sachs, Capital One, BlackRock, Citigroup, Charles Schwab, First Republic Bank and PNC Financial. Friday offers data on December industrial output, housing starts, and building permits and the month’s initial consumer sentiment index from the University of Michigan; General Electric, Comerica, Bank of NY Mellon, Morgan Stanley, Schlumberger and SunTrust all post earnings.
% CHANGE Y-T-D 1-YR CHG 5-YR AVG 10-YR AVG
DJIA -0.84 +22.02 +18.23 +5.72
NASDAQ -0.05 +33.73 +33.13 +10.00
S&P 500 -0.32 +25.15 +21.39 +6.42
REAL YIELD 1/10 RATE 1 YR AGO 5 YRS AGO 10 YRS AGO
10 YR TIPS 0.59% -0.62% 1.87% 1.89%
Sources: USATODAY.com, bigcharts.com, treasury.gov – 1/10/145,6,7,8
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly.
These returns do not include dividends.
WEEKLY QUOTE
“Kind words can be short and easy to speak, but their echoes are truly endless.”
– Mother Teresa
WEEKLY TIP
Low-fee or no-fee checking and savings accounts usually let you make major withdrawals without sizable penalties. That’s a feature you may appreciate if you find you need to make an emergency withdrawal in retirement.
WEEKLY RIDDLE
David put on a white shirt with three large holes in it and went to the grocery store. No one gave him a funny look; no one objected to it. What kind of shirt was David wearing?
Last week’s riddle:
Throughout Friday, Hanna asks her mother the same four-word question. On each occasion, her mother gives her a different answer. What is the question?
Last week’s answer:
“What time is it?”
Citations.
1 – tinyurl.com/l9ywkdk [1/10/14]
2 – forbes.com/sites/samanthasharf/2014/01/10/jobs-report-u-s-economy-added-just-74k-jobs-in-december-unemployment-down-to-6-7/ [1/10/14]
3 – bloomberg.com/news/2014-01-06/ism-non-manufacturing-index-in-u-s-fell-to-53-in-december.html [1/6/14]
4 – thestreet.com/story/marketstory.html [1/10/14]
5 – usatoday.com/money/markets/overview/ [1/10/14]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=12%2F27%2F12&x=0&y=0 [1/10/14]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=12%2F27%2F12&x=0&y=0 [1/10/14]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=1%2F10%2F13&x=0&y=0 [1/10/14]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=1%2F9%2F09&x=0&y=0 [1/10/14]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=1%2F9%2F09&x=0&y=0 [1/10/14]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=1%2F9%2F09&x=0&y=0 [1/10/14]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=1%2F9%2F04&x=0&y=0 [1/10/14]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=1%2F9%2F04&x=0&y=0 [1/10/14]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=1%2F9%2F04&x=0&y=0 [1/10/14]
7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [1/10/14]
8 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [1/10/14]
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. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is not possible to invest directly in an index. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. 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 material was prepared by MarketingLibrary.Net Inc., for Mark Lund, The 401k Advisor, Investor Coach and author of The Effective Investor. Mark offers investment advisory services through Stonecreek Wealth Advisors, Inc. an independent, fee-only, Registered Investment Advisor firm providing 401k consulting for small businesses and private investment advisory services for select individuals. Stonecreek is located in Salt Lake City and Provo Utah.
