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January 11, 2010
Is it just me or does the stock market seem to be hanging on? Rumors are that earnings, thanks to all our neighbors who were terminated, are going to surprise to the upside. That means a short term quick buck for those who are in the market. If you’re one of the lucky ones, it may be time to up your contribution to your favorite charity.
Fundamentally the market seems to be disregarding the continued increase in unemployed and underemployed ranks. Sooner or later that has to come home to roost. When it does the market could “adjust” about 10% or more is what I’m hearing.
That’s a lot less of a drop than what we had in 2008 and but it could still hurt and hurt badly if you haven’t fully recovered from the last decline that turned 401(k)’s in to 104(k)’s. Especially if you are older. On that note, any youngsters (50 and under) reading this should have that conversation with Mom and/or Dad. How are they doing? Are they OK? Are they worried? If they are worried, (or you are) take them to see a Financial Advisor you trust and have him(her) figure it out for them. Most will do it free. If yours won’t, contact me for a list of those who will.
So where is Congress on the reconciliation of the Health Care Reform bill? It will be interesting to see what happens with two Democratic Senators officially on the lame duck list and Senate Leadership making racially charged comments about the President (albeit before he was elected).
The dollar began to slip again after gaining some ground against the Euro for the past few weeks.
Government policy is going to hit you in the wallet starting this month. The temporary reduction in withholding of income taxes started last year to give you a bit more of your money to spend expired on 12/31/09. The tax rates weren’t changed so don’t be surprised if you have to write a check come April 15. Wait till next year when the check may be even bigger.
Speaking of income taxes, don’t be in too much of a hurry. The IRS graciously gave financial houses until the 16th of February to send out your 1099’s. That means you can’t file until you are sure you have them all or likely March 1st. For the few that might actually get a refund, it gives the government another two weeks to hold onto your money interest free.
By the way, China just became the largest car market in the world, buying more new cars last year than the USA. It is the first time in the history of automobiles that the USA wasn't number one. I wonder if that is a harbinger of things to come.
First quarter is a dark time for me emotionally. It’s cold the day light hours are still short, the grass is brown, no flowers are blooming and preparing my tax return brings me face to face with the reality of how much I contribute to the running of government. The second quarter is better, days are longer weather is warmer and summer is coming. I hope that optimism will carry over into the economy.
Monday, January 11, 2010
Tuesday, January 5, 2010
2010, what will you be?
HAPPY NEW YEAR!
I believe it will be a year filled with opportunity. I believe it will be a year of recovery. I believe it will be a year of backlash. I don’t believe it will be a smooth year by any means. It will be bumpy.
Many of the positive events of the 4th quarter could be overshadowed in the first and second quarters. The housing market is still a major issue. Banking is still an issue. Lending will remain soft (the most recent Treasury sales were covered fourfold suggesting that banks are still risk averse). With risk comes reward. So bank earnings are likely to lag as they continue to eat toxic assets. One day, the survivors will have potentially explosive earnings. Who they will be and when that will happen is still questionable.
Unemployment will remain high for the foreseeable future. That will keep consumer spending from being a powerful tool for recovery as has happened previously. That will cause the recovery to lag as well.
Jobs, as they return will require better education. The bulk of the jobs will be in growth areas, no surprise there, but the growth areas almost unanimously require education beyond high school. This, for many people AND employers, is a large problem. Although the predictions are that the slow decline in unemployment will keep any pressure on wage growth to a minimum, I submit that there will be a lot of wage growth in the areas most under served. A bidding war for talented qualified people could easily develop and while probably not large enough o affect the overall numbers by much, it could be geographically significant AND significant to you if you are in those fields.
I expect that 2010 will post some gains by year end, but the road from here to there will be anything but direct, straight and smooth. The interim elections in November could have a significant affect in the performance of 2011. Congress must begin to rein in the deficits. The November election could be a “It’s the economy, stupid” replay. Once the single party supermajority is broken, little will happen as each side struggles to prevent the other from achieving anything meaningful. Think of the mid-term election as a mid-term grade report on both Congress and the Whitehouse. So far, they seem to be scoring poorly, but November is a long time away.
I believe it will be a year filled with opportunity. I believe it will be a year of recovery. I believe it will be a year of backlash. I don’t believe it will be a smooth year by any means. It will be bumpy.
Many of the positive events of the 4th quarter could be overshadowed in the first and second quarters. The housing market is still a major issue. Banking is still an issue. Lending will remain soft (the most recent Treasury sales were covered fourfold suggesting that banks are still risk averse). With risk comes reward. So bank earnings are likely to lag as they continue to eat toxic assets. One day, the survivors will have potentially explosive earnings. Who they will be and when that will happen is still questionable.
Unemployment will remain high for the foreseeable future. That will keep consumer spending from being a powerful tool for recovery as has happened previously. That will cause the recovery to lag as well.
Jobs, as they return will require better education. The bulk of the jobs will be in growth areas, no surprise there, but the growth areas almost unanimously require education beyond high school. This, for many people AND employers, is a large problem. Although the predictions are that the slow decline in unemployment will keep any pressure on wage growth to a minimum, I submit that there will be a lot of wage growth in the areas most under served. A bidding war for talented qualified people could easily develop and while probably not large enough o affect the overall numbers by much, it could be geographically significant AND significant to you if you are in those fields.
I expect that 2010 will post some gains by year end, but the road from here to there will be anything but direct, straight and smooth. The interim elections in November could have a significant affect in the performance of 2011. Congress must begin to rein in the deficits. The November election could be a “It’s the economy, stupid” replay. Once the single party supermajority is broken, little will happen as each side struggles to prevent the other from achieving anything meaningful. Think of the mid-term election as a mid-term grade report on both Congress and the Whitehouse. So far, they seem to be scoring poorly, but November is a long time away.
As the Year Ends
December 24, 2009
As the year is ending, what do we know about politics and your money. Politics is very much business as usual. The left is enjoying a super-majority in both houses. As a result we will have a new health care program, but we don’t yet know what it will look like. The two bills, House and Senate are vastly different and reconciling them will be a major challenge. How that will happen and what will survive the process is unknown. I think it will be a bad bill, including little real progress but it is a first step toward moving the responsibility for health care from the business world to the government. Whether that will ultimately be good or bad remains to be seen.
Financially we remain in a quagmire. The housing market is showing some signs of stability but it is very fragile. January and February could see some serious problems.
As the year is ending, what do we know about politics and your money. Politics is very much business as usual. The left is enjoying a super-majority in both houses. As a result we will have a new health care program, but we don’t yet know what it will look like. The two bills, House and Senate are vastly different and reconciling them will be a major challenge. How that will happen and what will survive the process is unknown. I think it will be a bad bill, including little real progress but it is a first step toward moving the responsibility for health care from the business world to the government. Whether that will ultimately be good or bad remains to be seen.
Financially we remain in a quagmire. The housing market is showing some signs of stability but it is very fragile. January and February could see some serious problems.
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