We are over 60 percent of the way through Q1 earnings season. So far, nearly 73 percent of S&P 500 companies have beat expectations, with an average beat close to 7 percent above the consensus. What’s more, year-over-year [Y/Y] earnings growth is running around 6 percent on some pretty tough comparisons [19 percent Y/Y in Q12011, 50 percent Y/Y in Q12010].
There is never a shortage of public opinion, and the stock market is no exception. An exhaustive search it ain’t to find a pundit standing on a soapbox … with a strobe light … and a megaphone.
The S&P 500 Index is up over 8% this year so far. As Q4 2011 earnings “season” wraps us, pausing for a moment to investigate the big picture of how businesses are doing is an important step in assessing the health of the economy and the market.
According to our research, the last time the Fed held an explicitly capped interest rate policy [i.e. “rates held low until mid-2014”] was in 1945-51 [which ended with the Federal Reserve-Treasury Accord]. During this period, the 100 S&P 500 stocks with the highest dividend yield well outperformed the 100 with the lowest yields, as well as a good portion of the group with no yield. 2011 witnessed a run in strong dividend payers [utilities, health care, etc.]. Now in 2012, many have stated that these stocks will become laggards.
Friday’s January Employment Situation report showed strong gains. Across most measures the release told an encouraging story in U.S. labor. On the surface, 234,000 jobs were added last month with the prior two months [combined] enjoying a bonus of 60,000 more jobs than previous thought. We have been and continue to be sanguine on continued upward revisions as economic history tells us that they typically follow broad labor trends. Meanwhile, the unemployment figure dipped to 8.3%, the lowest in 3 years. The 234,000 net gain was the best addition since last April and marks the 16th straight month of job gains.
Deciding what social security benefits to take can be a complex decision for your family. Understanding the trade-offs for taking one benefit verse the other is an important evaluation before electing your benefit.
The wild stock market volatility of 2011 has been difficult for many long-term investors to stomach. It would be a mistake, however, to overreact. Volatility in and of itself does not automatically foretell a downtrend in the market. Using history as our guide, the sharp volatility will likely ease at some capricious point, and provides investment opportunities in the interim.
Evaluating your investment options is critical to financial success. Below, Albion Wealth Advisor Devin Pope explores a strategy that could prove beneficial; a strategy that many may not even know exists.
Jason Ware
Market Strategist, Analyst
(801) 487-3700; (877) 487-6200
The economy continued along its modest recovery path with the BLS’s November Employment Situation report. Out in front was the headline 8.6% unemployment statistic boasting a 0.4% drop from October. More important is its psychological significance – the rate fell under the 9% line for the first time in 26 months [March 2009]. While that may sound like a whiz-bang report, not everything contained in it was so strong.
The below entry was penned by Devin Pope, a financial advisor here at Albion. I found the information concise and insightful speaking on a topic that is often anything but – bond taxation.