Friday, February 10, 2017

MAD Economic Review - 2/10/17

I sometimes try and put up a good quote from someone famous, or myself. I'm almost famous I swear 😉.  Nonetheless I couldn't find any I liked, nor could I recall some of the great things I said recently. I know slightly big headed of me, but I do come up with a lot of good slogans/phrases for people and their life finances.  Unfortunately I don't write them down all the time, but if it had anything to do with specific numbers I remember it right off the top of my head. Sigh.

Either way I thought I'd give us a new quote. It's possibly been said before as they say "there is nothing new under the sun."

So here it is:

"When life gives you it's biggest challenges that's when you stand up and tackle them head on" 

We have challenges everyday. Such as not wanting to get up out of bed for work during the winter months, procrastinating on un-enjoyable task's, or the worst offense of not paying attention to your finances.

Of course you can have challenges far greater than that.  Whatever they are just make sure you stand up and tackle them with everything you've got. You'll thank yourself later. 

Economic News

There was light economic news this week, but I'll highlight the JOLTS report and U of M's Consumer Sentiment(Is it football season again yet?).  The JOLTS report showed 5.501 million job openings in the country.  Let's assume employers are willing to pay $25/hr for a 40 hour workweek. That means roughly $286 billion dollars in wages are going un-claimed for the whole year. Go get yours! The JOLTS number has been trending down since April 2016's high of 5.845 million, but I'll be looking to see how it trends the rest of the year.  I still can't believe employers are having such a hard time filling positions. But that's a symptom of structural unemployment which means they can't find qualified/trained candidates. I'll have more on job growth and GDP in a post coming out next week, it's a must read. 

The University of Michigan's Consumer Sentiment Index was released with a reading of 98.5 for January 2017. If you're not aware the last time we saw numbers this high was back in the beginning of 2015, and just before the recession started in 2008.

What's interesting to me is the index has risen 33.4% in 4 years from January 2013(73.8) to January 2017's 98.5. That of course is right after Barack Obama was inaugurated for his last term. That's not as rosy at first glance since generally numbers above 90 are correlated with high confidence, and anything from 50-75 is associated with pessimism. It took 23 months from his inauguration for consumers to feel confident enough about the economy for the Index to break above 90 again after last seeing it in 2007.

 In fact it was only during the last couple years of his Presidency when we witness consumer sentiment over 90(21 months over 90 total).  Or in other words only 21.8% of the time did consumers feel good enough to put them in the upper echelons of economic ecstasy during his two terms.  Not to Monday morning quarterback him as he inherited a woeful economy at the time. But the index shows he didn't do a great job of getting American Citizens excited about their economic well-being. I think that's partially manifesting itself into the protests we see now. A lot of Americans never felt the "recovery", and are just angry at everything. As James Carville said "It's the economy stupid."  


We saw the equity markets all notch new highs during the week. Yep that's right. Every single index notched a new all time high this week.  The Nasdaq leads all indexes YTD with a 6.5% gain so far this year. So far 71% of companies have reported and it looks like they've registered 4.9% earnings growth. A lot of people are attributing this weeks gains to Trumps remarks about a "phenomenal" new tax plan.  Let's not get to excited. The tax world moves pretty slow.

Speaking of which make sure you file your taxes early to get your refund if you're due it, and to avert any possibility that someone files a return under your name fraudulently before you can. Remember you can still contribute to IRA's for the 2016 tax year, and if you get a refund consider investing it into an IRA. If you don't have one contact us. MAD Consulting can get you setup with a Traditional and Roth IRA for all your tax season refund needs. You can get started with as little as $3k in some cases so contact us to find out what we can do for you!

While Trump may have been good for the index's overall this week, or so they claim, he wasn't good enough for his favorite loud horn - Twitter(TWTR). The company reported earnings and user growth that greatly disappointed investors, and the shares dropped over 16% in two days. Looks like the Donald doesn't boost all things market related.  This earnings report finally got UBS to change it's rating on Twitter from "Neutral" to "Sell". UBS originally had a "Buy" on Twitter from 9/10/14 which was finally changed to "Neutral" in January'17. Uh a little late there UBS as the stock is down 70% from their original "Buy" rating. Oddly enough the company is trading at one of it's cheapest valuations ever

Bonds were slightly uneventful as they saw most of their action last week with the FOMC meeting.  At last glance the 10 year treasury was drifting around 2.41%. Hard to get excited about government bonds when the S&P is still yielding around 2%.

Have a great weekend everyone!

MAD Consulting

PS. To all my gentleman readers. Don't forget Valentines Day next week.  It marks the 5 year anniversary since my wife and I had our first date. Oh how quickly time flies.

***If you were counting I technically gave 4 tips. The quote, the tax advice, IRA advice, and Valentines advice!

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