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Thankful For Progress
Weekly Update – November 19, 2012
As you gather with your family and friends this week, we urge you not to let anxiety over
the fiscal cliff or sovereign debt problems in Europe distract you from what matters
most. Turn off CNBC and close the Wall Street Journal for a few days. Use the
opportunity to recharge your batteries. There’ll be plenty of time to watch the news later.
To help you with this, we thought it would be nice to share a few positive things worth
being thankful for.
Progress towards a fiscal compromise: The latest word is that the White House and
Congress have committed to short negotiations, with the goal of achieving a fiscal cliff
resolution before the New Year. This is welcome news and we hope we’ll begin to see
business leaders opening their wallets and making big investments in hiring and growth
soon.1 Markets slid during the early part of last week, but rallied Friday on this news. 2
Resilient markets: Despite what we’ve been through in the past few years, U.S.
markets are still performing well – the Dow is still up 3% for the year and 3.5% since last
year, when economists worried that we might be facing a double-dip recession. With
consumer sentiment running high and investors feeling renewed confidence in
Congress, we may still see additional upside this year.3
A recovering economy: Our economy has suffered some serious pain in the last few
years, but is still chugging along. Currently, we have a housing market that is bouncing
back vigorously, a decreasing unemployment rate, and recovering industrial output. Our
economy still has a long way to go before it can be considered fully recovered, but
trends are pointing to continued improvement next year if we can get past the fiscal
cliff.4
Looking ahead, despite the holiday-shortened trading week, markets could still see
some action. Housing data will be released Monday, and Ben Bernanke is scheduled to
speak Tuesday (analysts expect his remarks to address the economic recovery and
tight consumer credit markets). The day after Thanksgiving, Black Friday will mark the
start of the holiday shopping season and traders may have time to react to any early
revenue announcements.5 European analysts expect the next round of Eurozone aid to
Greece to be announced this week, so we may see some movement in currency and
European markets too.6
ECONOMIC CALENDAR:
Monday: Existing Home Sales, Housing Market Index
Tuesday: Housing Starts, Ben Bernanke Speaks at 12:15 PM ET
Wednesday: Jobless Claims, Consumer Sentiment, EIA Petroleum Status Report
Thursday: U.S. Markets Closed for Thanksgiving Holiday
Friday: U.S. Markets Close Early
Data as of
11/16/2012
Standard &
Poor's 500
1-Week
Since
1/1/2012
1-Year
5-Year
10-Year
-1.45%
8.13%
9.94%
-1.36%
4.95%
DOW
-1.77%
3.03%
3.58%
-0.89%
4.67%
NASDAQ
-1.78%
9.52%
8.09%
1.64%
10.22%
MSCI EAFE
-1.34%
7.62%
8.39%
-5.10%
4.33%
10-year Treasury
Note (Yield Only)
1.61%
N/A
2.02%
4.15%
4.05%
Notes: All index returns exclude reinvested dividends, and the 5-year and 10-year returns are annualized.
Sources: Yahoo! Finance, MSCI Barra. Past performance is no guarantee of future results.
Indices are unmanaged and cannot be invested into directly. N/A means not available.
HEADLINES:
Superstorm Sandy depresses industrial output. U.S. industrial manufacturing output
fell in October as Sandy disrupted production and transportation across the Northeast.
The storm is estimated to have reduced output by 1%; however, the underlying tone of
production remains consistent with estimates.7
Next round of Greek aid expected this week. According to remarks by Italian officials,
Eurozone leaders will reach a compromise with Greece within days. Greece has already
been granted an additional two years to reach austerity goals and European leaders will
meet to discuss funding requirements for the next tranche of aid money.8
Business inventories rise in September due to high stocks of automobiles.
Excluding the automobile stocks, inventories were flat for a second month, meaning that
economists may have to lower third-quarter GDP estimates. Business inventories form
a key part of GDP estimates.9
China’s biggest future threat is inflation. According to a Chinese central bank
governor, the biggest risk to China’s transition from a planned economy to a marketbased one is inflation. Without careful management by central bankers and deep
financial reforms, overspending by local and regional governments could overheat the
economy.10
QUOTE OF THE WEEK:
"Once you choose hope, anything's possible." - Christopher Reeve
RECIPE OF THE WEEK:
Cider-Roasted Vegetables
A healthy and delicious side dish to share with family and friends. From
RealSimple.com
Ingredients:
1 1/2 pounds beets (1 bunch), peeled and cut into wedges
1 1/2 pounds parsnips, peeled and cut into 2-inch chunks
1 1/2 pounds baby carrots, peeled (or 1 1/2 pounds carrots cut into 2-inch chunks)
4 tablespoons brown sugar
4 tablespoons olive oil
2 tablespoons apple cider vinegar
1 pound white button or crimini mushrooms, cleaned and stemmed
Directions:
1. Heat oven to 450° F. Place the vegetables in two small roasting pans.
2. In a medium bowl, whisk together the brown sugar, oil, and vinegar. Pour over the
vegetables and toss to coat well.
3. Cook until tender, about 1 hour, stirring halfway. Add the mushrooms during the last
10 minutes, toss to coat well, and finish roasting. Season to taste with salt and
freshly ground pepper.
Make ahead tip: The roasted vegetables can be kept at room temperature up to 2
hours in advance or refrigerated up to 1 day in advance. Reheat from room temperature
at 350° F to 400° F.
GOLF TIP OF THE WEEK:
Hit high, not low.
It is a fairly common misconception that high shots are less desirable than low
screamers. Note however that great golfers hit high shots not low. On the pro tour in the
sixties, there was a saying: “High, Higher, and Highest”, and there is some truth to that
saying. Great shots tend to launch high and long. Low shots are preferred only in windy
or bump and run conditions. Remember that ground and grass create friction and
resistance that slow a ball down faster than air. There’s nothing wrong with hitting
monster drives. Don’t be ashamed for trying!
HEALTH TIP OF THE WEEK:
Boost Memory with a Mid-Day Nap
Surveys show that more than half of people aged 65 and older nap at least twice a
week. Turns out, they might have the right idea. Researchers have found that taking a
daily nap improves mental recall and problem-solving skills.
GREEN TIP OF THE WEEK:
Frugal Green Cleaning
Ask any group of friends about living a greener lifestyle and you’ll often hear complaints
that it’s too expensive. A quick check of the cleaning aisle shows that specialty cleaners
often cost 50% more than regular household brands and can really put a dent in your
wallet. But, don’t despair. Good old-fashioned products like baking soda, vinegar, and
lemon juice can be used to clean many of the surfaces in your house and cost pennies
per application.
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potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining
values.
Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect
against loss in periods of declining values.
Diversification does not guarantee profit nor is it guaranteed to protect assets
The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock
market in general.
The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock
Exchange and the NASDAQ. The DJIA was invented by Charles Dow back in 1896.
The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the
performance in major international equity markets as represented by 21 major MSCI indexes from Europe, Australia
and Southeast Asia.
The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is
seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
The Housing Market Index (HMI) is a weighted average of separate diffusion indices based on a monthly survey of NAHB
members designed to take the pulse of the single-family housing market. Each resulting index is then seasonally adjusted
and weighted to produce the HMI.
The Pending Home Sales Index, a leading indicator of housing activity, measures housing contract activity, and is based on
signed real estate contracts for existing single-family homes, condos and co-ops. The PHSI looks at the monthly
relationship between existing-home sale contracts and transaction closings over the last four years. The results are
weighted to produce the index.
The Chicago Board Options Exchange Market Volatility Index (VIX) is a weighted measure of the implied S&P 500 volatility.
VIX is quoted in percentage points and translates, roughly, to the expected movement in the S&P 500 index over the
upcoming 30-day period, which is then annualized.
The BLS Consumer Price Indexes (CPI) produces monthly data on changes in the prices paid by urban consumers for a
representative basket of goods and services. Survey responses are seasonally adjusted and weighted to produce a
composite index.
The Conference Board Leading Economic Index (LEI) is a composite economic index formed by averages of several
individual leading economic indicators, which are weighted to produce the complete index.
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Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future
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Past performance does not guarantee future results.
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1
http://www.boston.com/news/politics/2012/11/16/leaders-express-hope-fiscal-cliff-willaverted/qCwdvQP7aJZtfqUDZu254N/story.html
2
http://www.briefing.com/investor/markets/weekly-wrap/weekly-wrap-for-november-12-2012.htm
3
http://finance.yahoo.com/news/analysis-us-consumer-stocks-cheer-140135146.html
4
http://www.cfr.org/geoeconomics/quarterly-update-economic-recovery-historical-context/p25774
5
http://www.marketwatch.com/story/budget-talks-black-friday-may-sway-us-stocks-2012-11-17
6
http://www.cnbc.com/id/49849300
7
http://www.cnbc.com/id/49853484
8
http://www.bloomberg.com/news/2012-11-15/grilli-confident-eu-will-reach-agreement-on-greek-aid-next-week.html
9
http://www.cnbc.com/id/49820475
10
http://www.cnbc.com/id/49864808