- This week Treasury Secretary Jacob Lew said that Congress has until late February to lift the $16.7 trillion debt ceiling to avert a U.S. default. The cap is suspended until February 7th, after which the Treasury can move money around for a few weeks before running out of cash. The question becomes how contentious the debate will be with issues such as a decision on the Keystone XL Pipeline potentially playing a role in the negotiations.
- Stock markets were decidedly down this week as the S&P 500 ended the week off by 2.62%, closing at 1,790 and the Dow Jones fell 3.50%, closing at 15,879. So far in 2014, the S&P and Dow are down 3.14% and 4.21% respectively.
- Treasury yields continued to fall this week. The 5 year and 10 year treasury now yielding 1.56% and 2.73% respectively.
- The spot price of WTI Crude Oil rose this week by 2.37%, closing at $96.83 per barrel. Oil prices are down 1.75% in 2014.
- The spot price of Gold rose a bit this week, gaining 1.18% and closing at $1,268.83 per ounce. Year to date, Gold prices are up 5.59%.
- Initial jobless claims were roughly unchanged from last week, coming in at 326,000 vs. consensus estimates of 330,000. The four week moving average for claims fell by 3,700 to 331,500. The Labor Department noted that there was nothing unusual in the data this week as we exit the holiday season.
- Existing home sales rose 1.0% in December, better than expectations of a 0.6% gain. The December gain was the first in five months and was consistent with a general pickup in housing market activity following a soft patch in mid-late 2013.
- 4th quarter earnings season is underway with around 33% of the S&P 500 Index having reported. A few observations so far:
- Revenue figures have surprised to the upside more than usual but this hasn’t translated to more positive earnings surprises as usual.
- A disproportionate number of the positive revenue beats have come from the Technology sector, although several of the companies proceeded to provide lower guidance for next quarter.
- Previously a drag on earnings, pension adjustments are having a positive effect on the bottom line for many companies as the health of their defined benefit plans improve.
Fact of the Week
- According to a study by the Employee Benefit Research Institute, 47% of retirees left the workforce sooner than they expected, often times the result of health issues, disabilities or corporate downsizing. Only 7% of those individuals who retired earlier than they anticipated did so because their retirement accumulation was larger than expected.
Please contact a member of the Wealth Management Department if you have any questions about this information.
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