U.S. and World News
- Both the House and Senate passed through a one year extension of the U.S. debt ceiling that will extend the government’s borrowing authority until March 16, 2015. The measure was passed without any additional conditions, although there had been plans by the Republicans to link a debt ceiling extension to restoring cuts to military pensions. The legislation is now due to be sent to President Obama for his approval.
- The government has announced yet another delay to an important part of Obamacare, saying that businesses with between 50 to 99 full-time workers won’t be mandated to provide health insurance to their workers until 2016. Larger companies will have to cover at least 70% of employees by 2015 and 95% by 2016. The original plan was for companies to offer coverage this year, but in July, that was delayed until 2015.
- According to a Wall Street Journal study, there are around 4.8 million people aged 18-64 that get no government help to buy medical insurance because they earn too little to qualify for federal subsidies. However, they earn too much to receive benefits under state programs. The gap is the result of 24 states (Illinois is not one of them) deciding not to expand Medicaid coverage under the Affordable Care Act. Some states are revisiting their policies in order to cover the gap.
- New Fed Chair Janet Yellen, had her first congressional testimony in her new position this week and reiterated the Central Bank’s pledge to retain super easy monetary policies and reiterated that any action the Fed will take is data dependent. The Fed will have their next policy meeting in March, so there will be plenty of economic data, including another jobs report, which will be released before a decision needs to be made on continuing the path of tapering asset purchases.
- Stock markets climbed higher this week as the S&P 500 ended up 2.38%, closing at 1,839 and the Dow Jones rose by 2.45%, closing at 16,154. So far in 2014, the S&P and Dow are down 0.53% and 2.55% respectively.
- Treasury yields started to rise again this week with the 5 year and 10 year treasury now yielding 1.53% and 2.75% respectively.
- The spot price of WTI Crude Oil increased this week by 0.45%, closing at $100.33 per barrel. Oil prices are now up 1.81% in 2014.
- The spot price of Gold rallied again this week, gaining 4.06% and closing at $1,318.69 per ounce. Year to date, Gold prices are up 9.74%.
- Initial jobless claims rose by 8,000 from last week, coming in at 339,000 vs. consensus estimates of 330,000. The four week moving average for claims rose to 336,750. The Labor Department noted that there were no special factors affecting last week’s claims.
- January retail sales were a significant disappointment, declining by 0.4% vs. expectations that they would be flat for the month. Adverse weather conditions certainly played a role, with weakness seen at department stores as well as restaurants and bars. However, non-weather sensitive categories, such as online sales, also showed weakness and declined 0.6% for the month.
Fact of the Week
- The total number of listed stocks on public exchanges reached an all-time high of 8,823 in 1997. At the end of 2013, this number had fallen to a mere 5,008 companies, a 43% decline in the number of listings. The bursting of the Tech Bubble from 2000-2002, increased costs associated with being a public company after the Sarbanes-Oxley Act was passed and the rapid rise of the private equity industry are likely some factors reducing the number of listings. This phenomenon, combined with the decline in shares outstanding of companies that have remained public (through share buybacks), have contributed to reduce the total investment options available in the market and may be a significant factor in the rapid rise in stock prices since 2009.
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