While strong earnings have been in focus and questions still linger about the lacking revenue, companies are driving performance from a much stronger balance sheet lacking much of the debt that was typical, pre-2008. This lean position allows companies to generate better corporate earning s while not breaking records on sales. Eventually leverage will return, but for the good of growing already healthy businesses.
Weak Inflation data, falling .1%, represents cheaper goods for hopefully improved consumption during the 4th quarter. Homes with negative equity fell to 21%. This is a great indicator that we should see stronger inventories in the spring, coupled with sustained lower lending rates, this should yield a strong spring season for residential real estate. A lower jobless claims report was good news; however it’s being watched closely as an indicator of Federal Reserve policy moving forward.
As a first step toward be the Federal Reserve Chairperson, Janet Yellen was approved by the senate banking committee. She will be put to a full senate vote in December and this may very well cause some volatility if her nomination is disrupted.
Internationally, Germany (the strongest of the Eurozone economies) posted an increase in business confidence, signaling a belief in improving consumption over the near term. This is encouraging; given overall Eurozone composite PMI has slipped .04 to 51.5 (over 50 still signals expansion).
Always remember that while this is a week in review, this does not trigger or relate to trading activity on your account with Financial Future Services. Broad diversification across several asset classes with a long term holding strategy is the best strategy in any market environment.
If you would like an in-depth analysis of your current positions and allocation, please feel free to call Jason Roque at 719-313-7536 to schedule an appointment.
Sources: mfs.com, oppenheimerfunds.com, and morningstar.com
* Financial Action, Inc. is a Registered Investment Advisor.