POCKETBOOK: Week ending April 9, 2016

•Recession Risk Light Flashing Yellow

Straight from the mouth of FinancialSense comes this: “Though we are not expecting the US to be entering a recession currently, it is clear that the risk of one has increased meaningfully since last year. In the beginning of 2015, our recession model was showing a very low (1-2%) risk of recession. With deteriorating economic conditions, it is now reading a 15% probability, which is not far below the 20% critical threshold. Once we get above that point, economic weakness tends to accelerate……”

And this: “Corporate profits are also giving a very clear warning signal on the US economy and stock market as well. On a year-over-year basis, the current decline is now steeper than the readings we saw entering the 2001 and 2008 recessions.

“If we look at the data going back to 1950, there was only one instance in 1986 (circled in red) where profits have declined this far year-over-year without the US economy entering a recession.”

Read more and view the graphs at: http://seekingalpha.com/article/3964161-recent-data-shows-u-s-recession-risks-rise?ifp=0&app=1

 

•Market Quick Glance

-Indices:

Here are the year-to-date performance figures for the major indices through April 9, 2016, according to Bloomberg. To provide a longer performance perspective, 1-year returns have been added.

Overall it was a losing ground week for stocks as each of the following indices had lower performance returns at the end of this week than they had the previous week:

–Dow Jones +1.64% YTD

1 yr Rtn -0.10%

-S&P 500 +0.81% YTD

1 yr Rtn -0.46%

–NASDAQ -2.74% YTD—through 4/8/16

1 yr Rtn -1.63%

-Russell 2000 -2.99% YTD—through 4/8/16

1 yr Rtn -11.96%

 

-Mutual funds

Through Thursday, April 7, 2016 the average U.S.Diversified Equity Fund was down1.62 percent year-to-date, according to Lipper. The week before, the average year-to-date return for funds under this heading was only down 0.39 percent.

Small-Cap Growth Funds experienced the biggest losses—down on average 5.74 percent. Equity Income Funds had the highest returns: up 1.72 percent, year-to-date.

Precious Metals Funds continue to rock under the Sector Equity Funds heading. They gained more than 4 percent and closed the week up on average 46.73 percent y-t-d.

Health/Biotechnology Funds got healthier, the average y-t-d performance now off only 10.60 percent. And Global Health/Biotechnology Funds improved as well, now at -9.14 percent.

Under the World Equity Funds heading, Latin American Funds are the big performance winners—now up on average 10.40 percent y-t-d. Japanese Funds, the biggest losers, down 8.66 percent on average.

Visit www.allaboutfunds.com for weekly updates to see how equity and fixed-income funds have rewarded investors over the short-and long-term, based upon Lipper data. Short-term meaning weekly and monthly performance returns; longer-term includes quarterly, year-to-date, 1-yr, 2-yr, 3-yr and 5-yr returns.

Lipper’s weekly performance figures for stock and fixed-income funds are at www.allaboutfunds.com in the left column on the home page.

• So sad….

According to the WSJ, the median pay for 300 of America’s largest corporate CEOs fell  by $400,000 last year. Boohoo. Boohoo.

That’s a drop of 3.8 percent for these top dogs who had a median income of only $10.8 million in 2015—- down from the 2014 level of $11.2 million.

Oh how my heart breaks for these select few most of whom,  I would guess,  have clearly forgotten the value of $1  as that level of income translates to about $900,000 a month.

One more thing: Oddly enough, $10.8 million is the same amount of money businessman Donald Trump loaned candidate Donald Trump during the last three moths of 2015 so businessman Donald Trump could run for president, according to USA TODAY.

BTW, the Donald’s loan is an interest free loan and doesn’t have to be paid back to businessman Donald Trump until December 31, 2016.

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POCKETBOOK: Week ending March 26, 2016

• It’s a bunny market. Really.

Jim Paulsen, chief market strategist at Wells Capital Management, went on record last week referring to current market conditions as neither bearish nor  bullish but bunny-like. You know, hopping up and down in place.

“Unlike an enthusiastic bull or a scary bear, a bunny market hops about a bit but really doesn’t go anywhere, and bunnies have often dominated the stock market during the latter stages of past economic recoveries,” Paulsen wrote in a letter to his clients.

Okay…

 

• Market Quick Glance

-Indices:

There were only four trading days last week as the markets were closed on Good Friday.

Below are year-to-date performance figures for the major indices through March 24, 2016, according to Bloomberg. To provide a longer performance perspective, 1-year returns have been added.

–Dow Jones +1.22% YTD

1yr Rtn -0.20%

-S&P 500 +0.15% YTD

1yr Rtn +0.92%

–NASDAQ -4.34%YTD

1yr Rtn -1.12%

-Russell 2000 -4.66% YTD

1yr Rtn -11.75%

-Mutual funds

Through Thursday, March 24, 2016 the average U.S.Diversified Equity Fund was down 2.03 percent year-to-date, according to Lipper. That’s 50 basis points worse than the previous week’s performance improvement.

Small-Cap Growth Funds were last week’s worst performing category again, down on average 7.93 percent.

Precious Metals Funds lost ground  too but continue to be the high scorer under the Sector Equity Funds heading. They were up on average 38.43 percent y-t-d.

Health and biotech funds are that category’s worst performers. There are 95 Health/Biotechnology Funds that Lipper tracks with an average y-t-d performance of -15.74 percent. The y-t-d average performance of the 42 Global Health/Biotechnology Funds was -12.99 percent.

Visit www.allaboutfunds.com for weekly updates to see how equity and fixed-income funds have rewarded investors over the short-and long-term, based upon Lipper data. Short-term meaning weekly and monthly performance returns; longer-term includes quarterly, year-to-date, 1-yr, 2-yr, 3-yr and 5-yr returns.

Lipper’s weekly performance figures for stock and fixed-income funds are at www.allaboutfunds.com in the left column on the home page.

 

• There’s more junk in today’s corporate debt issuance
  

While we’ve seen positive upward trends within the housing market, the number of people with jobs  and stock prices have made up for a lot of their losses that were a result of The Great Depression, the ratings on corporate bonds haven’t been as fortunate.

According to CNNMoney.com, since 2012, 75 percent of the companies seeking a rating from S&P on their debt securities have walked away with a single-B rating. That’s only “one notch up form the triple-C, a rating given to companies with a high probability of default.”

Throw that into the mix of all things corporate and debt related and the result is that the average rating on U.S. corporate debt has not seen lows like this in nearly 15 years.

Investors looking for the juicy yields found on lower rated bonds need to look further than a company’s bond yields and into how sound the company actually is before investing.

 

• Boat lovers have short attention spans

Who hasn’t dreamed about owning a boat—any sized boat from dingy to a sailboat to a yacht? Getting out on the open seas whenever you’d like conjures up all sorts of  magical images.

But even if you can afford the purchase price, upkeep and cost of fuel, here’s the sad reality: Boat owners only spend an average of 10 to 14 days a year on their vessels, according to a study from the Delta Protection Commission, a California-based state organization.

Now that’s sad.

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