Market Update

Market UpdateDeclining interest rates and energy prices, combined with a strong dollar, rising employment and corporate earnings have made the U.S. a desirable destination for investors.  Along this line, the Dow Jones Industrials and S&P 500 have been setting record highs, and U.S. stock market has seemed almost impervious to any of the bad news that has plagued overseas market.  

However, as we enter the Holiday season we've seen stocks jump and down like kids waiting in line to see Santa.  U.S. stocks were negatively impacted by some of the following news from overseas:

Lower oil prices are increasingly hurting energy related stocks.

European countries are seeing sluggish to negative economic growth and Greece’s stock market tanked Tuesday due to concerns about upcoming election outcomes and the possible negative setbacks they'd have for Greece and the rest of the European Union.  As a result, we may see more of these volatility hiccups in the next couple of weeks as energy volatility continues and events unfold in Greece.

Separately, on Tuesday, China' s Shanghai Composite Indexlost 5.4% as a result of the Government banning investors from using low-grade corporate debt as collateral to borrow cash. China is tightening its lending standards  while facing slow growth ahead.

Ironically, this overseas news overshadowed an article that published late Monday in The Wall Street Journal. The article noted that Fed officials meeting next week will likely affirm a plan to start raising short-term interest rates in 2015 and are debating losing a key phrase, that rates will stay low for “a considerable time.”

This report comes on the heels of Friday’s U.S. jobs report, which indicated wages are picking up again and the economy is returning to some sort of normalcy.  Meanwhile, job openings at U.S. workplaces jumped up to 4.83 million in October, reaching close to the highest level since early 2001, from 4.69 million in September, the U.S. Department of Labor reported Tuesday.

The markets should be reading this as a sign the economy is recovering well and no longer needs such central-bank support, said Craig Erlam, market analyst at Alpari U.K., in a note.

“However, with stock markets trading at record-high levels as investors search for yield and Treasuries also trading near highs, the actual reality is that we may need to see markets correct, something all investors appear to be perfectly aware of and fearing,” he added.

In a separate report, small-business sentiment reached a seven-year high in November, as expectations for business conditions in six months surged and expectations for real sales volumes also gained, the National Federation of Independent Business said Tuesday.

Overall U.S. stocks have shrugged off any problems overseas, gasoline and natural gas prices are down and saving consumers money.  In addition, interest rates are far below where anyone would have predicted at this stage.  Thus, we may see more volatility in the stocks and maybe even bonds, but I don't think they will be material enough to ruin your holiday season.  So far, things are looking positive as we exit 2014 and 2015 may be another positive year for investors.  As such, do not let market volatility concern you in the near term. It would not be unexpected and long overdue, but instead, enjoy some eggnog and Christmas cookies!

For another perspective on what is occurring in the market, watch this video:  Market slide setting up for Santa Claus rally.

Better Tax Strategies for Business Owners

Tony Moeller, CPA, has a feature article, "Better Tax Strategies for Business Owners", published in the December 2014 issue of Thinking Bigger Business magazine.  Click here to read the article.

Quotes    

"I'm staying in shape this winter by wearing enough layers to be constantly sweating."                  

                             Unknown

" I once bought my kids a set of batteries for Christmas with a note on it saying "toys not included."

                             Bernard Manning

Quotes selected by the IAG staff

" Great things are done by a series of small things brought together."

                             Vincent Van Gogh

" May your walls know joy, may every room hold laughter, and every window open to great possibility."

                             Mary Anne Radmacher

Tony Moeller, CPA

tmoeller@integrity-advisory.com

The information listed in this commentary is a compilation of various publicly available sources and is for informational purposes only. It is not a recommendation or solicitation of any particular investment or strategy. A risk of loss is involved with investments in the stock and bond markets.

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