By Greg Naylor April was an uneventful month in terms of economic news, allowing the stock market and bond market to continue upwards. Gold prices continued to decline, as commodities in general are enduring a period of falling prices. Here is a re-cap of April by the numbers:
Stocks & Bonds
The U.S. stock market continued its strong start to the year. International stocks are also growing, although the strength of the dollar has dampened their returns somewhat for Americans.
|S&P 500 Total Return||MSCI EAFE||BarclaysAggregateBond||Unadjusted CPI|
Commodities & Currencies
NYMEX crude fell 3.9% in April. Gold fell 7.8% to a close of $1,474 per ounce, down significantly after flirting with nearly $1,700 per ounce last fall. Gold is sometimes seen as a hedge against bad news, and so good news in the stock market in the last few months seems to correlate with declining gold prices.
The dollar index lost 1.52% in April.
The Labor Department reported that the unemployment rate fell to 7.6% in March, but once again this number was less a result of job creation and more a result of Americans leaving the work force (presumably forced early retirement or something like it). The Institute for Supply Management reported that the manufacturing PMI in March fell to 50.7, which shows expansion but the rate has been falling somewhat consistently.
The National Association of Realtors (NAR) reported that the annual rate of existing-home sales in March increased by 10.3% from March 2012. National median prices rose from the prior year by 11.8% to $184,300. Foreclosures and short-sales, as a percentage of overall sales, moved down slightly from 25% in February to 21% in March.
Even as the stock market hits new highs, the next round of bad economic news is starting to show its head. As commodities prices fall, the Producer Price Index (PPI) is showing weakness, and that normally leads into CPI weakness. Deflation continues to be a significant threat. My opinion is that talk about curtailing monetary easing is just that, talk, and that Bernanke might have reason to loosen even further. The fledgling American recovery has yet to absorb the full impact of austerity at home (the sequestration) and economic activity around the world, especially Europe, continues to contract in real terms.
This material was prepared by Greg Naylor, and does not necessarily represent the views of Woodbury Financial or its affiliates. This information should not be construed as investment, tax or legal advice and may not be relied upon for the purpose of avoiding any Federal tax liability. This is not a solicitation or recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. The S&P500, MSCI EAFE and Barclays Aggregate Bond Index are indexes. It is not possible to invest directly in an index.
- www.standardandpoors.com – S&P 500 information
- www.msci.com – MSCI EAFE information
- www.barcap.com – Barclays Aggregate Bond information
- www.cmegroup.com – NYMEX crude prices
- www.bloomberg.com – U.S. Dollar & commodities performance
- www.realtor.org – Housing market data
- www.bea.gov – GDP numbers
- www.bls.gov – CPI and unemployment numbers
- www.commerce.gov – Consumer spending data
- www.napm.org – PMI numbers
- www.coinnews.net – Gold and silver price information
About Greg Naylor: Greg is a partner and co-founder of Fiat Wealth Management, an independent financial advisory firm in Long Lake, Minnesota. He has been investing for over 7 years and enjoys sports, reading, singing, and spending time with family. Greg is a 2004 graduate of the University of Minnesota and lives in South Minneapolis with his wife Kat.