Economic and Investment News Bits
- What a difference a month makes! It has been a tough year for both the stock and bond markets. Many factors have played a part in the higher volatility and flat-to-lower values. Through the end of September, domestic and international stock indexes were down at least 5-7%. Then, in a surprise to most investors, October happened, and the same indexes gained 6-8%. Commentators noted the August-September selloff was perhaps too severe, and that October’s rally was overdone, too. If history is any guide, markets could rally to the previous highs, helped along by the so-called Santa Claus Rally between Christmas and New Year’s Day. Just don’t bet the house on it.
- Over the last 20 years, the stock market has tended to react positively to Fed rate-hike cycles. This is because decisions to raise rates have come during periods of strengthening economic growth, an environment the Fed is forecasting for the next few years. And robust growth is good for corporate sales, profits, and stock prices. (Source: Federated Investors)
- “In China, we view the moderation of economic growth as an inevitable normalization for an economy of its size. Its GDP is now three times the size of what it was 10 years ago. Thus, a lower rate of growth still represents a massive level of global demand,” (Source: Franklin Templeton Investments).
- Driven by a growing belief that investing responsibly does not mean sacrificing returns, demand for ESG (environmental, social and corporate governance) funds has risen considerably.
- The list of top cities for millennials includes high-rent and high-expense cities like San Francisco (average new housing rent exceeding $5,000 per month), New York, and Washington D.C. When screening for best value locations, along with other factors, the high-cost cities are replaced by Chicago, Minneapolis, Pittsburgh, Columbus, Austin, and Raleigh-Durham. (Source: Forbes)
- “The Paris attacks will accelerate resistance to immigration in the European Union. Lack of border controls is a huge point of contention and could be abolished,” according to Stratfor Global Intelligence. Here at home, a similar attack could have a major impact on the 2016 national election.
Thought for the week
“Life is like a game of cards. The hand you are dealt is determinism; the way you play that hand is free will.”
Jawaharlal Nehru, Indian leader (1889-1964)
Charitable Giving Can Be Intelligent Giving
This is the time of the year when many people make their charitable giving decisions. It is important to know how much of the donation will go to the cause itself, how much goes to raising the dollars, and what portion will go to the charity’s operating expenses. There are three main charity watchdog agencies: the American Institute of Philanthropy, Charity Navigator, and the BBB Wise Giving Alliance. Although each uses a different methodology for rating charities, they all use the financial documents filed by the charities. Many smaller, local non-profits are not included in the ratings, but these are organizations with which donors are most familiar and may know very well. National organizations that solicit by phone, television ads, or email should be checked. Never commit dollars over the phone unless you are a current giver and the organization has your information. Never give your credit card or bank information or over the phone, except to confirm what a charity already has on file. Be generous and smart in your giving.
Chart For November (CLICK TO ENLARGE)
The above chart from dshort.com illustrates the growth rate of labor force participation by six age groups since the year 2000. The most striking feature is the huge growth in the number of persons age 65 or older who are continuing to work, the only group with a significant gain. But we also see a noticeable decline for the youngest group. A significant driver of this downward trend has been the decision to stay in (or go back to) school for more education. Supporting evidence is found in the massive growth of student loan debt that has been well documented.
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