It’s been an interesting and eventful start to the New Year. The DOW closed 2013 at an all-time high; the strongest year of the 5-year rally. January is considered a barometer for investors. There’s an old Wall Street adage, “As goes January, so goes the year“. And the stats usually support it. The last 3 years saw the Dow positive in January and positive for the year. Since 1896, a positive January has led to a positive year roughly 75% of the time. It’s worth paying attention to, and perhaps provides for interesting chatter.
So far, January has brought some surprising events. Retail sales have come in at the low end, showing that the holidays weren’t as strong as store owners hoped. But online sales have been jumping, so the consumer is still spending, albeit more selectively and with greater convenience. A big surprise came Friday with a stunning jobs report, which reflected only 74,000 jobs created in December, nowhere near the 200,000 estimate. The unemployment rate fell to 6.7% from 7%, but can be explained by people leaving the workforce. This was a bit of a shocker since we’ve seen such traction with economic data over the last few months. Bonds are rallying as interest rates are falling following the jobs report. We mentioned in our recent Winter Newsletter that we liked the Bond Market again for the first time in a couple of years and have been buying more bonds. Stocks are holding in like flint, still near all-time albeit slightly in the red for this young year. Ironically, the concern in December (just 10 days ago) was economic over-heating. Now some are wondering if things are stalling. New Fed Chair Janet Yellen’s going to be busy.
Global Markets continue to be mixed. Europe has shown definite signs of strength in recovery, while China’s recovery has been bumpier. We are watching international markets closely, as they have underperformed the United States, and might be ripe for investment again this year. China might have just become the world’s largest trading country after the value of its imports and exports increased 7.6% to over $4 Trillion in 2013. The U.S., which has held the crown for decades, hasn’t released its 2013 figures yet, but the first 11 months are tracking below $4 Trillion for the year. It’s been a bumpy go for China for 5 years now. The new regime seems focused on growth. Accelerating growth in China would kick start the rest of the world into a higher gear. It’s been missing. Perhaps 2014 is the year for China’s return.
January also means Football. Last week’s Niner game in frigid Green Bay was the most watched Wild Card game in history. Now they take the show to Charlotte in hopes to get to the NFC championship. We’ll be watching.
It will be interesting to see how the rest of the month plays out. We’re all over it. Have a nice weekend. We’ll be back dark and early Monday morning. Go Niners.
By Mike Frazier
