August 31, 2009, 2009 Edition, Volume III
Inside Signature Update
- Confirming Data of Recovery
- Retiree’s Impact on Unemployment
Confirming Data of Recovery
The range of economic news in past weeks has confirmed a recovery trend that began several months ago. While 2nd Quarter GDP fell by 1%, it is likely that the first two months of the quarter actually posted declines with the last month, June, offering real growth. While there are still valid concerns over the state of the economy, it appears that we are well on our way to stability and growth patterns that should fully develop in 2010.
Though federal stimulus programs have yet to provide meaningful benefit to the economy, it does appear that consumers are beginning to breathe a sigh of relief. Personal incomes are up slightly, consumer confidence has improved, unemployment is just beginning to lessen its grip on the nation and the stock markets have posted impressive gains.
Interesting to note, President Obama is experiencing his lowest approval rating to date and his numbers are trending lower than even some of the country’s least popular presidents at this point in their presidencies. His recent re-appointment of Ben Bernanke may have won him some favor with the capital markets, but likely cost him within his own party. Without question, the ongoing battle over health care now being waged in the house, senate and media has put pressure on both congress and the administration to make decisive action.
New home sales increased by 9.6% in July over June 2009, and 13.4% when compared to July 2008. At the current sales rate there is now just over 7.5 months of new home inventory on the market, nearing the healthy 6 month level. Existing home sales posted increases in recent months to bring inventory levels down to less than ten months. Though there is some threat of banks holding foreclosed inventory continuing to feed that inventory into the market, most expect continued improvement in both the volume of sales as well as sales prices. California and Nevada, two of the hardest hit markets have already marked a bottom in their housing prices and have seen meaningful month-over-month increases.
Profits from current production (corporate profits with inventory and capital consumption adjustments) increased in the 2nd Quarter 2009 to $67.6 billion from $59.1 billion in the 1st quarter. Many consumers write this off to big business simply expanding their profit profile, but in truth, the US economy is dominated by small business and they’re often the first to feel economic improvements.
July durable goods orders were up 4.9% in July over June and sales of manufactured goods were up .9% in June over May. These increases were posted in spite of manufacturing inventory continuing its downward trend by 1.1%. Increasing sales figures in the face of decreasing inventories represent purchasing levels sufficient to consume newly manufactured product as well as inventory manufactured in earlier months. Business inventory/sales ratio now stands at 1.38 (scale of 1.1 – 2.00), lower than at any time since January 2000 and has been on a steady decline since January 2009.
Consumer Confidence Index (CCI) level up to 54.1 over 47.4 in July as the Consumer Price Index (CPI) declined 2.1% in the last 12 months. Anything over 50 on the CCI is positive. Producer Price Index (PPI) declined .9% in July in the face of increases in energy prices; not enough of a decrease to signal a concerning level of deflation, but an important indicator that inflation pressures continue to be held at bay.
New jobless claims were down to 577,000 from over 630,000 only a few months ago with the overall unemployment level resting at 9.4%. The 53,000 claim decrease may not seem significant in the face of 9%+ unemployment, unless of course you’re among those who returned to work or survived a lay off.
Personal Income (PI) increased in July by $3.8 billion or .1%, but the increase was more than offset with a decrease in Disposable Personal Income (DPI) of $4.6 billion (.1%). The DPI increase appears to have been due to a slight increase in energy (fuel) costs and the increase in transportation costs wrought by the ‘Cash for Clunkers’ program.
The US equities market (stock) extended its rebound to over 9580 on the DOW and 1030 on the S&P 500 by 8/28/2009: up 17%+ since May. Those detractors promoting a ‘sell in May and go away’ strategy would have missed out on the largest portion of the rally. Though some traders are concerned that the current market levels could give way to a 6-8% correction by the end of September, others insist the recovery in the stock market is yet more stable than that of the economy as a whole. First Trust’s Brian Wesbury offers strong evidence for support at these market levels in his recent ‘Wesbury 101’ video commentary – worth taking the time to review.
http://www.ftportfolios.com/Commentary/EconomicResearch/2009/8/26/this_is_not_a_sugar_high
Retiree’s Impact on Unemployment
Many of us have read articles or seen news magazine coverage of how the decline in the stock market may have motivated some would-be retirees to postpone retirement. With decreased corporate participation in pension funding and a shift towards dependence on 401(k) and IRA investing, many Americans have felt the need to postpone or alter their retirement plans, but a new study suggests that declines in the investment markets are only one of a number of factors influencing this decision.
Fears over the general state of the economy, the potential impact of the current administration and congressional agendas, concern for the future of Social Security and Medicare, and dramatic decreases in residential real estate prices have caused many to postpone retirement or seriously alter what their retirement may look like. Though we’ve certainly endured periods of time during which one or two of these elements have been present, we’ve not had this level of uncertainty since the 1930’s, and its now becoming apparent that a slow down in the rate of retirement is having a major impact on the employment markets.
Unemployment rates have increased due to lay offs, corporate hiring freezes and the dramatic slow down in the housing market, but data is now showing that as much as 2% of the 9.4% unemployment rate may be caused by older workers who would normally be expected to retire and free up space in the workforce are extending their employment. In addition, more retirees than ever before have re-entered the labor market and are now filling positions previously occupied by other younger workers.
It's difficult to get a firm read on just how impactful this trend has become, or how far it might extend, but its certain that the job openings expected to be left in the wake of the baby boom generation’s retirement phase won’t be as numerous as expected. Worse still, it may represent a serious drag on reducing the current unemployment rate and that will have a detrimental impact of overall economic growth by some margin.
Signature Update is offered by Richard Haskell, Managing Director of Signature Wealth Management and CEO of Signature Management, LLC
Monday, August 31, 2009
Tuesday, August 11, 2009
Just What Are We Reforming?
August 11, 2009, 2009 Edition, Volume III
Inside Signature Update
- Just What are We Reforming?
Just What Are We Reforming?
Part One of Two
One can’t pick up a newspaper or turn on the television without getting a glimpse of the ongoing debate regarding healthcare reform. The American healthcare system is enormous and represents some $2.5 trillion in annual GDP. It is expensive, seems to favor the upper and middle class, and oft times provides a less than certain outcome. It is also the finest in the world; contrary to some media reports. The critically ill across the globe turn to American medical centers and physicians trained at domestic universities and hospitals, and depend on medical procedures and pharmaceutical products stemming from American-led research. It’s not that other countries don’t produce important medical talent and technology, but the standard of care and cutting edge developments being used by doctors and hospitals across the
The problems faced in healthcare today are not as many of our elected leaders would have us believe. Certainly there is the issue of providing coverage for an increasing number of uninsured and underinsured, but there are other fundamental issues that are not being adequately addressed. Among them are American’s expectations of the healthcare industry, our lack of willingness to accept our personal responsibility, the increase in the provision of unnecessary procedures in an attempt to avoid potential liability, the interest of some of our elected representatives to reduce compensation to healthcare providers and researchers, and the need to deal with the looming insolvency of Medicare.
What appeared incurable only ten or twenty years ago is now often managed by a simple pill. Surgeries that may have taken weeks from which to recover and required lengthy hospital stays are now sometimes done on an outpatient basis with the patient often being able to return to their normal lifestyle patterns within days. Rather than undergo ‘exploratory surgery’ as may have been done only twenty to thirty years ago, an ailing patient is now able to lay still as a machine creates three-dimensional, full-color images of virtually every portion of the body in minutes. This is not only performed in a major hospital, but can be found in shopping malls and mobile medical units, as well as most hospitals and clinics in the country. The unimaginable has become fantastic and attainable, miraculously real, and it has come at a cost. For those longing for healthcare costs to decrease to the levels experienced in the 1950’s to 1970’s, I only suggest they also consider accepting the level of care attainable at that time.
Miraculous medical procedures and drugs have become so real, so expected in our society that too often our physicians lead us towards treatments that may be cutting edge, but for which the outcome may be less certain than many expect, and for which the expense is considerable. The range of motivations for physicians to consider such treatments may range from a sincere attempt to provide outstanding care to a desire to push revenues. It is often the consumer who seeks advanced treatment, expecting modern miracles to be their benefit. In the end, many patients are not better off than they may have otherwise been and the cost of treatment may have gone from expensive to excessive.
My children are now at the age that they are having their own families. It amuses me when I find that they have named their children months in advance of the infants’ birth. But when one stops to consider that they know the sex of the child, have seen full-color images detailing fingers, toes and facial features, and have listened to their baby’s heartbeat on numerous occasions, then it seems normal to have named their baby. When my wife and I were having our children we could only guess at whether we would have a boy or girl. With our first, whom I call ‘Junior’ to this day, my wife’s doctor was sure we were having a boy, so much so that he convinced us we should paint the nursery blue and decorate for a child who would be my namesake. No one was more surprised than he when Jessica was born rather than Richard. Richard came years later, but by then we had stopped even venturing a guess, well enough assigning a name or decorating preference. Along with Rebecca, Lauren and my grandchildren, they are the delights of my life.
We think these kinds of advancements commonplace today, but they aren’t. They have come at extraordinary expense, and by bringing together the finest and most advanced talent and technology in the world. Just as any consumer wants the best of what they see, people want, and have come to expect, the highest, most advanced level of healthcare attainable, regardless of the price. Healthcare appears to be the only consumer good with no consideration of budget; after all, what is the value of good health, being free of pain, or of a human life? Virtually impossible to assign without risking being seen as cold and calculating. The cost of providing care increases faster than most other costs around us, and unless we are willing to accept less than extraordinary care, we must be prepared to deal with extraordinary costs. The rising cost of healthcare in this regard is less of a problem than it is the natural byproduct of innovation and advancement and there is little to reform.
It’s understandable that our expectations have increased and that we all want the best care. As such, we simply need to accept the higher price, or be prepared to make budget-oriented decisions such as when we are purchasing an automobile or choosing where we might have dinner on a night out. Unfortunately, some don’t understand this concept and their defenders now seek a solution to a problem they are unwilling to fully appreciate. In many cases, the same individual who complains about having to pay $500 to $800 a month for full-featured healthcare coverage, or is unwilling or unable to pay what can be hundreds more for adequate life insurance coverage, will defend their ‘right’ to expect an insurance company to pay millions of dollars in medical expenses in an attempt to save their life or that of a family member. Where do we draw the line between having economically reasonable expectations versus natural, understandable emotion? Moreover, is it responsible to expect taxpayers and other insureds to pay the bill? Difficult to say and subject to personal values and judgments: where is the biblical King Solomon when we need him?
We live in an age of disparity, a time during which many have chosen to take extraordinary care of themselves while others abuse their bodies in every conceivable manner. Communities abound with fitness centers and fast food outlets alike, and never before have either been more frequented. We’ve accommodated better health awareness through various campaigns against the evils of smoking and drugs, while at the same time making it easier than ever to consume a 1200 calorie lunch and continue to glamorize the consumption of harmful amounts of alcohol and drugs. These elements, and many others, have direct bearing on the cost of our healthcare and medical insurance premiums. The less responsible among us tend to overeat, abuse their bodies chemically and disregard physical conditioning, and then complain loudly at the higher cost of care and coverage. Much of the legislation currently proposed would further reduce our personal responsibility by limiting the differences in premium costs between various groups of consumers (based on their personal health or familial predisposition) or by attempting to assign a dollar amount the medical community may charge to care for an individual’s health. Reducing our personal responsibility will only serve to increase the need for more costly care and in no way solves the problem. Consider the Canadian healthcare system in which citizens may be prepared to go to the local doctor or hospital for even the slightest ailment, but in which those who can afford to travel to the
Another problem, only somewhat separate from that which we’ve explored, is the pressure now placed on medical professionals to run every possible test to rule out potential problems when the real difficulty may be reasonably discernible, though with less absolute certainty. Many expect that any procedure, test or treatment possible should be applied in an attempt to deal with the situation with absolute certainty, but is this reasonable? This comes down to expectation and a standard of care issue once again. But it also speaks to a substantial cost in healthcare. The tests and procedures are not inexpensive and often only serve to burden the system. In addition, malpractice or liability coverage and the high cost of dealing with the outcome of being wrong or having missed something when providing medical care is often 25% or more of the cost of care through a local physician.
Settlements of millions of dollars are commonplace when something has gone awry in a patient’s treatment; those measured in hundreds of thousands are now considered inexpensive. This is due to the difficulty in assigning a value to good health, pain and suffering, or life and the fact that healthcare is a high-stakes game. When one is an auto mechanic or accountant and a mistake is made, the outcome may be annoying, but is easily remedied at a readily identifiable cost. When a physician errs, the byproduct may require a lifetime of care, or worse. Some would suggest that the solution lies in expecting medical professionals to be willing to reduce their personal incomes to accommodate the cost of liability coverage; personally, I prefer my physician to be deserving of a high level of compensation. Others suggest a curtailment in the amount of awards or settlements in medical liability cases.
A reasonable few would suggest a return to personal accountability in these cases and advocate a more standardized level of reasonable care. Were a patient to receive a lower standard of care, the door to liability should be open and rewards and settlements should be appropriate to do what is possible to correct the problem and assign a value for the difficulties caused. Conversely, if a patient expects a higher standard of care, then they should also bear the cost directly or through an insurance policy designed to do so. For those who advocate that high quality healthcare is our right, this may seem heretical. But we must remember that quality healthcare is our opportunity, our privilege, perhaps even our blessing; it is not our right.
In the current debate, little appears to have been said about the level of compensation for healthcare professionals, but barely beneath the surface of the debate is an ongoing resentment of those with higher incomes. While the media rarely presents comments from legislators and others regarding the cost of salaries among healthcare professionals, including those involved in research and support, it is inconsistent to expect that under a ‘reformed’ system the opportunity for high compensation will remain. This becomes one of the most problematic portions of some of the current proposals. Not only would the incomes of healthcare professionals be subject to decrease, but those who may still be able to garner six figure incomes are under attack as being those targeted to pay the price of the legislation through increased tax rates.
I referenced that I prefer my physician to be deserving of high compensation. It’s not that I like paying high fees, it is more that I want to know that the compensation available in healthcare is high enough to attract the best and the brightest. These are they who have brought about the innovation which now affords us the best healthcare in the world. Without them we would be subject to less competent providers with less ability to advance the science. If physicians and others are less able to create high incomes, then they would also be less able to justify the high cost of quality medical education and those universities that now provide the training would become less able to offer a cutting edge educational opportunity. This all becomes a downward spiral that ends in a healthcare system not unlike that seen in certain European and Asian nations and
Those leading the charge of healthcare reform discount this affect. They may be uninformed, perhaps naïve, or are more likely attempting to sidestep the issue in an effort to forward their own agendas. The current president and legislative leaders from his party have been candid at times regarding the desire to create a single-payer system. This means a healthcare system where the federal government is the single payer, the insuring company if you will. We have a system that eschews such monopolistic powers for a good reason; whenever any one body has too much power, abuse and corruption often occurs, and inefficiency and bureaucracy ensues. Some argue that Medicare is a single-payer system and that it is preferred by its users and provides for excellent care. We must also add that it is subject to an otherwise competitive healthcare industry of care providers, scientists, and insurers. Absent these influences, we can rightly expect it would be more like the retiree healthcare provided many in Europe and Asia and
We are all aware that the Medicare system is headed for a tremendous and potentially devastating problem. The Congressional Office of Management and Budget has long warned that Medicare will be insolvent by 2017 without drastic intervention. Absent from the healthcare debate, is what the passage of current legislation, which either creates or opens the door for a single payer system, would do to Medicare. Consider an insurer with only one group of insureds where that group is growing in both size and cost, but are unwilling to continue to face increases in their rates. What must the insurer do to side step the problem? Open their doors to other classes of insureds without the same problems, but with a large enough group across which can be spread the cost increases of the existing group. The federal government actually has two groups for which it is effectively the single payer: retirees covered by Medicare and the uninsured who may be covered by Medicaid or a state or local equivalent, yet funded by federal dollars. Both groups are growing and both represent inordinately increasing costs. It is possible that their salvation may be a federal single payer system that includes all groups and insurance classes, and it may be inevitable unless we are prepared to dramatically decrease costs, increase taxes or decrease benefits.
Taxes are already on the rise, even for the middle class, and we’ve already pointed out how a decrease in benefits is unlikely given the expectations of our society. We may be able to decrease costs, but not through the planned actions of any of the existing legislative proposals. Only through reasonable moderating of expectations, an increase in personal responsibility, and a decrease in unnecessary costs can we ‘reform’ healthcare.
Our system of healthcare likely needs little reform. Rather, our expectations of what that system should offer us at a given cost may need to be altered. Likewise, we may need to address the fiscal state of Medicare in a forthright manner, rather than as a side issue or fortunate bystander of existing legislation, and in so doing we are likely to address the state of Social Security, the third rail of American politics. Perhaps this time the courageous who do so will succeed rather than be electrocuted by the energy of their own ambition.
Part Two of Just What Are We Reforming? will address sensible changes in healthcare delivery and outline economically viable steps that may be taken to address the problems of our healthcare system while providing incentive for quality care with reasonable and responsive consumer access.
Signature Update is offered by Richard Haskell, Managing Director of Signature Wealth Management and CEO of Signature Management, LLC
Stagflation... if inflation concerns aren't bad enough
July 29, 2009 Edition, Volume III
Inside Signature Update
- Stagflation… if inflation concerns aren’t bad enough
- Beware of the Herd
- On the Earnings Front - continued
-
Stagflation… if inflation concerns aren’t bad enough
Among the many dangers wrought by a ballooning federal budget during a weak economy with high unemployment rates is stagflation. Though we may well not experience this two-headed monster, we need to better understand what its causes and remedies are and then strive to protect ourselves from its potential byproducts.
Most of us have come to understand inflation over the course of our lifetimes. We know that when the money supply increases, almost regardless of what causes the increase, the dollar tends to weaken; as a byproduct, the cost of raw goods or commodities (inputs) increases and ultimately that increase will be passed onto the consumer. If the economy is healthy enough for incomes to increase at the same time, and it most often is, then consumers may actually demand yet more of the higher priced good than they did before and a cycle of inflation ensues. If incomes don’t increase, or if employment levels decrease, then the input cost increases tend to be short lived as decreasing demand causes prices to return to previous levels.
But what happens when commodity prices increase due to an increase in the money supply and a weaker dollar while incomes and employment are relatively stable (regardless of their levels) due to a lackluster, though not deteriorating economy? When prices are rising, in the face of weak economic growth and demand, stagflation occurs, and while preferable to cyclical or systemic deflation; it is a combination of price inflation and economic stagnation and benefits virtually no one.
Many of us remember the high interest rate environment of the late 1970‘s and early 1980’s and recall that as a period during which the stagflation term was used as one of the many descriptors of our economy at the time. Though higher interest rates are not an automatic byproduct of stagflation, they are one of the more powerful tools the Federal Reserve has to stem inflation and strengthen the dollar, which in turn are expected to stimulate the economy. As the Fed is then able to decrease interest rates once inflation has been beaten back, a period of economic growth is likely to develop – both ‘stag’ and ‘flation’ having been thwarted.
The Fed has many tools at its disposal to adjust the course of the economy, just as we’ve recently seen. The most powerful and most likely to bring about rapid change is altering interest rate levels through the adjustment of the Fed Funds rate, which causes virtually immediate changes in most other interest rates. When the rate change is a decrease, the markets, businesses, and consumers breathe a collective sigh of relief. When the rate increases, however necessary and impactful, it’s not unlike the use of chemotherapy for the treatment of cancer: the application of the remedy is almost as damaging as the disease, but not quite. As soon as the disease (inflation in this case) is halted, the treatment shifts to one more supportive of overall health and the patient improves dramatically.
Even though little long term benefit is attained through a period of inflation, there are market strategies investors can employ to ‘ride the tide’ without being overtly damaged in the process.
Owning equities (stocks) in various commodity sensitive firms, such as mining and natural resources, and those industries supporting them, or any other industry that can glean a meaningful margin in the face of increasing raw material costs, may allow investors to enjoy portfolio values increases that keep pace with the rise in the CPI (consumer price index), one of the more common tools used to measure the impact of inflation. Stocks, commodities and real estate tend to do well in inflationary times; most other investments do not.
In deflationary cycles, holders of treasury, municipal and corporate bonds may benefit greatly as their interest incomes and eventual principal repayment may ultimately yield more purchasing power than expected when the instruments were acquired. But nearly all others are adversely affected by long-term decreasing prices; inevitably accompanied by lower wage rates and equities, commodities and real estate valuations. Real estate becomes one of the more sensitive issues as mortgages continue to need repayment at higher than market values with few dollars available from declining incomes. No wonder that deflationary cycles are referred to as spirals and are among the most damaging of economic trends.
Even though the
Among the most concerning trends developing, one that would almost certainly stall economic recovery, is the current house and senate’s interest in increasing income tax rates and other revenues from other sources.
Unlike most families and businesses, which when faced with the need to fund additional expenses in certain areas, curtail spending in others, the current federal legislature and administration does not appear to be prepared to decrease spending in the slightest. Though many of the proposed spending increases may appear noble they are ill-timed at best, and run the risk of damaging the economy in such a way as to undermine the very benefits they are intended to create. For example, the quest for fuel efficient transportation is only meaningful if households are able to afford to purchase new cars; the desire to offer cost effective health insurance is without merit if a prolonged period of high unemployment places the more affordable coverage out of reach; the potential benefits of a ‘cap and trade’ energy policy are meaningless if businesses aren’t able to manufacture and sell the goods and services these instruments are designed to cover.
I’ve been a business owner for most of the last 20 years and before that I was privileged to work for one of the finest firms on Wall Street. Throughout the years, I’ve advised many hundreds of clients regarding investments, tax and estate matters, and helped untold others through the rigors of the various aspects of owning and operating their own businesses. While there have been many trends we’ve recognized as they were forming, there have been at least as many that couldn’t be readily identified until the momentum had formed and the die was cast. That’s the nature of business and the markets; and for those few who are yet better able to see into the future, there are private islands in the
When navigating personal and business finance, there are many variables and a few constants - one of those has to do with the mentality of the herd. By that I mean, the actions of large groups of people, whether coordinated or not, towards any given end – they are rarely productive and oft times disastrous.
For example, in late 1999 and early 2000 when the US stock markets were soaring and virtually everyone was making money, new stock issues would come to market and be snatched up by everyone who could get a commitment from their broker, regardless of whether or not the stock was suitable for their portfolio; certain to be winners of the .com wave. You couldn’t open a newspaper, enter into a conversation with co-workers, or turn on the evening news without hearing about the millionaires being made in the high tech markets. Everyone wanted in and most got their wish - sadly.
Within weeks, the markets began to tumble and losses began to mount. Investors were certain the tide would turn and rode stock and mutual fund positions down 60, 70, and 80% and more. It was like watching lemmings topple over the cliffs of
The momentum gathered among novice investors was so extraordinary that everyone wanted their taste of fortune. But an eerily consistent trend was forming, one that has been seen over and over again: when everyone around is able to see the opportunity and ready to take action, it’s certain that the opportunity has past.
The same thing began to play out in 2007 as the real estate markets climbed month after month. Individuals put their nest eggs at stake and leveraged everything conceivable to buy another property – it was going to make them rich. Otherwise prudent investors began to ‘loan’ their creditworthiness to builders and others to help finance development projects and all of this was fueled by a political machine clamoring to make home ownership affordable. Less than two years later, the greatest evaporation of wealth in
A business associate and I saw this trend forming with clarity and began to advise against it. It wasn’t that we were so smart and others weren’t; it was just that we saw and heard the herd forming and recognized the signs of danger. One month in late 2006, several clients approached our firm and withdrew virtually all of their funds to invest in what we considered dodgy real estate programs. We saw that these people represented hundreds of thousands of others and commented to each other that the opportunity in real estate was about over, noting that it was time to sell rather than buy. As luck would have it, we were right and that month marked the top of the local real estate market. A few clients listened, a few chose to disregard our concerns, and a few even supposed that we were looking out for our own interests rather than theirs.
The herd can be just as reliable in identifying a bottoming affect as it can be at marking the end of opportunity. Just as our nation was in the earliest days of President Obama’s newly elected administration, the markets were falling apart at an uncontrollable rate, and it was exactly the wrong time. Trillions of dollars that had been invested in various parts of the real estate and securities markets were being set on the sidelines in cash and cash equivalents (money market funds, CD’s, etc.). Investors who had ridden the market downwards for many months could no longer face their family and friends and finally pulled out under the greatest of peer pressures. Tragically for many, fortunately for a wise and patient few, the declines were largely behind us and in less than two months the markets reversed a 50%+ decline and awarded investors with a 30% gain. The herd had already gone over the cliff and they had not only seen their savings diminish before their eyes, but now they saw the markets rebounding without them.
The moral of the story… be willing to turn away from conventional wisdom when it is neither conventional nor wise and always stop to consider if the momentum in the market has its foundation in something other than the market itself.
On the Earnings Front - continued
The recent rally in the
With the DOW up over 9000, the markets have staged a mid-summer rally many were certain wouldn’t materialize; the strength of which was tested by poor CCI (consumer confidence index) numbers on Tuesday, but almost simultaneously bolstered by improved housing reports.
The Conference Board Consumer Confidence Index™, which had retreated in June, declined further in July. The Index now stands at 46.6 (1985=100), down from 49.3 in June. The Present Situation Index decreased to 23.4 from 25.0 last month. The Expectations Index declined to 62.0 from 65.5 in June.
The S&P Case/Shiller Home Price Index showed improvement for the first time since 2007, and offered a clear inflection point for the 16 month tend in declining housing prices. This followed several months of increases in the volume of units sold and is the first clear sign that a bottom in the housing market has likely been reached.
Signature Update is offered by Richard Haskell, Managing Director of Signature Wealth Management and CEO of Signature Management, LLC
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