Larry Howes kicks off the New Year with his outlook on the economy in 2016. How did the interest rate increase in December affect mortgages? Will U.S. inflation reach the Fed’s target rate of 2%? What is expected from the U.S. economy and markets this year? What will happen to the U.S. dollar? What can we expect to see in Europe this year? Listen in as Larry addresses these questions and more!
This week, we bring you a special edition of Inside the Economy with SH&J. As many of you are aware, the Federal Reserve increased interest rates on Wednesday for the first time since 2008. While the increase was a small one, only a quarter of a percentage point, it has caused media frenzy. In less than five minutes, Larry addresses the primary reasons behind this rate increase, what it could mean for inflation, mortgage rates, credit card interest, the housing market, Americans’ wallets, and more. Overall, Larry says the effects of this increase will be mostly positive. We will cover more on this topic during our next discussion on January 4th. Until then, have a wonderful holiday season and we look forward to reuniting with you in 2016!
This week Larry focuses much of his commentary on the U.S. Looking at new housing starts, the dollar, markets and corporate America, Larry says, “The U.S. economy, compared to everyone else, is doing so much better.” He also shares his perspective on the possibility of a rate increase by the Fed and answers a question from last week about the American banking system. Larry ends with a trip around the world to China, explaining how China’s decline has influenced the currencies of countries that rely on China for trade. Educational and informative as per usual — listen in now!
In our quarterly reports to clients, we always include commentary on the markets, economy and other financially relevant information. Our 2014 Q4 reports recently went out, and we wanted to share our commentary with you as well. We would also love to hear your questions and comments in the comments section below.
New Year’s Resolution – “Do More of What Makes You Happy”
We think that would be a good resolution. However, focusing on the financial markets around the world will rarely help! The Media elicits emotions that cause lots of dissatisfaction and fear.
In 2014, for example, few categories did as well as big blue chip American companies. The S&P 500 index did great, so now the news is full of advice about how you “should” have invested! Of course with us, you DID invest in the S&P 500 – and your diversified portfolio also invested in bonds and other assets worldwide. Remember 1987, 2000, and 2008 when the S&P 500 was, as the pundits later agreed, the one place to avoid investing in – EVER AGAIN! (Source)
Our society seems to love being unhappy about markets! “Are they going to correct?” Yes – we just don’t know which ones, when, and how badly. “Did we miss out on the ‘best performance of the year/decade/century?” “Which asset class was the one we should have exclusively chosen?”
If you had thought that the S&P 500 was the best place to be in 2014, think again. The top performing market of 2014 was China (up 44%)! Who would have guessed?!
We saw a fascinating report from the Medical Media about that other perennial New Year’s resolution – wanting to lose weight. There exist as many, if not more, diets as there are sure fire ways to “beat the market”. The American Medical Association threw up its hands and opined that although all diets may work, the only one certain to do so is “the one the patient will stick with!” We think that makes a lot of sense, and we try hard to design investment portfolios that “the client can stick with.”
2015 will probably be the year the Federal Reserve raises interest rates – very carefully (Source). We expect that our US bonds and stocks will weather the change well, despite turbulence and dire headlines.