Lindsey Report – January 2016

Happy New Year! Hope that you enjoyed your Holidays.  We had a great Christmas.  Jag (9) and Lauren (11) had a blast: the unbridled excitement of young kids is priceless!

However, there was no Santa Claus rally for investments, as the major equity markets and fixed income markets limped into the New Year. For 2015, the S&P 500 lost less than 1% and the Dow was down -2% (AP).  While the S&P 500 was only slightly down, that can be a little misleading, as the average benefitted by the exceptionally strong performance of a handful of technology companies (I’m prevented from using names, but you likely got a delivery from one).

Yahoo Finance reported that U.S. Aggregate Bonds fell 2%, so the fixed income market did not provide much either. The High Yield Bond space was a troubled spot late in the year, falling more than 4% (as measured by the Barclays High Yield Index).

While there were many story lines for 2015, two of the bigger ones continue to be. The first is the decline in oil prices.  It was only a few years ago that oil prices were over $100/barrel and as of today, they had fallen below $35 (Reuters).  There are clearly positives; such as we all pay less at the pump, the auto industry had a banner year, etc….  However, this has negatively impacted the burgeoning domestic energy sector.  Not only are many producers struggling, but so are equipment suppliers, tool shops, and other manufactures that support this sector.

The other storyline was the slowing Chinese economy. Well, that story line was front and center to start the year.  Their stock market (Shanghai Composite) had to be shut down for a day due to a rapid one-day sell-off of 7% on January 4th (CNNMoney). While the health of our economy is marginally dependent upon China, they are the 2nd largest economy.  A big shock there has a ripple effect: it certainly socked world markets in the mouth to start 2016.

Thus, 2016 is off to an auspicious start. Equities are down, but our economy is still slowly growing.  Also, there are indications that the Eurozone may finally be in recovery mode.

 

 

The opinions voiced are for informational purposes only and are not intended to provide specific advice to any individual. To determine which investments are appropriate for you, consult myself prior to investing. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly.  The economic forecasts set forth in this commentary may not develop as predicted and there can be no guarantees that strategies promoted will be successful.

 

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