Jehl & Kreilach Financial Management Presents:
WEEKLY ECONOMIC UPDATE January 7, 2013
WEEKLY QUOTE “The only limit to our realization of tomorrow will be our doubts of today.” - George Washington
STEADY HIRING AT THE EDGE OF THE CLIFF Employers added 155,000 jobs in December. The encouraging news is that non-farm payrolls continued to expand while businesses fretted about the fiscal cliff. The discouraging news is that December’s job growth roughly approximated that seen in September, October and November – and at the current pace, it would take about seven years to bring the jobless rate down to prerecession levels. The Labor Department reported 7.8% unemployment in December.1
MAJOR TAX LAW CHANGES PASSED IN CONGRESS WEEKLY TIP Many people confuse Medicaid with Medicare. If you aren’t yet a senior, read up on both of these programs to learn the benefits they provide and the distinctions between them.
WEEKLY RIDDLE You serve it, but you can’t eat it. You hold it, only to smash it. Sometimes love is involved when you use it. What is it? Last week’s riddle: It is found in the ground, round as a circle and yards deeper than a cup, and a hundred horses cannot pull it up. It isn’t going anywhere, it cannot think; it might provide you with something to drink. What is it? Last week’s answer: A well.
As a result of the fiscal cliff deal approved on Capitol Hill last week, the top marginal tax rate was raised to 39.6% and the top estate tax rate was hiked to 40%. While the Bush-era tax cuts were preserved permanently for individuals with taxable incomes of $400,000 or less and couples with incomes of $450,000 or less, the payroll tax holiday came to an end. The Alternative Minimum Tax was permanently patched, long-term jobless benefits were extended through the end of the year, and dividend and capital gains taxes were given a new 20% ceiling.2
ISM GAUGES BOTH RISE U.S. manufacturing and service sectors both expanded last month, according to the purchasing manager indices released by the Institute for Supply Management. ISM’s manufacturing PMI rose from 49.5 to 50.7 in December; its service sector index increased to 56.1 from November’s 54.7 reading. 3
CONFIDENCE GROWS, STOCKS SOAR Wall Street saw fantastic gains last week. Across four market days, the S&P 500 climbed 4.57% to 1,466.47, the NASDAQ jumped 4.66% to 3,101.66 and the Dow rose 3.84% to 13,435.21. The CBOE VIX ended the week below 14 after its largest weekly drop since 1987. On the NYMEX, gold ended last week at $1,657.90 while oil wrapped up the week at a settlement price of $93.19.4,5,6 THIS WEEK: The data stream is very light over the next few days. No major U.S. economic releases are scheduled for Monday. The Q4 earnings season does begin this week, with results from Alcoa and Monsanto on Tuesday and Constellation Brands on Wednesday. Thursday, the latest initial jobless claims numbers arrive, as do earnings results from Ruby Tuesday and interim earnings from Chevron. Wells Fargo reports Q4 results on Friday. % CHANGE
1 YR AGO
5 YRS AGO
10 YRS AGO
10 YR TIPS
Sources: usatoday.com, bigcharts.com, treasury.gov, treasurydirect.gov - 1/4/12 7,8,9,10 Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends.
Please feel free to forward this article to family, friends or colleagues. If you would like us to add them to our distribution list, please reply with their address. We will contact them first and request their permission to add them to our list.
Registered Representative and Principal, Securities offered through Cambridge Investment Research Inc., broker/dealer, Member FINRA/SIPC to residents of: IN, AK, FL, IA, IL, MI, MN, MO, TN, CT, CA, NY, NJ, SC, VA and OH. Advisory Services offered through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor to residents of: IN, AK, FL, IA, IL, MI, MN, MO, TN, CT, CA, NY, NJ, SC, VA and OH. Jehl & Kreilach Financial Management and Cambridge are not affiliated. This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. Marketing Library.Net Inc. is not affiliated with any broker or brokerage firm that may be providing this information to you. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is not possible to invest directly in an index. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world's largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.
Citations. 1 - www.nytimes.com/2013/01/05/business/economy/us-economy-adds-155000-jobs-jobless-rate-is-7-8.html [1/4/13] 2 - blogs.wsj.com/totalreturn/2013/01/02/what-the-new-law-means-for-taxpayers/ [1/2/13] 3 - briefing.com/investor/calendars/economic/2012/12/31-04 [1/4/13] 4 - www.cnbc.com/id/100354557 [1/4/13] 5 - online.wsj.com/public/page/news-financial-markets-stock.html [1/4/13] 6 - montoyaregistry.com/Financial-Market.aspx?financial-market=retirement-investment-funds&category=3 [1/4/13] 7 - www.usatoday.com/money/markets/overview/ [1/4/13] 8 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=1%2F4%2F12&x=0&y=0 [1/4/13] 8 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=1%2F4%2F12&x=0&y=0 [1/4/13] 8 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=1%2F4%2F12&x=0&y=0 [1/4/13] 8 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=1%2F4%2F08&x=0&y=0 [1/4/13] 8 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=1%2F4%2F08&x=0&y=0 [1/4/13] 8 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=1%2F4%2F08&x=0&y=0 [1/4/13] 8 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=1%2F3%2F03&x=0&y=0 [1/4/13] 8 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=1%2F3%2F03&x=0&y=0 [1/4/13] 8 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=1%2F3%2F03&x=0&y=0 [1/4/13] 9 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [1/4/13] 9 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [1/4/13] 10 - treasurydirect.gov/instit/annceresult/press/preanre/2002/ofm71002.pdf [7/10/02]