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February 12 2015

What’s in an employment report?

Last week, the U.S. Bureau of Labor Statistics’ Employment Situation Summary was full of encouraging data. Employment numbers for last November and December were revised higher which made 2014 the strongest year for job growth since 1999. However, 2015 isn’t off to a shabby start. The economy added just over a quarter of a million jobs in January. In addition, Barron’s reported:

“…Wages for private-sector workers ticked higher in January, rising 0.5 percent from December and 2.2 percent year-over-year. That sort of growth must persist to indicate a trend, but it is a promising sign, and one that could quell chatter about deflation in the U.S. The good news doesn’t end there. Low gas prices could save the average household $750 this year, and household net worth remains near an all-time high. It’s no wonder consumer confidence hit its highest level last month in more than seven years.”

Consumers are happy. Workers are happy. Who’s not happy? The answer may be companies and investors. Barron’s speculated workers’ gains could come at the expense of corporate profits.
Source: http://online.barrons.com/articles/jobs-report-is-this-the-shift-from-wall-street-to-workers-1423278035?mod=BOL_hp_we_columns

Last week, Factset.com reported analysts are expecting to see year-over-year declines in both the overall earnings and revenues of companies in the Standard & Poor’s 500 Index during the first half of 2015. The downward revisions primarily reflect the expected performance of companies in the energy sector. While prospects for the first half of 2015 have dimmed a bit, analysts are expecting profit margins to expand and companies to have record earnings per share, overall, during the second half of 2015.
Source: http://www.factset.com/websitefiles/PDFs/earningsinsight/earningsinsight_2.6.15

  • Data as of 2/6/151- WeekY-T-D1-Year3-Year5-Year10-Year
  • Standard & Poor’s 500 (Domestic Stocks)0.03-0.0020.15915.20.1420.055
  • 10-year Treasury Note (Yield Only)1.9N/A2.71.93.64.1
  • Gold (per ounce) -1.53.5-1.2-10.33.111.6
  • Bloomberg Commodity Index1.8-1.6-19.9-11.1-4.3-3.2
  • DJ Equity All REIT TR Index-1.44.729.714.919.79.4

*Indices are unmanaged and investors cannot invest directly in an index.
*Sources: Yahoo! Finance, Barron’s, djindexes.com, London Bullion Market Association.
*S&P 500, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend).
*The DJ Equity All REIT Total Return Index does include reinvested dividends.
*All investments involve risk – coins and bullion are no exception. The value of bullion and coins is affected by many economic circumstances, including the current market price of bullion, the perceived scarcity of the coins and other factors. Therefore, because both bullion and coins can go down as well as up in value, investing in them may not be suitable for everyone. Since all investments, including bullion and coins, can decline in value, you should understand them well, and have adequate cash reserves and disposable income before considering a bullion or coin investment.

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Bart A Zandbergen, CFP® is a Registered Investment Advisor with Optivest, Inc and a Registered Representative with Gramercy Securities, Inc. Investment advisory services are offered by Optivest, Inc. under SEC Registration and securities are offered through Gramercy Securities, Inc., member FINRA & SIPC, 3949 Old Post Road, Charlestown, RI, 02813, 800-333-7450.

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