Stocks opened lower but quickly turned around. The Dow and SPX are currently up 10 pts & .2%, respectively. The SPX briefly touched another all-time high. The Dow is higher for the eighth straight trading session. The Russell 2000 (small caps) Index is again outperforming the major averages, up .3%. The best performing sectors in early trading are consumer discretion, financials and utilities. Consumer discretion, a sub-index of the SPX, just touched a fresh all-time high. Commodities are mostly higher, with the exception of gold. WTI crude oil continues to hover around $55.50/barrel and that’s great news for those predicting a bottoming process is underway. Bonds are surging higher this morning on some political turmoil in Greece. The 5- and 10-year Treasury yields are trading at 1.71% and 2.20%, respectively.
We’re closing in on the last few trading sessions of 2014, so here’s a look at how indexes & asset classes performed this year:
Nasdaq +16.5%
SPX +15.5%
Dow +11.5%
Russell 2000 +6%
TLT (long term US Treasury bonds) +26.7%
JNK (US junk bonds) +1.4%
Gold -2%
Copper -18%
Oil -44%
A snap election was called after Greek politicians failed to elect a president. The prime minister, Antonis Samaras, said he will call for the dissolution of parliament and the new election will be held January 25th. The worry here is that Greek voters may take the opportunity to vote in the Syriza opposition party, which generally opposes the European Union’s (EU) bailout plan for Greece. Syriza is also called the anti-austerity party, and has promised to roll back some of the government spending cuts that the EU required for the bailout. You may remember Greece is completely dependent at this point on bailout funds. Greek government debt is 175% of the country’s GDP, and the unemployment rate is about 26%.
The Chinese government has blocked Google’s Gmail service. You may know that the popular web search site was blocked in China after Google refused to yield to government surveillance and censoring. Well, now Chinese citizens are unable to access Gmail even through third-party devices such as Apple’s iPhone or iPad.
Russia’s economy shrank .5% in November from year-ago levels as recession begins to take hold. The Ruble continues to devalue, having lost 40% of its value against the dollar. Finance Minister Anton Siluanov has forecasted 2015 GDP at -4%. Russia’s PMI, which measures business activity, is now well below the 50.0 dividing line between expansion and contraction. Consumer spending is expected to fall more than 6% next year. At this point, it is probably safe to say Mr. Putin’s foray into Ukraine probably wasn’t worth it.
Bill Gross, former head of PIMCO, says his wish for 2015 is that “Republicans and Democrats come together and initiate an investment program” focused on infrastructure to drive economic growth. Good luck with that.
MikesMarketUpdate 