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Like the tipping of a domino, the effects
of lower oil prices have helped the U.S. economy gain strength.
Although
oil prices increased slightly last week on expectations
of colder weather in some parts of the country, they've
dropped 36% from last summer's peak, according to Barron's.
That's important because it puts more money in consumers' pockets.
What we're not spending on energy, we may spend on other
things, and that gives the economy a boost. (Consumer spending
accounts for about two-thirds of the U.S. economy.) It also
inspires confidence, which can help move markets higher. The
University of Michigan's consumer sentiment index
rose to its highest level in two years during January.
Lower
oil prices have had other significant effects, too.
According to MarketWatch, they've helped the U.S. dollar
rebound against the Euro and the Yen since the start of the
year, and trimmed the U.S. trade deficit by reducing the cost
of imports. The effects of lower oil prices were apparent
in last week's glut of positive economic news: building
permits increased for the first time in almost a year, retails
sales hit their highest levels in five months, and manufacturing
showed improvement, according to Bloomberg.com. In addition,
the economy added new jobs and hourly wages increased. What's
the upshot of all this economic strength? It seems less likely
that the Federal Reserve will be lowering interest rates anytime
soon.
So, why were the markets so choppy when
there was lots of good economic news last week? It's earnings season...
| Returns through 01/19/07 |
1-Week |
Y-T-D |
1-Year |
3-Year |
5-Year |
10-Year |
| Dow Jones Industrials |
0.1 |
0.8 |
17.8 |
6.1 |
5.3 |
6.3 |
| Nasdaq Composite |
-2.1 |
1.5 |
9.1 |
4.5 |
5.4 |
6.0 |
| Standard & Poor's
500 |
0.0 |
0.9 |
13.4 |
7.9 |
5.0 |
6.3 |
Source: Yahoo! Finance, Barrons
Past performance is no guarantee of future results. Indices
are unmanaged and cannot be invested into directly.
Three-,
5-, and 10-year returns are annualized. Assumes dividends are
not reinvested.
EARNINGS SEASON IS WHEN COMPANIES STRUT
THEIR STUFF for investors. It happens during the month
following the end of every quarter. Even when a company has
good news to report, its share price may fall. Consider what
happened to International Business Machines (IBM) last week.
The company reported better than expected profits for fourth
quarter, which you would expect to push the stock's
value higher. Instead the price dropped because of concerns
that future growth might not be as strong as analysts had
hoped, according to the Associated Press.
The company's performance was felt by many, many investors.
Why? Because IBM is one of the companies in the Dow Jones
Industrial Average and it has about a 6% weighting. In last
week's newsletter, we talked about the fact that one
company can have a significant influence on an index. During
the past week, the performance of IBM's stock, which
was down 3.3% after reporting earnings, hurt the overall performance
of the Dow for the week.
DO YOU KNOW HOW MUCH LONG TERM CARE COSTS? A survey conducted by the AARP has found that a majority of
people under the age of 45 just don't know much at all
about long-term care costs.
- 92% of survey participants could not accurately
estimate (within 20%) the monthly cost of nursing home care
or an assisted
living facility.
- 20% or more
admit they don't
know the cost of in-home care; the rest were willing to
wager
a guess.
- 59% think Medicare will pay for an extended nursing
home stay, but it doesn't.
- 52% believe
Medicare covers assisted living costs, but it doesn't.
So, how much does long term care cost? The average cost for
care in homes, nursing homes, and assisted living facilities,
was more than $70,000 during 2006, according to Medical News
Today. According to the Kaiser Commission on Medicaid and
the Uninsured, Medicaid was the single largest source of funding
for long term care in recent year. Of course, to be eligible
for Medicaid, you must be poor or have become poor paying
long term healthcare expenses.
 Love
the ocean? You may soon rely on it for electricity. According
to Fortune Small Business magazine, an entrepreneur, electrical
engineer, and surfer named George Taylor has invented a buoy
that converts wave action into electricity. The energy is
carried ashore through undersea cables. Once it arrives,
it's channeled into the national power grid. How much
power can we expect the ocean to generate? Researchers at
the University of Oregon estimate that less than 1% of the
ocean's wave energy could power the entire world. The
kicker is that it's not expensive. Wave-generated power
is cost competitive with coal-generated power—the cheapest
and most abundant electricity available.
Alphabets
A through R are printed above the box, in the box, and beneath the box.
Can you continue on for S to Z and place them correctly according to
the scheme?
Click here to view the answer.
Best Regards,
P.S. Please feel free to forward this newsletter
to family, friends, or colleagues.
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