|Dow||-15.48 to 18,038.23|
|S&P 500||+1.80 to 2,090.57|
|Nasdaq||+0.05 to 4,806.91|
|10-YR Yield||-.043 to 2.207%|
|Gold||-$11.60 to $1,183.70|
|Crude Oil||-$1.05 to $53.68|
The holiday season is often a quiet time in the markets and the news. But not this year!
With just a couple days left in 2014, several developments are demanding your attention:
First, political fighting in Greece is causing major turmoil in the European debt and stock markets. Current Prime Minister Antonis Samaras failed to get a commanding majority for his presidential appointee in a third parliamentary vote. That development will force the country to hold snap elections Jan. 25.
|Political fighting in Greece is causing major turmoil in the European debt and stock markets.|
Unlike in the past, though, Samaras’ New Democracy party has lost substantial ground to another party called “Syriza.” That party is more radical, with leader Alexis Tsipras and his compatriots pushing for much more aggressive debt restructuring and even a “Grexit” from the euro currency.
Fears of a Syriza-led government in the wake of this third vote caused Greek bonds and stocks to plunge in value. That worsened a greater-than-30 percent decline in Greece’s benchmark stock index over the past several weeks, and caused more investors to flee to the safety of “core” European bonds. German 2-year government yields hit a record-low of negative-0.1 percent.
The message for investors like you? Europe remains a dysfunctional place to invest, and political- and currency-related issues continue to pop up every few months. No wonder the euro currency just sank to a fresh two-and-a-half year low just under 1.22 to the dollar.
Second, Libyan militants struck the Es Sider oil port in that country. They set several petroleum tanks on fire at the facility, which can store more than 6 million barrels of crude.
Libya remains one of the most unstable of OPEC’s member-countries. As of November, it was producing only a third of the 1.59 million barrels per day worth of oil it produced in late 2010 — just before government turmoil and in-fighting led to the downfall of Muammar Gaddafi. Production fell further to just 352,000 barrels per day in the wake of the latest chaos.
Crude oil prices have stabilized in the $55-a-barrel area. Concerns about Libyan production, as well as declining production elsewhere driven by the fall swoon in prices, could intensify in early 2015. That would be bad news for U.S. drivers, but good news for investors in beaten-down energy stocks!
Third, yet another Asian airliner has gone missing — this time Indonesia AirAsia flight 8501. The plane disappeared from radar on Sunday while on its way to Singapore from Surabaya in Indonesia.
Despite a search involving more than 30 ships and airplanes, no credible sign of the flight has turned up. Some 162 passengers and crew were onboard and presumed lost.
The disappearance follows by nine months the crash of Malaysia Airlines Flight 370, with 239 aboard. Its whereabouts remain a mystery to this day, despite tens of millions of dollars being spent and thousands of man-hours being expended. And of course, yet another Malaysia Airlines plane was shot down over the Ukraine earlier this year, with 298 lives lost.
|“We still haven’t seen any broader, concrete economic impact from these very real human tragedies.”|
We still haven’t seen any broader, concrete economic impact from these very real human tragedies — such as less tourist or business travel to and throughout Asia. But it’s worth watching as an investor considering how U.S. investments are already outperforming investments in many funds and ETFs that focus on Asia. Anything that puts further pressure on Asian markets or regional economies would tend to widen that performance gulf.
So let’s talk! Are you concerned about renewed European debt problems, or fighting in Africa (and the Middle East)? How is it shaping your investing strategy? And what about the latest jetliner disaster in Southeast Asia? Do you worry about flying safety? Is that impacting your own personal travel plans — current or future?
The place to go is the Money and Markets website, where several lively discussions can be found each and every trading day!
|Our Readers Speak|
I’m getting back up to speed on some of the comments that came in while I was on vacation last week, and I’m excited about helping you navigate the markets in the new year that’s right around the corner.
One commenter, Reader Phil P., said: “I am quite heavily invested in oil stocks and, because of the plunge in the price of crude, I am taking quite a beating. Are there any prospects for a turnaround?”
Good question, Phil! I believe the Saudis are fighting a battle they can’t win (over the longer term) given their incredible reliance on energy prices vis-à-vis our own. As great as the domestic energy boom has been for our country, we have other drivers of economic growth that Saudi Arabia and other OPEC members simply can’t fall back on.
So I doubt this short-term price war will last for long. Many energy stocks are starting to base, and we could see that process accelerate in early 2015 and beyond!
Meanwhile, Reader Richard weighed in on general economic sentiment and how many Americans aren’t sharing in the benefits that Wall Street is reaping. His view:
“What the average working stiff doesn’t feel is his job isn’t what it was. Pay is down and more people are working several jobs to just get by than ever before. There are more married couples that work and they are not any better off than their parents were when just one parent had a job.
“The man on the street that doesn’t have a job for whatever reason — whether counted or not — or is underemployed, is not realizing the market rally!”
But again, that doesn’t necessarily mean there aren’t ways to better your financial lot in life here. As Reader Howard notes, you can make the most of the current economic environment by following these tenets:
“Think independently, specialize in a few investments, own your research, set reasonable profit targets and take profits. Someone told me this a long time ago. It may help.”
I appreciate the words of wisdom Howard. If any of you have your own to add, or would like to weigh in on other topics, you can use the Money and Markets website to sound off!
|Other Developments of the Day|
Tragedy struck at sea, as well as in the air, over the weekend. A Greek passenger and vehicle ferry caught fire on its way to Italy early Sunday. Seven people are now confirmed dead out of more than 400 on board, though many were fortunately rescued by air and ship despite rough seas in the area.
The battle between Chinese censors and Chinese citizens continues, according to new reports. They suggest that China is blocking access to Gmail accounts through third-party services, the latest move to construct a “Great Firewall” between its citizens and the Internet the rest of us use and enjoy.
Is the American Middle Class being “held down” by government policies designed to oppress it? Or is it really just a widespread crisis of faith that’s holding us back? A breakdown in the belief that through hard work, we can still better our lives rather than have our ambitions be derailed by outside forces? There’s an interesting thinkpiece here at the Washington Post if you have some time to check it out.
Any thoughts on these topics? Or others that are scrolling by on your TV screen? Then hop on over to the website and weigh in!
Until next time,