Highlights of this Week’s Update:
- Super Bowl XLIX week is upon us. Facts and Trivia about the game follow.
- Call today to set up your MyWealth system today to get your personal planning on the right track!
- S. stock indices manage small gains last week and interest rates continue to fall.
- Might be a good time to start looking at refinancing your mortgage.
- Oil moves lower again, gold prices rise.
- European Central Bank announces its own “QE” program.
- Euro falls sharply, dollar gains.
- S. Fed meets this week, with expectation for no major change.
READ ON FOR MORE DETAILS…………………………………….
Super Bowl Trivia:
All week we will be hearing about and planning for Super Bowl XLIX. We thought it fitting to provide you with some Super Bowl facts and trivia for conversations about the big game over the coming week.
- Super Bowl Sunday is the second biggest food consumption day in the U.S., second only to Thanksgiving.
- The first Super Bowl was played on Sunday, January 15, 1967 between the NFL champion Green Bay Packers and the AFL champion Kansas City Chiefs. Green Bay won.
- Each Super Bowl Trophy is handcrafted by Tiffany & Co.
- The name “Super Bowl” came from Kansas City Chief’s founder and owner Lamar Hunt when he jokingly referred to the proposed interleague championship as the Super Bowl after watching his daughter play with a toy called the “super ball”. The ball is now displayed at the Pro Football Hall of Fame in Canton, Ohio.
- Four of the last five winners of the opening coin toss have gone on to win the game, including the Seahawks last year. Overall the record is dead even at 24-24.
- Twelve teams have retuned a pass interception for a touchdown, and all twelve teams have gone on to win the Super Bowl game.
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The major U.S. stock indices were able to produce small gains last week, with the Dow Jones Industrial Average up .92%, but still down .84% for the year. The Standard & Poor’s 500 stock index rose 1.60% for the week ending Friday, and is now off .34% year-to-date. (MarketWatch)
Interest rates continued to fall, with the yield on the 10 year U.S. Treasury dropping to 1.81%. Rates for a 30 year fixed mortgage are now in the 3.625 range, and the 15 year rate has dropped below 3%. (U.S. Treasury, Zillow.com)
Gold rose last week to $1,294.75 per ounce, while oil continued to fall. West Texas Intermediate Crude ended the week at $45.28 per barrel, down $3.63. (CNBC, Energy Information Admin.)
The European Central Bank’s Landmark Decision and Why it Matters
Following months of discussions and wrangling about the best way to fix Europe’s ailing economy, the European Central Bank (ECB) has embarked on a new path, following in the footsteps of the Federal Reserve, the Bank of England, and the Bank of Japan. Beginning in March, the ECB will coordinate the monthly purchases of 60 billion euros ($68 billion based on the current exchange rate) in bonds, including government debt, with freshly minted cash.
The bond buys are intended to last until at least September 2016, amounting to about 1.1 trillion euros. But the purchases could go longer depending on whether it is meeting its goal for inflation (ECB press release). The ECB’s most immediate concerns – erect a firewall against deflation (currently at -0.2% per Eurostat), restore confidence, and provide a fertile environment for economic growth in the 19 nations that share the euro. The immediate effect: government bond yields in Europe continue to march lower and set records, including Germany, France, Spain, and Italy (Bloomberg).
In addition, the decline in the euro accelerated in recent weeks amid expectations of new measures. The aggressiveness of its open-ended commitment to buy bonds forced an additional 3.5% drop versus the dollar on Thursday and Friday (MarketWatch). The dollar is currently at its highest level in over 11 years.
Why does it matter?
There are a number of reasons. On a lighter note, if you are planning trip to Europe, the dollar will go much further than it would have a couple of years ago. Turning to financial markets, falling euro-zone bond yields have played a big role in the decline in U.S. Treasury yields. Also, the rising dollar could keep a lid on the price of European imported goods, a plus for U.S. consumers.
As you can see, what happens in Europe can and does affect us in many ways.
The Fed’s on tap
The Federal Reserve will conclude its two-day meeting on Wednesday. Although the latest Reuters poll indicates most Wall Street firms still expect a rate hike from the Fed in June, it would be swimming against the global tide.
The Bank of Japan remains firmly committed to its hyper-aggressive bond purchases, the ECB just announced bond buys, and both India and Canada’s central banks surprised with recent rate cuts (Wall Street Journal). A rising fed funds rate may attract even more foreign cash into the U.S., raising the value of the dollar to new heights. That has both positive and negative ramifications.
But if the Fed hints it may delay an expected rate hike, it can spark consumers and businesses to make buying decisions based on artificially low interest rates, encouraging excessive risk taking.
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1 The Dow Jones Industrials Average is an unmanaged index of 30 major companies which cannot be invested into directly. Past performance does not guarantee future results.
3 The S&P 500 Index is an unmanaged index of 500 larger companies which cannot be invested into directly. Past performance does not guarantee future results.
4 New York Mercantile Exchange front-month contract; Prices can and do vary; past performance does not guarantee future results.
5 London Bullion Market Association; gold fixing pricing at 3 p.m. London time; Prices can and do vary; past performance does not guarantee future results.