Although the news that China's economy is slowing grabs most of the headlines, other countries in Asia are also experiencing difficulties. For example, South Korea's rate of growth is now expected to fall below 3% for 2013, pressured by the slowdown in China as well as the anticipated effects of the massive decline in the value of the yen vs. the won. This currency movement will have the effect of decreasing the competitiveness of Korean export giants such as Samsung and Hyundai.
It's News to Us
Year in Review – March, 2013
The twelve month period ending March 31st, 2013 was a tumultuous one for the global economy and markets. Investors continued to look past the lackluster economic situation of the moment and anticipated more favorable results. It appears that investors have high expectations for the unprecedented efforts of central banks to overcome political paralysis and economic stagnation. The US economy proved quite resilient over the year and China’s downshift to a lower rate of growth has gone relatively smoothly.
US stocks were the standout this quarter and posted double digit gains during the first quarter of 2013. The largest gains were posted domestically by small and mid cap stocks, and internationally, in Japan. Perhaps surprisingly in this optimistic environment, emerging markets posted small losses. Bonds also posted small losses, with international bonds faring worse - predominantly due to dollar strength against the yen and other currencies. Economic news showed that the consumer side of the economy is holding up quite well in the midst of policy uncertainty from Washington.
Anyone notice that government bond yields are dropping again? All across the G-7 countries, with the exception of Italy, yields have fallen to the lowest levels of 2013. (recall that yields down = prices up). Maybe the demise of the bond market rally isn't quite as inevitable as has been portrayed??
How can this be with so many governments dedicated to creating inflation? And with the US and Chinese economies seemingly doing better? And with stock markets enjoying such a strong period??
By Cam Moore, CFP, Associate Financial Advisor
Clients considering changing banks sometimes ask us if we can recommend one to them. It’s a question I’m actually surprised I don’t hear more often. Almost a week doesn’t go by that we don’t hear bad press coming out about our nation’s largest depositories. Bank of America, Citigroup, JPMorgan Chase, and Capital One are consistently on MSN’s Customer Service Hall of Shame list and generally score poorly on JD Power’s annual satisfaction survey.
But what should you look for in a bank?
I find it very distasteful to draw negative attention to our competitors or to point out the various unsavory practices which seem to be Standard Operating Procedure for many in the financial advising field
So I will let the New York Times do it for me.
February was another endorsement of diversification. Asset returns were all over the map, figuratively and literally.
US stocks posted yet another month of gains, and most indexes are up fairly strongly year to date. There wasn't much noticeable difference between large and small caps...and the differences by sectors have been relatively small. The telecom sector is the only sector in the red so far this year, which doesn't tell me very much about the overall market or the perception of economic growth.
Confirmation that the most basic tenet of finance - that risk and reward are linked - comes from data showing rates of return over the twenty year timeframe 1992-2011. Note that although 2012 hasn't been incorporated, the market returns in that year only reinforce the data below. Stocks beat bonds which beat inflation, homes, and cash.
Asset class returns were calculated over the timeframe for the following: Bonds, Gold, the EAFE (Europe, Japan) index, Home Prices, Inflation, Oil, REITs, and the S&P 500.
I think its safe to say that most of our clients and readers have a pretty good understanding of what emerging markets are and what the exposure is. Still, looking at a per country and per sector breakdown of emerging markets is illuminating and certainly demonstrates the changing nature of the world economy.
2013 seems to me to be a year of enormous opportunities. Perhaps this isn't unusual in itself, but what is perhaps rarer is that the likelihood of achievements seems to have grown dramatically in recent months. Below I will touch on a few items that I believe can - and will - be achieved this year. A fun aspect of this mental exercise is then attempting to think through the ramifications in the context of this forum - the effects on the economy and the markets.
First Achievement- Budget