I’m always amazed how many big financial service companies there are spending millions, well, probably billions of dollars on expensive tv advertising. The ads seem to run every day of the year but appear especially prevalent during the college football bowl season and the NFL playoffs; i.e. right now. And while some people say they want a “big Wall St. name” to manage their finances, I always ask, “who do you think is paying for those ads?” The answer? Their clients are.
I’m pretty sure you’ll never attend a game at Chrome Asset Management Stadium. And that football’s MVP quarterback Aaron Rogers will never be chatting with Hans and Franz from Saturday Night Live about us. Why? Because we don’t have that kind of money to spend on advertising. Our goals are to keep costs low for our clients. We hire no lobbyists and there are no “golden parachutes” for our employees. And we aren’t too big to fail- which means every day we know we need to be working hard for you. What we do have is a fiduciary obligation to always be acting in our clients best interests. And to us, that means relying on them to grow our company. Not Dennis Haysbert, or Flo, or Jake, or Peyton Manning. Not Larry or Samuel Jackson, or Mayhem. We hope you’ll keep that in mind this coming year, especially when the game turns off, and the advertising pitches come on.
The Prior Month
The S&P 500 fell 0.50% in December as a mid-month dip was quickly bought. Fears surfaced that due to collapsing oil prices high yield bonds may be in trouble and in particular those issued by smaller energy companies. You’ve probably seen the price of gasoline tumbling and while that’s good news for sectors like retail and airlines it can be a death knell to a smaller oil exploration company that borrowed a bunch of money to poke a hole in the ground thinking they could sell the oil they got for much higher prices. Interestingly, while the stock market recovered it’s losses, oil continues to hover at five year lows around $50/barrel. Meanwhile, the unemployment rate dropped to 5.6% amid an addition of 252,000 jobs to the U.S. economy in December. Interest rates on the benchmark 10-year U.S. Treasury fell ever so slightly from 2.19% to 2.17%.
While Santa was delivering presents the Grinch seems to have been waiting patietly just outside the door. Renewed concerns over Greece troubled the markets in the few days before and after the calendar turned to 2015. While the current ruling party in Greece has done good job balancing the budget and returning the country to economic growth, the government job layoffs and bevy of new taxes have not been popular with the country’s citizens. An election scheduled for January 25 could mean a new ruling party, Syriza, is installed. Syriza plans to push the EU on their bailout package, threaten default, and potentially exit the Eurozone if they don’t get what they want. And while the Greeks are wondering if things might be better off without their EU overlords, we fear they may finally be willing to roll the dice and find out.
Besides the action in Greece keep an eye on oil prices (already now below $50/barrel). While cheap gasoline seems great for all on the surface, layoffs are beginning to hit the energy and other collateral sectors (such as welding and pipe making). Many of these jobs are well-paying, blue collar jobs that have no parallel. Prolonged weakness in the oil market will mean additional layoffs and an unemployment rate that may begin to creep higher for the first time in years.
Lastly, earnings reports for the fourth quarter of 2014 will begin to roll in. Energy sector earnings are expected to feel the greatest pain but those companies with strong ex-U.S. sales could also face difficulties as the U.S. dollar has steadily been climbing higher the last few months.
The Greek vote on January 25 might be one we don’t want to watch…
40% of car theft victims left their keys in the ignition.
Have a great January,
Steve Zakelj, CFP®