29 Feb What Are the Markets Telling Us?
The market is starting to feel the pain from the bruises of last year, as well as the beginning of the worst start to the stock market in 90 years. But many of these bruises were patched up with faulty reports and bad numbers. These markets are not so easy to read and even harder to understand, however being able to see the state that the economy is in through these markets will be more than informing, during the time that we are in.
One of the reports which was so conveniently revised was the U.S. GDP for the fourth quarter of 2015. This number more than doubled from 0.4% to 1.0%. What this means is that American businesses did not meet their expected sales. Now although this is expected for a third quarter during a time of stockpiling, this is not usual at all for the holiday season, which is usually the most profitable season for most American markets. Also there was a lower than estimated report on personal consumption. Although not as severe as the correction on the GDP this is still an important sign to pay attention to. Lower personal consumption is a sign of a recession as well, this coupled with a doubled U.S. GDP in the fourth quarter is not a very good sign of things to come.
The December S&P/ Case-Shiller home price index is up by 5.7% for the year after monthly reports of between 4-5%. Higher home prices are a common sign of a tighter supply and a growing population. The rising price of the home market won’t be able to keep up with wages sluggishly moving along, the way it is coupled with a continuing population growth. Also this hasn’t even taken into regards the fallout from the energy sector.
Speaking of the energy sector, crude oil inventory went up once again by 3.5 million raising itself to 507.6 million. The price of oil swings every day, one day its down 3% the next day its up 1%, however the International Energy Agency estimates that the world oil industries will keep adding to the inventory for at least this year and the next. This can not bode well for American oil companies. As long as crude oil stays below $50 per barrel, American firms will be reporting bankruptcies, which can’t be good for banks who are already experiencing loss from low interest rates.
What all these signs seem to be saying, is recession, and with recession on its way its safe to assume that the market isn’t safe. This is not time to be taking risks, rather the time to be making calculated and secure investments with your assets. Contact Ortiz World Wealth, your trusted investment advisor representative, today to make sure that you’re making the smartest investment you can.
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