February 1st, 2012
Dear Client:
It’s about time! The market has recovered nicely in the New Year. We finished strong in December 2011 and this has continued through 2012 with the S&P 500 up almost 6% alone in the month of January. No politicians want to say anything about the economy whether they are Republicans or Democrats, but I will. The U.S. economy has started to recover and things are looking very good with the troubles in Europe now stabilizing. During the fourth quarter every bit of news that came out of Europe caused the stock market to shift one way or another. Is the Euro going to be broken up? Are there going to have separate currencies? Why is the German chancellor Merkel taking such a hard stance with the Greeks? Well these questions have taken care of themselves and the European Central Bank deserves much of the credit. Thank you!
Annualized real GDP growth of 2.8% in Q411 was the fastest growth of the year! Unemployment continues to drop and jobs are being created. Housing was softer than expected but this is expected to reverse itself in January. The January jobs report came out with companies hiring 243,000 new people. This is after 200,000 jobs were created in December. In correlation with the jobs report unemployment continues to drop and is currently at 8.3%. Must be an election year! As history has proven in election years solid stock market results and up ticks in the economy are the standard. If that trend continues we will all be smiling by the end of 2012.
With trillions on the sidelines and many consumers starting to open up their wallets and spend, I am convinced that stocks are still very cheap. While we cannot expect returns north of 6% every month it certainly kicks off 2012 with a bang. Emerging markets were an area that was crushed in 2011. With countries like Brazil and China leading the way in 2012 emerging markets should be a big winner. We took everything that Europe could throw at us and we bent but did not break. We are optimistic about 2012 and we look forward to many continuing improvements in the economy and solid returns in the market.
Sincerely,
J.B. L’Esperance, ChFC