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In the following piece, Fifth Third’s Investment Management Group recaps the market and how it reacted to various events in the month of November. I hope you find this Financial Market Roundup helpful and informative.

The old saying that “money can’t buy you happiness” is probably true. But we also believe in another old saying, “don’t look a gift horse in the mouth.” Now that we are well into the holiday season we would like to take the opportunity to acknowledge the bounty of gifts currently being bestowed upon the U.S. consumer. A host of macro tailwinds are leaving more cash in our collective pockets and this will likely have significant implications for the global economy in the months and years ahead; granted, peace on earth would be preferred, but let’s take what we can get, shall we?

But before we talk about the good fortunes of the American consumer let’s see what happened to risky assets in November.

  1. The MSCI World Index, a broad measure of developed world’s stock markets rose 2.00 percent for the month.
  2. The S&P 500, a measure of large U.S. companies, rose 2.69 percent for the month..
  3. The MSCI Emerging Market Index, a broad measure of the emerging world’s stock markets, declined 1.05 percent for the month.
  4. The MSCI REIT Index rose 2.00 percent for the month.
  5. Gold declined 0.47 percent during the month.

The decline in energy prices is probably the most obvious positive development for the U.S. economy in 2014. The price of gasoline has fallen 35% in less than six months due to increased oil production, predominantly here at home, and a rising dollar. Shoppers are finding savings at the grocery store too. The Food and Agriculture Organization’s price index, which measures monthly price changes for a basket of cereals, dairy, meat and other products, fell for the seventh consecutive month in October, the longest continuous slide since the late 1990s.

Developments in foreign exchange markets are helping to pad consumers’ wallets as well. Easy monetary policy from the European Central Bank and the Bank of Japan has helped to boost the value of the dollar. This has led to lower import costs and increased purchasing power for Americans traveling abroad. The same easy-money policies, and slow growth, in Europe and Japan have kept global interest rates at historic lows. This is helping to keep a lid on Treasury yields here at home, despite our strengthening economy.

Americans are also seeing a substantial increase in the value of their homes and stock portfolios. As we currently stand, 2014 is looking to be yet another year where both housing and equity prices have risen. If that is the case, this will be the 6th consecutive year of positive S&P 500 total returns, with that index up over 200% from the 2009 lows. Perhaps the greatest consequence to the U.S. consumer lies with their prospects for finding a well-paying job, and we’ve seen considerable improvements here as well. Not only have we gained back all the jobs we lost during the financial crisis (and then some), but non-farm payroll increases are consistently coming in over 200K per month while initial jobless claims are at a fourteen year low.

Despite receiving a boost to their disposable income, U.S. shoppers posted less than spectacular retail numbers over the Thanksgiving weekend. The National Retail Federation reported that spending fell an estimated 11% compared to last year. However, business owners are hoping that the slower foot traffic in November will translate into more online sales in December.

 
 
     
 

Market commentary provided by Fifth Third Private Bank. Source of statistics is Bloomberg.com. Returns are calculated from market close on 10/31/14 through 11/30/14. This information is current as of the date of this letter and the opinions expressed are subject to change at any time, based on market and other conditions. This information is intended for educational purposes only and does not constitute the rendering of investment advice or specific recommendations on investment activities and trading. The mention of a specific security within this letter is not intended as a solicitation to buy or sell the specific security. Index performance shown within this letter is not representative of any Fifth Third managed account.

Investing involves risk, including the possible loss of principal invested. Diversification does not assure or guarantee better performance and cannot eliminate the risk of investment loss.

Past performance is no guarantee of future results. Indexes are unmanaged, do not incur investment management fees, do not represent the performance of any particular investment, and may not be invested directly into by investors. Small company investing involves specific risks not necessarily encountered in large company investing such as increased volatility. Investments in foreign markets entail special risks such as currency, political, economic and market risks.

S&P 500 Index is a composite of 500 companies, amongst the largest based in the United States, and it often used as a measure of the overall U.S. stock market.

The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets. The MSCI Emerging Markets Index consists of the following 23 emerging market country indexes: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Russia, South Africa, Taiwan, Thailand, Turkey* and United Arab Emirates.

The MSCI US REIT Index is a free float-adjusted market capitalization index that is comprised of equity REITs. The index is based on MSCI USA Investable Market Index (IMI) its parent index which captures large, mid and small caps securities. With 137 constituents, it represents about 99% of the US REIT universe and all securities are classified in the REIT sector according to the Global Industry Classification Standard (GICS®).

Gold Index is the U.S. dollar per Troy ounce

The MSCI World Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets. The MSCI World Index consists of the following 23 developed market country indexes: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the United Kingdom, and the United States.


Fifth Third Private Bank is a division of Fifth Third Bank offering banking, investment and insurance products and services. Fifth Third Bancorp provides access to investments and investment services through various subsidiaries. Investments, investment services and insurance:

Are Not FDIC Insured

Offer No Bank Guarantee

May Lose Value

Are Not Insured By Any Federal Government Agency

Are Not A Deposit

Insurance products made available through Fifth Third Insurance Agency, Inc.

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