Financial Year In Review

2014: End Remarks

By WJ Rossi, CFP®, ChFC

Since the beginning of the calendar year, many economic trends have taken place. Long-term interest rates came down, but the US dollar strengthened as investors saw the United States as the best place to put their money. Slowdown in Gross Domestic Product (GDP) growth in China and the Euro zone contributed to this. Oil prices plummeted, and unemployment numbers fell to levels not seen before the Great Recession. Some of this has translated into better financial market performance, some has not.

The US dollar index rose from 79.45 at the beginning of 2014 to well over 85 (source: Bloomberg). The European Central Bank, along with other developed country banks, is keeping its long-term rates very low, relative to the US, making here a relatively attractive place to invest. The stronger dollar may create a headwind for multinational companies with a large exporting base and earnings that have to be converted back to Greenbacks.

A large fracking boom, years in the making, got the best of itself. Oversupply and less demand contributed to crude dipping below $80 per barrel in mid-October. This trickled into slightly cheaper gas prices at the pumps. It hurt energy equity investments in late autumn. The International Energy Agency indicated that the United States will surpass Saudi Arabia and Russia as the world’s top oil producer by 2016.

According to data from the Bureau of Labor Statistics, jobless claims decreased to 264,000 in the second week of October, marking a 14-year low. While the unemployment rate has declined to below 6%, income growth continues to remain relatively stagnant, prompting the central bank to move cautiously, with regard to its stimulus program. Nonetheless, Gainesville’s unemployment rate in August was 5.5%, below the national average of 5.9% at that same time.

Alibaba’s IPO was the largest in US history. A Chinese company listing on a US exchange highlights how interconnected our financial markets have become. Some have commented on that, marking a high in the stock market; it remains to be seen whether or not that will be so. Retailers such as JC Penney and Sears are struggling to survive. Radio Shack is trying to hold off bankruptcy. Old business models are struggling to survive in an ever-changing, technologically-driven economy. Local companies benefitted from this change, as biotech companies such as AGTC went public this year.

Dr.  W. Kent Fuchs was appointed the new president of the University of Florida with the goal of making UF one of the top ten public universities in the nation. While so much is happening globally, so much innovation is in our own backyard.

2014 might almost make you forget the recession of 2008. Enough is there, however, to remind us of how hard it has been to climb out of that point in economic memory. Lower unemployment and cheaper gas prices should, we hope, make the American consumer resilient into 2015.

For questions or more information, Rossi can be reached at 352-373-3337 or wjr@kossolinger.com. Securities Offered Through ValMark Securities, Inc. Member FINRA/SIPC.  ValMark and Koss Olinger are separate entities. Advisory Services offered through Koss Olinger Consulting, LLC., An SEC Registered Investment Advisor.

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