Look Like Your Family?

It doesn’t look like ours either.

So you, too, may be in need of some table topics this year!

U.S Markets: As measured by the Dow, we’re up 0.72% on the week. This brings the market’s year to date return to 10.2%. That’s pretty darn good!

Emerging Markets were down 0.36% on the week. But, they are up 15.4% year to date. For more information check out the VWO (an ETF which tracks them).

The 10-year Treasury yield is back down to 3.33%.

For the Family Table: Civilized Conversation Topics

If you want to deflect somewhat uncomfortable topics (like your love life), be sure to read these over before you sit down to dinner. We give you 5 relevant points on the week’s news and the oh so important detail, “who cares?”

1) Low Taxes Will Stay

Well, for the next 2 years at least. On Friday night after the market close, Obama signed the new tax bill.

Who Cares? Anyone who pays taxes cares. It’s a good thing for your wallet and for the economy. This bill has led economists to raise their projections for U.S. growth. This has pushed stock prices and bond yields up. Higher bond yields are bad for current bondholders, but better for people looking to get invested.

2) 2010 Ends on a Bright Note

Barron’s, a weekly financial paper, interviewed multiple economists on their predictions for the New Year. The conclusion? Global growth is without question stronger into year-end. US consumption is tracking up 4% this year. Asian exports are rebounding and business sentiment is more upbeat than expected.

Europe is still a bit of a problem, with Ireland downgraded this week. But that will be a long steady headwind.

Who Cares? The economic recovery, which is now underway globally, will become self-sustaining. And the Federal Reserve will keep the Fed Funds Rate very low. We should see natural job growth as a result.

Hallelujah, we have been waiting for this.

3) ETFs Hit an Important Landmark

Formally called Exchange Traded Funds (ETFs), these stock-like instruments are traded on stock exchanges. They tend to be a cheaper way to access certain parts of the market (domestic, international, commodities, bonds) without a hedge fund, mutual fund, or direct investment.

They are different from mutual funds in that they simply aim to track an index—not outperform an index. For that reason the fees tend to be lower.

Who cares? They surpassed 1 trillion dollars in investments last week. They are a serious and growing part of the market, yet still dwarfed by mutual funds with 11.5 trillion dollars of investments.

4) Bye-Bye Bonds?

PIMCO, the largest bond manager in the world, founded by Bill Gross, made an important announcement this week. It was that they plan to buy equity-linked bond in their largest mutual fund (the Total Return Fund). Why? They are more positive on stocks than bonds. Take a look at the link above and you can see how sharply bond prices have fallen recently.

Who Cares? Bill Gross, in his letter to investors, said that the last round of Quantitative Easing would mark the end of the decades long bull market (meaning, prices rising) for Treasury bonds. Take your party hat off bond traders.

5) Here Comes Santa Claus….

The 15^th of December through year-end has historically been (over the past 30 years) a good time for stocks.

Who Cares? Anyone who invests should care. Why? On average, markets are up 1.6% in this period — just about 83% of the time. Perhaps instead of buying a company’s products this year you can buy their stock. The gift that keeps giving—let’s hope. For more read: What is a Santa Claus Rally?

Bought an iPad this year? You may be adding to the U.S. Deficit.

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