• US and International stocks were unable to maintain the gains they posted in November and December despite some positive earnings reports and economic data. The month started off strong with the Dow gaining 1.5% on the first day of trading, but the final week of January pushed the S&P 500 to a loss of -3.6% for the month of January.
• US and International economic data still offered a mixed picture to investors. In the US, Consumer confidence, durable goods orders, and manufacturing data showed some signs of strength. The final week brought GDP growth of 5.7% in the fourth quarter. Yet, housing remained weak as mortgage applications declined, initial jobless claims spiked in the last week of the year as unemployment remained at 10%. 2009 also so a 33% increase in personal bankruptcies in the US.
• International manufacturing was up in the UK, China, Germany, and the other Euro countries. China’s economy grew by 8.9% in 2009, ahead of the 8% target established at the beginning of the year, and the China central bank announced that they would be raising bank reserve requirements to slow growth. However, Germany’s economy continued to show weakness, shrinking by over 5% in 2009, showing that not all nations are on the right track.
• The Obama administration announced that they would be instituting a tax on financial companies that received government aid in 2008 and 2009, and that the revenue would be used to help create liquidity for small loans.
• The US Treasury announced their largest auction of TIPS securities, to meet increasing demands for inflation protected securities.
• Despite a protracted debate and a lot of criticism of the Fed’s role in the real estate bubble, Fed Chairman Ben Bernanke was affirmed for another term.
• Earnings season started with Alcoa reporting a $277 million loss on slowing demand from construction and aerospace firms.
• Many companies had positive news: Microsoft profit grew 65%; McDonalds profit was up 23%; Apple’s profit increased on continued strong demand for their products; and Goldman Sachs ended the year by adding $4.9 billion in profit, to bring the year to date profit to a record $13.4 billion.
• However, many companies are still down: GE profits fell 19% in the fourth quarter; Caterpillar’s earnings were down 65% on lower orders; Citigroup posted a loss of $7.6 billion; and Morgan Stanley had it’s first loss since going public in 1986.
Index Performance – January:
US Large Cap Stock (S&P 500) -3.60%
International Stock (FTSE AW ex US) -4.28%
US Broad Bonds (Barcap Aggregate) +1.53%
US Government Bond (Barclay’s Govt) +1.45%
Cash (ML 3 Mnth T-Bill) +0.01%
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Past performance is not a guarantee of future results and there is always a risk that an investor may lose money. Information contained has been gathered from sources we believe to be reliable, but we do not guarantee the accuracy or completeness of such information. Indices are not available for direct investment and performance does not reflect expenses of an actual portfolio. Such expense would reduce the returns illustrated. Returns are shown gross RWM’s advisory fee. The incurrence or inclusion of an advisory fee will have the effect decreasing performance results. For example an advisory fee of 1% compounded over a ten year period would reduce a 10% return to an 8.9% annual return. RWM’s form ADV is available upon request. The form ADV is the RIA disclosure document that outlines material arrangements and business practices.