News / Economy

    US, Japanese Stocks Soar in 2013

    Japanese Prime Minister Shinzo Abe (C) on the podium, speaks during a ceremony to wrap up the year's trading on the Tokyo Stock Exchange in Tokyo, Dec. 30, 2013.
    Japanese Prime Minister Shinzo Abe (C) on the podium, speaks during a ceremony to wrap up the year's trading on the Tokyo Stock Exchange in Tokyo, Dec. 30, 2013.
    Jim Randle
    U. S. and Japanese stock markets soared in 2013 as investors were encouraged by central bank efforts to make it easier to buy homes, equipment and other goods by pushing down interest rates and promising to keep them there for a while.  Will stocks continue to rise in 2014? 

    Japan's Nikkei was up 57 percent in 2013, the best performance in decades.  In the United States, the S&P 500 gained nearly 30 percent for the year, the Dow advanced 27 percent, and the NASDAQ jumped 38 percent.

    Stocks are up, in part because of stimulus efforts by the U.S. and Japanese central banks. The U.S. Federal Reserve cut short-term interest rates nearly to zero a few years ago. More recently, the Fed has been working to push long-term interest rates down with a complex program that involved purchasing billions of dollars' worth of securities every month. The central bank recently announced it would reduce that program because the economy no longer needs quite so much help.

    Nick Ventura of Ventura Wealth Management in New Jersey calls some of these central bank actions a "global gamble" that has worked -- at least so far.  

    In 2013, the United States saw modest improvements in growth, housing prices and the unemployment rate. Ventura said the improving economy meant fewer wild swings in prices and fewer worried investors.

    "Every time there was the slightest pullback in stock prices it was rewarded with a fresh round of buying.  So there is a growing confidence in the U.S. recovery and I think that's what really perked up the U.S. economy," said Ventura.

    Experts report improvements in consumer and investor confidence in late 2013. Growing confidence apparently is making investors more willing to take modest risks and buy some kinds of stocks.

    A study published Tuesday by the Boston investment firm State Street shows a significant improvement in investor confidence between November and December. That growing confidence apparently is making investors more willing to take modest risks and buy some kinds of stocks.

    The Wall Street Journal reports investors have been shunning complex strategies and are simply seeking stocks with low prices and strong earning potential.

    Meanwhile, The Financial Times reports that investments thought to offer a safe haven for money in troubled economic times, like gold and government bonds, saw fewer buyers.

    Some analysts predict stock prices will continue to climb in 2014, but at a slower pace.

    Investment advisor and author Matthew Tuttle, of Tuttle Tactical Management in Stamford, Connecticut, said stock prices will increase, but so will risk.  

    "We have a 'house of cards' [fragile economy], but we don't see the cards toppling really until 2016," he said. "We are definitely forming a bubble [pushing prices toward unsustainable levels] but that bubble still has a lot of room to grow."

    Tuttle says it is crucial that the U.S. Federal Reserve moves gradually and carefully as it reverses the low interest rate policies that spurred rising stock prices.  

    The Fed eventually will have to cut stimulus efforts to avoid sparking inflation that could hurt the economy.  For the moment, analysts say overcapacity in the economy is keeping inflation from taking hold.

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    by: Dennis Sullivan from: NYSE
    December 31, 2013 5:32 PM
    Just because a bunch of half-crazed investors are going into massive amounts of debt in a desperate attempt to make a quick buck does not mean that the overall economy is in good shape.

    In fact, much of the country is in such rough shape that “reverse shopping” has become a huge trend. Even big corporations such as McDonald’s are urging their employees to return their Christmas gifts in order to bring in some much needed money…

    In a stark reminder of how tough things still are for low-income families in America, McDonalds has advised workers to dig themselves “out of holiday debt” by cashing in their Christmas haul.

    “You may want to consider returning some of your unopened purchases that may not seem as appealing as they did,” said a website set up for employees.

    “Selling some of your unwanted possessions on eBay or Craigslist could bring in some quick cash.”

    This irrational stock market bubble is not going to last for too much longer. And a lot of top financial experts are now warning their clients to prepare for the worst. For example, David John Marotta of Marotta Wealth Management recently told his clients that they should all have a“bug-out bag” that contains food, a gun and some ammunition…

    A top financial advisor, worried that Obamacare, theNSA spying scandal and spiraling national debt is increasing the chances for a fiscal and social disaster, is recommending that Americans prepare a “bug-out bag” that includes food, a gun and ammo to help them stay alive.

    David John Marotta, a Wall Street expert and financial advisor and Forbes contributor, said in a note to investors, “Firearms are the last item on the list, but they are on the list. There are some terrible people in this world. And you are safer when your trusted neighbors have firearms.”

    His memo is part of a series addressing the potential for a “financial apocalypse.” His view, however, is that the problems plaguing the country won’t result in armageddon. “There is the possibility of a precipitous decline, although a long and drawn out malaise is much more likely,” said the Charlottesville, Va.-based president of Marotta Wealth Management.

    by: Guy Lazer from: NYC
    December 31, 2013 5:30 PM
    It has been a wonderful run for Wall Street. Unfortunately, there are a whole host of signs that we have entered very dangerous territory.

    The median price-to-earnings ratio on the S&P 500 has reached an all-time record high, and margin debt at the New York Stock Exchange has reached a level that we have never seen before. In other words, stocks are massively overpriced and people have been borrowing huge amounts of money to buy stocks. These are behaviors that we also saw just before the last two stock market bubbles burst.

    And of course the most troubling sign is that even as the stock market soars to unprecedented heights, the state of the overall U.S. economy is actually getting worse…

    -During the last full week before Christmas, U.S. store visits were 21 percent lower than a year earlier and retail sales were 3.1 percentlower than a year earlier.

    -The number of mortgage applications just hit a new 13 year low.

    -The yield on 10 year U.S. Treasuries just hit 3 percent.

    For many more signs like this, please see my previous article entitled “37 Reasons Why ‘The Economic Recovery Of 2013′ Is A Giant Lie“.

    And most Americans don’t realize this, but the U.S. financial system and the overall U.S. economy are now in much weaker condition than they were the last time we had a major financial crash back in 2008. Employment is at a much lower level than it was back then and our banking system is much more vulnerable than it was back then. Just before the last financial crash, the U.S. national debt was sitting atabout 10 trillion dollars, but today it has risen to more than 17.2 trillion dollars. The following excerpt from a recent article posted on thedailycrux.com contains even more facts and figures which show how our “balance sheet numbers” continue to get even worse…

    Since the fourth quarter of 2009, the U.S. current account deficit has been more than $100 billion per quarter. As a result, foreigners now own $4.2 trillion more U.S. investment assets than we own abroad. That’s $1.7 trillion more than when Buffett first warned about this huge problem in 2003. Said another way, the problem is 68% bigger now.

    And here’s a number no one else will tell you – not even Buffett. Foreigners now own $25 trillion in U.S. assets. And yet… we continue to consume far more than we produce, and we borrow massively to finance our deficits.

    Since 2007, the total government debt in the U.S. (federal, state, and local) has doubled from around $10 trillion to $20 trillion.

    Meanwhile, the size of Fannie and Freddie’s mortgage book declined slightly since 2007, falling from $4.9 trillion to $4.6 trillion. That’s some good news, right?

    Nope. The excesses just moved to a new agency. The “other” federal mortgage bank, the Federal Housing Administration, now is originating 20% of all mortgages in the U.S., up from less than 5% in 2007.

    Student debt, also spurred on by government guarantees, has also boomed, doubling since 2007 to more than $1 trillion. Altogether, total debt in our economy has grown from around $50 trillion to more than $60 trillion since 2007.

    So don’t be fooled by this irrational stock market bubble.

    by: Get ready for PAIN from: USA
    December 31, 2013 5:29 PM
    It is time to crank up the Looney Tunes theme song because Wall Street has officially entered crazytown territory. Stocks just keep going higher and higher, and at this point what is happening in the stock market does not bear any resemblance to what is going on in the overall economy whatsoever.

    So how long can this irrational state of affairs possibly continue? Stocks seem to go up no matter what happens. If there is good news, stocks go up. If there is bad news, stocks go up. If there is no news, stocks go up. On Thursday, the day after Christmas, the Dow was up another 122 points to another new all-time record high. In fact, the Dow has had an astonishing 50 record high closes this year. This reminds me of the kind of euphoria that we witnessed during the peak of the housing bubble. At the time, housing prices just kept going higher and higher and everyone rushed to buy before they were “priced out of the market”. But we all know how that ended, and this stock market bubble is headed for a similar ending.

    It is almost as if Wall Street has not learned any lessons from the last two major stock market crashes at all. Just look at Twitter. At the current price, Twitter is supposedly worth 40.7 BILLION dollars. But Twitter is not profitable. It is a seven-year-old company that has never made a single dollar of profit.

    Not one single dollar!!!

    by: Dr. Bernard H. from: NYC
    December 31, 2013 3:05 PM
    what "investors" ?? - there are no investors in the markets...!!! these "gains" are Government buy back of their own securities... we are masking a huge inflation... there is no value in the market anymore... we are sitting on a bloated corpse... soon we will all smell it... "yes we can..." LOL

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