Market Update — June 24, 2013

A few interesting numbers I read this weekend:

1. A bad week.  The S&P 500 fell 2.1%.  The MSCI emerging markets index fell 4.7%, its biggest weekly drop since May 2012 (credit the Fed, questions about China’s economy and financial system, problems in Brazil).  Gold fell to a nearly three-year low before recovering slightly on Friday.
2. Stocks that are seen as “bond alternatives” have done the worst.  In the past month, the S&P 500 has dropped 4.6%.  The S&P index of consistent dividend-paying stocks has fallen 5.9% in the same period. The utility sector is down 8.4%. The FTSE index of U.S. mortgage REITs has fallen 13%.
3. When will the Fed funds rate rise?  Recent FOMC projections show that only four Fed officials see short-term interest rates rising before 2015, while the remaining 15 saw rates remaining near zero until 2015 or 2016.
4. Huge potential losses.  The BIS said in that a rise in bond yields of 3 percentage points across the maturity spectrum would inflict losses on U.S. bond investors – excluding the Federal Reserve – of more than $1 trillion.
5. Yields can increase quickly.  In 1994, yields in many advanced economies rose by about 2 percentage points in the course of a year.
6. Get my money out of there!  Based on the funds that report weekly, investors took $2.2 billion out of muni mutual and exchange-traded funds during this past week.  This is the largest outflow since December 2012.  Muni funds have seen outflows for four straight weeks.
7. Are financial incentives strong enough?  Once new health insurance exchanges are up and running in October, companies with 50 or more full-time employees can either provide affordable care to all full-time employees, or pay a penalty. But that penalty is only $2,000 a person, excluding the first 30 employees. An employer’s contribution to family health coverage averages $11,429 a year.
8. Don’t shake my hand!  A recent study says that only 5 percent of people wash their hands well enough to kill germs that cause infections and illnesses.  The study found that 33 percent of people did not use soap and 10 percent did not wash their hands at all.
9. Women are drinking more.  In the nine years between 1998 and 2007, the number of women arrested for drunken driving rose 30%, while male arrests dropped more than 7%. Between 1999 and 2008, the number of young women who showed up in emergency rooms for being dangerously intoxicated rose by 52%. The rate for young men, though higher, rose just 9%.

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