Insight on Business

April 2015

Issue link: http://www.insightdigital.biz/i/489016

Contents of this Issue

Navigation

Page 54 of 69

42 | I NSIGH T • A p r i l 2 0 15 w w w . i n s i g h t o n b u s i n e s s . c o m R ight now, there is one thing the whole world is watching and that thing is called interest rates. Since the Federal Reserve controls rates in the U.S., investors scrupulously pore over Fed announcements for any hint about rate increases. is year hasn't been different, with analysts speculating on rate increases later in 2015. So why all the fuss? Well, rates affect a lot of things, including capital expenditures used to grow businesses. For instance, if you have a lemonade stand and want to borrow $100 from your neighbor to buy more lemons, how much of a return would your neighbor want on his investment? e answer is he wants the most he can get, but in today's low rate environment he won't get much. e flip side is that you won't have to pay much to borrow the $100, so the extra money you save from low borrowing costs could be used to hire another worker to sell lemonade. is scenario is one of the reasons why rates are kept low; to give companies incentive to borrow and expand their businesses, therefore creating jobs and keeping inflation levels within target. So what happens when borrowing becomes expensive? Companies spend less on expansion, prices fall and jobs get cut. Shareholders anticipate declining profits due to lower prices of goods and sell their company shares, which in turn pushes market prices down. Overall, economic activity slows and everyone faces more economic challenges. is is why the Federal Reserve is overly cautious on timing rate increases. If it's not done at a time when the economy is strong and can handle it, the Fed runs the risk of straining the economy more than it would like to. clearTREND research produced by our firm in Appleton indicates upward trends in most U.S. stocks as well as most U.S. sectors. U.S. energy has been trending downward. Our U.S. Economic Health Index shows that 67 percent of U.S. sectors are expanding while 17 percent are contracting. KEY: = uptrend = downtrend Ticker = trading symbol (individual securities only) Trend Began = date on which current trend was identified Confidence = clearTREND's historic success rate in generating capital gains based on accurate trend identification clearTREND U.S. Economic Health Index: trending i n fo c u s Interest rate debate dominates discussion in the marketplace To raise or not to raise? at is the question This index measures more than 130 unique U.S. market sectors to determine how many are expanding, stable or contracting. More than 50 percent of expanding sectors are healthy, while less than 50 percent are not. 67% Expanding: 67% Neutral: 16% Contracting: 17% Poor Fair Good Excellent Data as of 3/10/2015 Sector Focus: Health Insurance Description Ticker Trend Began Confidence Aetna Inc. AET 10/8/14 82.90% Centene Corporation CNC 8/25/14 74.71% CIGNA Corporation CI 11/13/14 80.43% Health Net Inc. HNT 1/2/14 74.77% Humana Inc. HUM 2/7/14 77.30% UnitedHealth Group Inc. UNH 12/11/13 81.74% WellCare Health Plans Inc. WCG 11/12/14 80.72% Wellpoint Inc. WLP 2/19/14 76.72% Residential Construction Description Ticker Trend Began Confidence D. R. Horton Inc. DHI 10/24/14 74.46% Lennar Corporation LEN 10/20/14 76.83% NVR Inc. NVR 7/11/14 87.04% PulteGroup Inc. PHM 10/29/14 74.80% Standard Pacific Corp. SPF 2/18/15 78.49% Taylor Morrison Home Corporation TMHC 2/23/15 92.86% Toll Brothers Inc. TOL 1/12/15 74.76% Tri Pointe Homes Inc. TPH 11/26/14 99.00%

Articles in this issue

Archives of this issue

view archives of Insight on Business - April 2015