S&P 500 up 26% Annually Since 2009 (Bloomberg)
If you suddenly start seeing Hewlett Packard TV advertisements for its line of industry-leading computers… don’t be alarmed. That’s just the 1990s coming back into style — especially for the last three years. At least that’s what it may seem like to investors, as the S&P 500 has averaged 26.2% annual returns since March 2009. The last time returns were in that range was the first half of the 1990s. However, don’t head for that online broker just yet, as valuations differ significantly from the ‘90s — 28 percent lower today, as a matter of fact. To some, the lower valuations mean less confidence by investors in the markets. Still, at 26.2% annually, it is tough to figure out what investors will need to actually be confident.
Chinese Economic Future Clear as the Yangtze River (Reuters)
So, about that recovery of the world’s second-largest economy… According to China’s National Bureau of Statistics, annual industrial output only grew by 9.3 percent in April. Analysts originally forecast an expansion rate of 9.5 percent, meaning the country lagged behind expectations. However, that same 9.3 percent also represented an increase over March, which had experienced output at a 7-month low, meaning industrial output rebounded slightly. So, as an investor, how would you characterize your attitude toward China’s industrial sector: “pessimistic, unless surprised,” or “optimistic, unless surprised?” Well, it looks like you’ll need to take the country’s pulse for another couple of months before you could say anything definitive. Or, you could listen to Liang Youcai, a representative from the State Information Centre, a government think tank, who said, “Economic activity remains weak.” And remember, Liang works for the Chinese government…
When Is a $1.9 Billion Loss Really a Win? When the Post Office Keeps Track (WashingtonPost.com)
Fiscal second quarter results for the U.S. Postal Service showed a $1.9 billion loss, which represents an increase of almost 33% over first quarter losses of $1.3 billion. However, much like the question regarding China’s industrial growth, when you ask if the Post Office is winning or losing its war on efficiency, the answer depends upon who you ask. The $1.9 billion loss was $1.3 billion less than the same-quarter figures the previous year. So, which performance figure is more telling: the 33 percent jump in costs, compared to the previous quarter, or the 40 percent reduction in costs from the previous year?