Financial News January 2015

December markets recovered well mid-month with words of reassurance from the Federal Reserve. After climbing to record highs by the holidays, reality seemed to set in as the month closed. Opening the new year markets have shown caution, eliminating recent gains. Market indices averaged an increase of 0.4% for the month and rose an average of 9% for 2014. Volatility increased in December but remains very low. Tech stocks fell and small company stocks rose over the month, just the opposite of their trends over the year.

The uncertain factor currently is the drop in the price of oil. The effects of this on economies concerned the Federal Reserve and influenced their decision to postpone the initial interest rate increase. While cheaper gas and oil put more spendable money in consumer pockets, it has devastated budgets of domestic oil producing states and countries around the world. A reduction in oil production by a major producer like Saudi Arabia will help reduce the surplus and gradually increase prices. Sustained lower oil prices would lead to deflation and stock price drops even if our economy holds.

Snow in January is a good thing, in moderation. Orchids in pots have decided that the sun is coming back and have produced new flower shoots in welcome. The cold may strengthen for a few more weeks but the promise of longer, warmer days is underway. We tune in to the signs of change and follow our ways to endure, even enjoy winter until the sun overcomes it for another year.