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Economic, Market Review and Outlook: 2012 Recap

Overall results were mostly positive in 2012, but getting there was a wild ride characterized by economic frailty, political uncertainty and volatility in the markets.

Gross Domestic Product (GDP), the primary measure of economic activity in the U.S. typically grows rapidly after a deep recession, but this time has averaged just 2.1% per quarter on an annualized basis. Nevertheless, early in 2012, investors were hopeful for a robust expansion due to signs of improvement in the housing market and employment.

By April, job growth was fading, the housing recovery was sputtering and other economic reports were mixed at best; so the U.S. economy continued to plod along with subpar growth. China and other emerging economies slowed, much of Europe sank back into recession while uprisings in the Mid-East and political uncertainties in the U.S. also weighed on investors.

Stock Market
Economic optimism early in the year pushed stocks sharply higher in the first quarter, but when the optimism disappeared in April, stocks declined through June. After a strong recovery in late summer, the market sold off again in the fall.

Corporations reported mostly higher and slightly better than expected profits throughout the year, despite the economic headwinds. This, along with historically low interest rates and some positive reports on the economy, helped stocks to recover by the end of the year. The S&P 500 closed 2012 with a gain of 13.5% or a total of 15.8% with dividends included.

On the international markets, stocks in both developed and emerging economies experienced much the same pattern as U.S. stocks in the first half of 2012, but much less of a slide in the fall and so ended the year with generally higher gains than their
U.S. counterparts.

Bond Market
Interest rates fell sharply during the second quarter and remained in a low trading range the rest of the year. Falling interest rates caused bond values to rise so the major U.S. bond market index was up 4.2% in 2012. That was good for total return, but interest income was minimal. The 10-year U.S. Treasury bond closed the year with a yield of 1.76%, down 0.11% from the end of 2011.

European and emerging market bond indexes enjoyed double digit total returns in 2012, while bonds in the Asia-Pacific region experienced more modest gains similar that of the U.S.

Commodities
Average commodity prices were somewhat higher in 2012 even though crude oil, one of the largest single components of most commodity indexes, fell throughout the year. Livestock, precious metals and other agricultural products posted the biggest gains for the year.

Looking Forward
Just after the end of the year, Congress and the President came to an agreement on tax rates, but failed to act on government spending and the debt limit. (See page one.) How this will affect the economy in the long run remains to be seen, but was viewed as a positive step in the short term to avoid the so-called fiscal cliff and markets rallied on the news.

In any case, many analysts expect U.S. companies to continue to increase earnings at a modest rate in 2013. Valuations remain at reasonable levels, historically speaking. Barring economic calamity, stocks appear more attractively prices than bonds.

Most investment strategists believe world economies will grow faster than the U.S. in 2013. Thus, diversification into international stocks or U.S. companies with significant sales and profits from foreign operations may
be important.

David RiggsVice President,Trust Investment Officer

Contact a Representative Today

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Personal Banking Security Measures for the 21st Century

clientuploads/21st-Century-Securitysquare180.pngMany of us are constantly connected to the online world these days. This means that the potential is there for our computers and personal information to be compromised which greatly increases the risk of ID theft and financial fraud to occur. However, by taking some basic precautions you can significantly reduce the risk of your computing environment being compromised. Following these simple guidelines should help your computing environment become more secure:

Keep your computer and software up-to-date

Keep your computers and network equipment secured with the latest software updates and enable automatic updates whenever possible.  This includes updates to third party applications such as Java and Adobe Products.  

Use hard drive encryption

In the event your machine is lost or stolen, drive encryption can prevent others from accessing the data on your hard drive.  The purpose is to encrypt or scramble your data on your machine so that it can only be read with your encryption key.Many operating systems offer drive encryption.  Microsoft offers Bitlocker and Apple has FileVault. There are also other third party encryption offerings.   

Enable your firewall

Think of the firewall to your computer as the fence around your property.  If there were multiple holes cut in the fence, it wouldn’t be very useful at keeping people out.  Firewalls are typically enabled by default on Windows machines, but double check to make sure it’s on.  Here are instructions to do so if you are using Windows 7. Only allow necessary applications inbound access through your firewall. The same principles apply to your network firewall. 

Configure your screensaver

Set an auto-locking screensaver so your account gets locked out after a few minutes.  This is useful if you forget to lock your machine when are away from it. On Windows machines this can usually be done by pressing the “Windows Key” and the “L” button simultaneously.

Make your passwords stronger

The longer and more complex the password, the better.  At least 16 characters with a combination of upper and lowecase letters, numbers, and special characters is a best practice.

Configure your router

Use the strongest wireless security available (currently WPA2-CCMP) with a long and complex password for your wireless network. Disable WPS on your wireless router for greater security.   

 


Think that some secure banking information
of yours has been compromised?

If you suspect that your personal financial information has been compromised, call MutualBank Customer Support at 800-382-8031.


 

Monday, April 7, 2014

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Economic, Market Review and Outlook: 2012 Recap

Overall results were mostly positive in 2012, but getting there was a wild ride characterized by economic frailty, political uncertainty and volatility in the markets.

Gross Domestic Product (GDP), the primary measure of economic activity in the U.S. typically grows rapidly after a deep recession, but this time has averaged just 2.1% per quarter on an annualized basis. Nevertheless, early in 2012, investors were hopeful for a robust expansion due to signs of improvement in the housing market and employment.

By April, job growth was fading, the housing recovery was sputtering and other economic reports were mixed at best; so the U.S. economy continued to plod along with subpar growth. China and other emerging economies slowed, much of Europe sank back into recession while uprisings in the Mid-East and political uncertainties in the U.S. also weighed on investors.

Stock Market
Economic optimism early in the year pushed stocks sharply higher in the first quarter, but when the optimism disappeared in April, stocks declined through June. After a strong recovery in late summer, the market sold off again in the fall.

Corporations reported mostly higher and slightly better than expected profits throughout the year, despite the economic headwinds. This, along with historically low interest rates and some positive reports on the economy, helped stocks to recover by the end of the year. The S&P 500 closed 2012 with a gain of 13.5% or a total of 15.8% with dividends included.

On the international markets, stocks in both developed and emerging economies experienced much the same pattern as U.S. stocks in the first half of 2012, but much less of a slide in the fall and so ended the year with generally higher gains than their
U.S. counterparts.

Bond Market
Interest rates fell sharply during the second quarter and remained in a low trading range the rest of the year. Falling interest rates caused bond values to rise so the major U.S. bond market index was up 4.2% in 2012. That was good for total return, but interest income was minimal. The 10-year U.S. Treasury bond closed the year with a yield of 1.76%, down 0.11% from the end of 2011.

European and emerging market bond indexes enjoyed double digit total returns in 2012, while bonds in the Asia-Pacific region experienced more modest gains similar that of the U.S.

Commodities
Average commodity prices were somewhat higher in 2012 even though crude oil, one of the largest single components of most commodity indexes, fell throughout the year. Livestock, precious metals and other agricultural products posted the biggest gains for the year.

Looking Forward
Just after the end of the year, Congress and the President came to an agreement on tax rates, but failed to act on government spending and the debt limit. (See page one.) How this will affect the economy in the long run remains to be seen, but was viewed as a positive step in the short term to avoid the so-called fiscal cliff and markets rallied on the news.

In any case, many analysts expect U.S. companies to continue to increase earnings at a modest rate in 2013. Valuations remain at reasonable levels, historically speaking. Barring economic calamity, stocks appear more attractively prices than bonds.

Most investment strategists believe world economies will grow faster than the U.S. in 2013. Thus, diversification into international stocks or U.S. companies with significant sales and profits from foreign operations may
be important.

David RiggsVice President,Trust Investment Officer

Contact a Representative Today

Back to Education Resources

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