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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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    Muncie, Indiana - February 27, 2015 – MutualFirst...

    Monday, March 2, 2015

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Proactive Steps to Take in Light of Anthem Data Breach

Chances are you are a person who has Anthem insurance coverage or you know someone who does. As a result, either you or your friend has a reason to be concerned.

A typical data breach includes a compromise of debit card numbers or partial personal identifying information. This kind of breach, though inconvenient, can typically be ‘fixed’. An initial investigation indicates that the Anthem breach includes a compromise of name, birthday and/or social security number. This kind of information is all one needs to steal someone’s identity.

According to Anthem this particular breach could affect up to 80 million people. Instead of trying to ignore this has happened or just being upset, it’s now time for you to be educated and try to protect yourself as best as you can. We have some tips that will help you accomplish that.


1. Review Your Statements


First, take a moment each month to view your eStatement or monthly statement. You can monitor your accounts throughout the month with Online Banking and the MutualBank App. Monitoring your accounts will give you the quickest opportunity to see if your accounts have been compromised. If you notice any transactions that are unfamiliar or questionable, please get in touch with your MutualBanker. Call us at 800-382-8031.


2. Be Cautious with Any Anthem Emails You Receive


Next, if you receive an email stating it is from Anthem, be cautious. Anthem’s website warns customers not to reply with information, click any links or open any attachments within the email. Anthem is not calling their customers and will not ask for information. Never give your credit card information, social security number, or other sensitive information to someone via email or over the phone.


3. Consider Freezing Your Credit


If you are a resident in Indiana, the Attorney General’s office website (http://www.in.gov/attorneygeneral/2853.htm) is offering and encouraging you to sign up for a free credit freeze with each of the three credit bureaus. A credit freeze places a hold on your credit where a new line of credit could not be obtained without you unfreezing your credit. This doesn’t affect already open credit lines like an existing credit card, yet helps to protect you against someone opening new lines of credit in your name.


4. Keep in the Know


Finally, try to keep in the loop on the Anthem Breach. The best source for current information about this breach can be found at Anthem’s Frequently Asked Questions. (http://www.anthemfacts.com/faq)

MutualBank is here to help inform you of ways to help protect against identity theft. Thank you for trusting us.

Sunday, February 15, 2015

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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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