Dec Jobs Report: Dude, Where’s My Raise?

It’s official: 2014 was the best year for job growth since 1999, with a total of 2.952 million non-farm jobs created. The Labor Department reported that the U.S. economy added 252,000 jobs in December and the unemployment rate dropped to 5.6 percent, the lowest level since June 2008. That said, the labor market still remains in the healing phase for at least these four reasons:

1. We Ain’t there yet: The Hamilton Project at the Brookings Institute examines the “jobs gap,” which is the number of jobs that the U.S. economy needs to create in order to return to pre-recession employment levels while also absorbing the people who enter the potential labor force each month. To keep up with population growth since the recession began, the economy would need to create about 4.6 million additional jobs.
2. Broad Unemployment Rate is still high: The headline unemployment rate of 5.6 percent is awfully close to the average of 5.5 percent recorded from 1990 – 2006. But the broader unemployment rate (the BLS statistic known as “U-6”, which includes official rate, plus marginally attached workers, those who are neither working nor looking for work, but want a job and have looked for work recently; and people who are employed part-time for economic reasons), stood at 11.2 percent at the end of 2014. While that is down from the 13 percent from a year ago and way down from 17.1 percent seen in April 2010, it is still above the 8 to 9 percent readings observed before the recession started.
3. Whither the American Worker? The participation rate, which counts the number of Americans who are employed or actively seeking a job, fell to a fresh 36-year low of 62.7 percent. Before the recession started, 66 percent of the working age population either had a job or was looking for one. Economists estimate about half of the drop is attributed to baby boomers retiring, but the other half is likely due to the severity of the recession and something that economists call “labor market scarring,” which means that when some people lose their jobs amid a deep downturn, they find other ways to survive, including relying on friends and family; claiming disability or working under the table.
4. Dude, Where’s My Raise? Average hourly earnings fell by 0.2 percent in December from the prior month, which put wage growth at just 1.7 percent annually, (Thankfully, because of the big drop in oil and gas, inflationis running at 1.3 percent from a year ago.) In previous expansions, wage growth averaged 3 to 3.5 percent.

Just days ahead of the December jobs report, the Federal Reserve Bank of San Francisco released a paper asking “Why Is Wage Growth So Slow?” (I asked a similar question six months ago, “When Will Americans Get a Raise?”) Authors Mary C. Daly and Bart Hobijn note, “A prominent feature of the Great Recession and subsequent recovery has been the unusual behavior of wages.” At this point you may want to exclaim, “NO KIDDING” or some other expletive, but what was really unusual about the most recent recession, according to the research, is that more workers did not take STEEPER wage cuts.

In past recessions, companies cut wages and then subsequently raised them amid upturns. But in the past three recessions, Corporate America minimized wage cuts and instead laid-off more workers. The goal was to keep the remaining workers happy. Who knew that those who kept their jobs had it better than they thought?

Because many firms did not reduce wages during the recession, “they must now work off a stockpile of pent-up wage cuts.” And because “it takes some time to fully exhaust the pool of wage cuts, wage growth remains low even as the economy expands and the unemployment rate declines.”

That’s why despite putting up the best year for job creation since 1999, wage growth continues to be disappointing. “Industries that were least able to cut wages during the downturn and therefore accrued the most pent-up cuts have experienced relatively slower wage growth during the recovery.” Fed economists say wage growth should slowly pick up, as the labor market tightens and companies are forced to pay up for talent. American workers are waiting...

MARKETS: If the first week of the year is a harbinger for the rest of 2015, we better fasten our seat belts, because it's going to be a bumpy ride.

• DJIA: 17,737, down 0.5% on week, down 0.5% YTD
• S&P 500: 2045, down 0.6%, down 0.7% YTD
• NASDAQ: 4704, down 0.5%, down 0.7% YTD
• Russell 2000: 1185, down 1.1% on week, down 1.6% YTD
• 10-Year Treasury yield: 1.97% (from 2.12% a week ago)
• February Crude Oil: $48.36, down 8.2% on week (7^th consecutive weekly loss)
• February Gold: $1,216.10, up 2.5% on week
• AAA Nat'l average price for gallon of regular Gas: $2.14 (from $3.32 a year ago)

THE WEEK AHEAD: What’s the upside of stagnant wages? It’s good for corporate profitability. This week kicks off quarterly earnings season and the estimated year-over-year earnings growth rate for S&P 500 companies in Q4 is 1.1 percent, according to Factset. Analysts will also be keeping a close tab on those companies that are either hurt by or benefit from lower oil prices.

Mon 1/12:

Alcoa

Tues 1/13:

7:30 NFIB Small Bus Optimism

10:00 Job Openings and Labor Turnover Survey (JOLTS)

Weds 1/14:

JP Morgan Chase, Wells Fargo

8:30 Dec Retail Sales

2:00 Fed Beige Book of Economic Conditions

Thurs 1/15:

Citigroup, Bank of America, Schwab, Schlumberger, Intel

8:30 Weekly Jobless Claims

8:30 Producer Price Index

8:30 Empire State Manufacturing Index

10:00 Philadelphia Fed Survey

Fri 1/16:

Goldman Sachs

8:30 Consumer Price Index

9:15 Industrial Production

9:55 Consumer Sentiment

#201 New Year's Reallocation, Student Loan Forgiveness

Forget New Year's resolutions; we're doing New Year REALLOCATIONS! Shane kicked off the conversation with a good problem: What to do with $500K in cash? One easy place to start: A diversified portfolio, that takes into account risk tolerance and time horizon.

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Larry is on the other end of the risk spectrum from Shane, but maybe that's just fine for his situation. Both Carolyn and Jerome asked about how to select a financial advisor.

These questions provided a perfect opportunity for me to explain the different types of advisors and the various ways you can pay for services. For more, you can check out: Protect Against Scams: 10 Questions to Ask Financial Advisors. We also were able to exonerate Brian from his self-described "financial malpractice".

Finally, here's last week's CTM segment about the diving stock and oil markets.

Thanks to everyone who participated and to Mark, the BEST producer in the world. Check out Mark's first-producing credit for this CBS Evening News segment that aired recently. If you have a financial question, there are lots of ways to contact us:

• Call 855-411-JILL and we'll schedule time to get you on the show LIVE 

• Send an email: askjill@jillonmoney.com 

• Tweet us: @jillonmoney and @MTalercio

Protect Against Scams: 10 Questions to Ask Financial Advisors

SCAM ALERT! The North American Securities Administrators Association (NASAA) and the Financial Industry Regulatory Authority (FINRA) have both issued annual reports identifying the top threats investors are likely to face in 2015. The lists are lengthy, but a couple of new, noteworthy threats you should guard against include:  Pot Schemes: Legalization of marijuana has encouraged promoters to market and sell investments in this emerging and fast-growing industry, and securities regulators are seeing “pump and dump” scams. "Fraudsters lure investors with aggressive, optimistic, and potentially false or misleading information designed to create unwarranted demand for shares of a small, thinly traded company with little or no history of financial success (the “pump”). Once share prices and volumes peak, scammers behind the ploy sell their shares at a profit, leaving investors with worthless stock (the “dump”)." One more note: Even legitimate companies promoting a new venture in a new field are highly speculative and carry a high degree of risk for investors. 

BitCoin Bites: Another area of concern is for securities offerings tied to digital currencies, where unscrupulous promoters are often illegally offering securities tied to these currencies.

Some of the old problems for investors remain in 2015. Here are just some of the issues that are on FINRA's radar screen:

Customer Comes Last: FINRA says that too many firms and their representatives are not putting customers’ interests first.

Variable Annuity Ambiguity: Regulators are focusing on sales practice issues associated with variable annuities, because many consumers purchase these contracts without fully understanding the steep fees involved.

Senior Investors: The U.S. Senate Special Committee on Aging estimates that older Americans lose $2.9 billion to fraud each year. In fact, there is so much targeting of older Americans, that the Committee launched a special fraud hotline to help deal with the "epidemic" and has held a series of investigations to spotlight the devastating impact fraud has on seniors.

Separately, FINRA examiners continue to review communications with seniors; the suitability of investment recommendations made to seniors; and the techniques used to attract senior investors. Additionally, the Consumer Financial Protection Bureau provides resources for families trying to ward off the senior scammers.

If all of these frauds has you spooked, GOOD! That means that you are ready to start asking the right questions of financial professionals. Once again, here are my favorite ten questions to ask any potential financial advisor, stock broker or insurance salesperson before you retain them:

1) Are you registered as an investment advisor? If yes, then the advisor owes you a fiduciary duty, which is a fancy way of saying that she must put your needs first. Investment professionals who aren't fiduciaries are held to a lesser standard, called “suitability,” which means that anything they sell you has to be appropriate for you, though not necessarily in your best interest.

2) How will I pay for your services? The advisor should clearly state in writing how she will be paid for the services provided. The three basic methods of payment are: fees based on an hourly or flat rate; fees based on a percentage of your portfolio value, often called "Assets Under Management" ("AUM"); and commissions paid per transaction. How often you expect to trade, and whether you want your money pro-actively managed, will help determine which model works best for you.

3) What experience do you have? Find out how long the advisor has been in practice and where. Also ask if she has any professional certifications, licenses or designations. While these are signals of credibility, they don't guarantee a successful relationship. Here’s a description of some of the more common financial planner designations:

• CFP® certification: The Certified Financial Planner Board of Standards (CFP Board) requires candidates to meet what it calls “the four Es”: Education (Education (through one of several approved methods, must demonstrate the ability to create, deliver and monitor a comprehensive financial plan, covering investment, insurance, estate, retirement, education and ethics), Examination (a 10-hour exam given over a day and a half; most recent exam pass rate was 62.6 percent), Experience (three years of full-time, relevant personal financial planning experience required) and Ethics (disclosure of any criminal, civil, governmental, or self-regulatory agency proceeding or inquiry). CFPs must adhere to the fiduciary standard.
• CPA Personal Financial Specialist (PFS): The American Institute of CPAs® offers a separate financial planning designation. In addition to already being a licensed CPA, a CPA/PFS candidate must earn a minimum of 75 hours of personal financial planning education and have two years of full-time business or teaching experience (or 3,000 hours equivalent) in personal financial planning, all within the five year period preceding the date of the PFS application. They must also pass an approved Personal Financial Planner exam.
• Membership in the Membership in the National Association of Personal Financial Advisors (NAPFA): NAPFA maintains a high bar for entry: Professionals must be RIAs and must also have either the CFP or CPA-PFS designation. Additionally, NAPFA advisers are fee-only, which means that they do not accept commissions or any additional fees from outside sources for the recommendations they make. In addition to being fee-only, NAPFA advisers must provide information on their background, experience, education and credentials, and are required to submit a financial plan to a peer review. After acceptance into NAPFA, members must fulfill continuing education requirements. The stiff requirements make NAPFA members among the tiniest percentage of registered investment advisers, with only 2,400 total current members.

4) What services do you offer? The services offered can depend on a number of factors including credentials, licenses and areas of expertise. Some offer advice on a range of topics, but do not sell financial products. Others may provide advice only in specific areas such as estate planning or tax matters.

5) What is your approach to financial planning and investing? Some advisors prefer to develop a holistic plan that brings together all of your financial goals. Others provide advice on specific areas, as needed. Make sure the advisor’s viewpoint on investing is neither too cautious nor overly aggressive for your risk tolerance. Also ask whether the planner makes investment decisions herself, or depends on others in the firm to do so. What was the advisor's performance in both good and bad markets and ask yourself whether it’s more important to you to make money in a rising market or prevent losses in a down market. A great follow up question: what were the three worst investment decisions you made over the past five years, and how did you correct them?

6) Can you provide three references? Ask for two current clients whose goals and finances match your own, as well as a professional reference, like an accountant or estate attorney.

7) Do you have a financial interest in the entity that houses my account? This is your Madoff-prevention question. When interviewing advisors not associated with large brokerage or insurance companies, ask if they use an independent, third party custodian or clearing firm (this is the entity that produces your statements), which prevents the advisor from having direct custody of your assets and adds another level of security for your account. In the Madoff example, he was the investment advisor, broker-dealer, clearing agent and custodian for all of his client accounts.

8) Is there anything in your regulatory record that I should know about? Part of your research should include conducting background checks on the professional you may hire. You can visit the Securities & Exchange Commission and FINRA websites or the State Securities website NASAA as well as the CFP Board. While some violations are non-starters (settlement of multiple customer complaints) others may be understandable (marketing materials not pre-approved; non-client or investment violations).

9) How often will we interact? What should you expect in terms of frequency of verbal, written and in-person communication? Also ask whether the advisor will remain your primary contact.

10) Do I like this person? You are about to enter into an intimate relationship that will hopefully last a long time. If you have any reservations, move on. There are plenty of qualified advisors out there, who would like to help you out.

#200 The Social Security Special

What better way to celebrate our 200th show -- and the first program of 2015 -- then to have Social Security expert Bill Meyer as our guest! Bill is the founder and Managing Principal of the terrific SS resource, SocialSecuritySolutions.com.

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Bill discusses the Social Security system, how to improve it and then dives into the various strategies available to retirees. With hundreds of thousands of dollars at stake, you can't miss this show!

Thanks to everyone who participated and to Mark, the BEST producer in the world. Check out Mark's first-producing credit for this CBS Evening News segment that aired recently. If you have a financial question, there are lots of ways to contact us:

• Call 855-411-JILL and we'll schedule time to get you on the show LIVE 

• Send an email: askjill@jillonmoney.com 

• Tweet us: @jillonmoney and @MTalercio

2015 Economic Crystal Ball

No rest for the weary or hung over…time to dust off the crystal ball to see what lies ahead! Global Economy: After increasing at an estimated 2.4 percent rate in 2014, economists expect that U.S. GDP will pick up to 3 percent this year, which would be the strongest growth in a decade. Since 2000, the fastest real GDP growth was 3.8 percent in 2004, and the fastest growth for the recovery was 2.5 percent in 2010. The dot-com meltdown, plus the financial crisis has taken a toll on the U.S. economy since 2000, with an annualized pace of 1.9 percent, well below the post World War II average of 3.3 percent.

The drivers of growth include: consumers, who after paying down lots of debt, should see wage gains and will continue to enjoy the benefits of low energy prices; state and local governments, which have stopped slashing budgets and may spend a bit more freely; and the housing market, which after taking a breather in 2014, should contribute more to the economy in 2015.

Outside the U.S., the picture is more complicated. China’s double-digit growth rates are a thing of the past, as the world’s second largest economy attempts to impose controls that will likely keep GDP at six to 7 percent in the year ahead. Japan and Europe are still battling low prices, which is why central banks in both areas are likely to crank up efforts to defend against inflation. Emerging markets will continue to diverge, with countries that have not addressed economic imbalances, like Russian, Brazil and Venezuela struggling, while more balanced economies, like India, Thailand and Chile should be better positioned for growth.

2015 Year of the Raise: If 2014 was the year of the job (probably the best year for job creation since 1999), economists are hopeful that 2015 will be the year of the raise. Wage growth has remained stubbornly at 2 percent during the recovery, but this year, the improving economy and labor market should help wage growth finally start to outpace the rate of inflation.

Federal Reserve Rate Hikes: With bond buying over, the big question for 2015 is: “When will the Fed FINALLY increase short-term interest rates?” Reading between the lines of central bank speeches, statements and press conferences, most believe the first rate hike will occur in the third quarter of the year. Goldman Sachs analysts’ noted that once the Fed starts the process, it could move faster than the market now expects.

Oil: At her last press conference of the year, Janet Yellen called low oil a “transitory” phenomenon, which loosely translated means “Don’t get too used to those cheap gas prices!” The reason is that supply and demand will surely change. If the global economy picks up, so too will demand for oil, but these changes often occur slowly, which is why some economists are predicting that oil prices will likely remain in a range of $50 to $75 a barrel in 2015.

2014 MARKETS:

• DJIA: 17,823.07, up 7.5% (6^th annual gain, longest streak since 1990s)
• S&P 500: 2058.90, up 11.4% (up an average of 20.7% a year for the last 3 years including dividends, its best three-year returns since the late 1990s)
• NASDAQ: 4736.05, up 13.4%
• Russell 2000: 1204.70, up 3.53%
• Stoxx Europe 600: 342.54, up 4.35%
• Argentina Merval: 8579.02, up 59.14%
• Shangahi A Shares (Mainland China): 3389.40, up 53.06%
• RTS Russia: 790.71, down 45.19%
• 10-Year Treasury yield: 2.173% (from 3.03% a year ago)
• February Crude Oil: $53.27, down 46% (lowest level since May, 2008)
• February Gold: $1,184.10, down 1.5%
• WSJ Dollar index: 83.04, up 12% (highest level since Sep 2003)
• AAA Nat'l average price for gallon of regular Gas: $2.24 (from $3.32 a year ago)

THE WEEK AHEAD: 

Mon 1/5:

Automobile Sales

Tues 1/6:

9:45 PMI Services Index

10:00 Factory Orders

10:00 ISM Non-Mfg Index

Weds 1/7:

8:15 ADP Employment Report

8:30 International Trade

2:00 FOMC Minutes

Thurs 1/8:

8:30 Weekly Jobless Claims

3:00 Consumer Credit

Fri 1/9:

8:30 December Jobs Report

10:00 Wholesale Trade

2015 New Year's Resolutions

The practice of making resolutions for the New Year has been traced to the ancient Babylonians, who more than 4,000 years ago, made promises so that they would stay on the good side of the gods and start the year off on the right foot. Fast forward to modern times, where a resolution is less about earning the good favor of a higher power and more about making a promise to yourself that will enhance your life. According to Allianz Life Insurance Company’s 6th annual New Year’s Resolution Survey, the majority of Americans “will be more concerned about their waistlines than their wallets.” Maybe as the economy improves, people have become less focused on their financial lives, because only thirty percent of respondents said they plan to focus on money resolutions for 2015. A Fidelity Investments survey saw similar results and also found that among those considering a financial resolution, the top three are to save more, pay off debt, and spend less.

While making those promises is hard, keeping them is the real challenge. Research from the University of Scranton suggests that just eight percent of people achieve their New Year’s goals. Before you throw in the towel, let’s try to figure out how you might be more successful in keeping those resolutions.

The first step is to write down the resolutions and don’t make too many – why stack the deck against you? Next, make the resolution concrete. For example, instead of “save more,” the better resolution is “contribute six percent of my salary to my retirement plan”. To make sure you are on track, schedule time to check on your progress – I suggest quarterly.

If you need help coming up with resolutions, you can always default to “Jill’s Big Three”:

1. Zero consumer debt (credit card, auto loans)
2. Adequate emergency reserve funds (6-12 month’s worth of expenses; 12-24 months for retirees)
3. Maximization of retirement contributions (for 2015, $18,000 for 401(k), 403(b) and 457 plans, with an additional $6,000 catch up contribution available if you are over the age of 50; and $5,500 for IRAs, with an additional $1,000 catch up contribution). Don’t forget that you need a properly diversified portfolio that is consistent with your risk tolerance level.

For many, conquering the Big Three will require some time and energy. The process may even require you to (gasp) figure out where your money is going. The easiest way to do that is to track your expenses for three months. After doing so, you may find that there’s extra money available to help your efforts.

Once you have these covered the Big Three, you are not off the hook. You also need to draft/update wills and other estate documents; review insurance coverage (life, disability, long-term care and property and casualty); and make sure that you are taking advantage of all employee-based benefits that are available.

What comes next? That’s up to you. Do you want to buy a second home in the next year or two? If so, you may need to channel all available cash flow into a down payment fund. Are you ready to set aside some of your precious free cash flow for your kids in a Section 529 Plan or would you prefer to aim for early retirement? Do you need to think about caring for your aging parents? If so, have you had the tough talk with them to see what their wishes are?

These are just some of the questions that you need to consider how to prepare for your financial future. No wonder 92 percent of resolution-makers abandon the project! But with a well thought-out plan, you may find that those resolutions are just what was needed to help you reach your financial goals.

2014 Financial Year in Review

With just a few days before we turn the page to 2015, it’s time to take look back at 2014 and highlight some of the big financial stories and trends of the year. Economic Growth: The year started with weakness, due to unusually cold weather across the nation. The economy actually contracted by annualized pace of 2.1 percent in the first three months of the year, before recovering to grow by 4.6 percent in the second quarter and by a surprisingly strong 5 percent annualized pace in the third. The fourth quarter probably expanded by 2.5 to 3 percent, though the government will not release its first estimate of growth until January 30th. For the year, the economy likely grew by two and a half percent, which is a small improvement from the previous few years, though still below the long-term average of 3.3 percent.

Labor Market: 2014 was the year of the job. Through November, the year was on pace to be the best year for job creation since 1999, with the economy adding just over 2.6 million total payroll jobs. The unemployment rate stands at 5.8 percent, down from 6.7 percent at the end of last year; and the number of people out of work for more than six months has dropped from 3.9 million last December, to 2.8 million, the lowest level for long-term unemployed since January 2009. While 2.8 million is still very high, it is down from over 6 million from a peak in early 2010.

Federal Reserve and the Bernanke Hand-Off to Yellen: The transition from the Ben Bernanke era to the Janet Yellen regime was mostly smooth. Oh sure, there was the inevitable woops moment at her first press conference back in March, when the newly-anointed Fed Chair let it slip out that the Fed would raise rates “something on the order of around six months” after the central bank’s bond buying (aka “Quantitative Easing” or “QE”) ended. Those eight words threw financial markets into a temporary tailspin (reminiscent of 2013’s “Taper Tantrum,” which occurred after then-Chairman Ben Bernanke began discussing tapering bond purchases), as investors worried that the Fed would increase rates faster than expected.

As it turned out, Yellen’s Fed slowly unwound the central bank’s bond buying policy and announced its conclusion at the October FOMC meeting. Then, in its last policy meeting of the year, the Fed split the difference on the language it used to describe when it would increase short-term interest rates. The central bank “judges that it can be patient (emphasis mine) in beginning to normalize the stance of monetary policy,” but also added the new description of their stance was “consistent” with past assurances that rates would stay low for a “considerable time.” The last Fed meeting of the year and the subsequent Yellen press conference spurred the 2014 Santa Claus Rally.

Financial markets: The biggest market story of 2014 was the swift and steep near-50 percent plunge in crude prices. The catalyst for the drop was a combination of softening demand in China, Europe and Japan, combined with a surge in U.S. production. Because the price of oil determines about two-thirds of the price of a gallon of regular gas, drivers were delighted to enjoy the 38 percent dive from a high of $3.70 a gallon on April 8th, to $2.29 today.

Meanwhile, both the stock and bond markets performed far better than most analysts expected at the beginning of the year. While there were periodic ups and downs, investors were spared a full-blown stock market correction, defined a fall of at least 10 percent. (It may have felt like a correction in October, but that was a 7.3 percent drop.) As of this writing (I’ll update this post after the close on December 31), the S&P 500 is up 13 percent and the bond market has also seen smart gains, with US Treasuries returning 5.6 percent this year, on track for the best performance since 2011, after losing 3.4 percent last year, according to the Bloomberg U.S. Treasury Bond Index.

Of course, in any given year, there are winners and losers (in market lingo, this is sometimes called “divergence in performance.”) In 2014, the laggards in the equity universe were US small caps (loosely defined has companies having a market value less than $1 billion); and a handful of emerging stock markets. Before you throw in the towel on these assets, its good to remember that just because 2014 was a U.S., big-cap world, does not mean that 2015 will see a repeat performance. (There’s a reason why every investment prospectus features the warning “Past performance is not indicative of future results.”) In fact, small caps outperformed the broader market from the bear-market bottom of March 2009 through 2013. Think of 2014 as a bit of give back on that outperformance.

U.S. Government Backs Off: Here’s a nice change from 2013: this past year had no Congressional stand-offs! That’s right, no Fiscal Cliff, no Sequestration, no government shut down and no fight over the debt ceiling.

Geopolitical Issues Heat Up: 2014 was filled with a series of scary geopolitical events: unrest in Ukraine; Russian annexation of Crimea; an outbreak of violence between Israel-Hamas; the rise of ISIS; pro-democracy protests in Hong Kong; and an outbreak of Ebola. Economists call these events “exogenous,” which means coming from outside. The practitioners of the dismal science hate exogenous events, because they are impossible to predict. Investors also detest these events, because they often can have a significant negative effect on prices.

MARKETS: Holiday shortened weeks are usually kind to investors and last week did not disappoint. If history is any guide, the bulls are likely to remain in control next week too. During the last five trading sessions of December and the first two of January, the Dow has gained an average of 1.7 per cent, according to the Stock Trader's Almanac (the data go back to 1896!)

• DJIA: 18,053, up 1.4% on week, up 8.9% YTD (best 5 days since 2011)
• S&P 500: 2088, up 0.9% on week, up 13% YTD (52^nd record high of the year)
• NASDAQ: 4806, up 0.9% on week, up 15.1% YTD
• Russell 2000: 1215, up 1.5% on week, up 4.4% YTD
• 10-Year Treasury yield: 2.25% (from 2.18% a week ago)
• February Crude Oil: $54.73, down 4.2% on week
• February Gold: $1,195.30, down 0.04% on week
• AAA Nat'l average price for gallon of regular Gas: $2.29 (from $3.31 a year ago)

THE WEEK AHEAD:

Mon 12/29:

10:30 Dallas Fed Manufacturing Activity

Tues 12/30:

9:00 Case Shiller Home Price Index

10:00 Consumer Confidence

Weds 12/31:

8:30 Weekly Jobless Claims

9:45 Chicago PMI

10:00 Pending Home Sales

Thurs 1/1: NEW YEAR’S DAY – GLOBAL MARKETS CLOSED

Fri 1/2:

9:45 PMI Manufacturing

10:00 ISM Manufacturing

10:00 Construction Spending

#199 Reverse Mortgages, Capital Gains, Financial Planners

Retirement expert Mark Miller join the program to explain Social Security basics (which are always confusing!) and to provide an update about what the Affordable Care Act does for retirees who are pre-Medicare age.

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Mark is the editor and publisher of RetirementRevised.com, but as if that were not enough, he is also a journalist and author who writes for Reuters, Morningstar and anywhere else that a retirement guru is needed — that means a lot of places!

We also fielded questions on reverse mortgages, saving money to buy a house and what to do if you think that your advisor has a conflict.

Thanks to everyone who participated and to Mark, the BEST producer in the world. Check out Mark's first-producing credit for this CBS Evening News segment that aired recently. If you have a financial question, there are lots of ways to contact us:

• Call 855-411-JILL and we'll schedule time to get you on the show LIVE 

• Send an email: askjill@jillonmoney.com 

• Tweet us: @jillonmoney and @MTalercio

Janet Yellen Spurs Santa Claus Rally

Leave it to a nice Jewish girl from Brooklyn to give Santa Claus a nudge. In its last policy meeting of the year, Janet Yellen (who hails from Bay Ridge, Brooklyn) and her cohorts at the Fed split the difference on the language used to describe when we would see an increase short-term interest rates. The central bank “judges that it can be patient (emphasis mine) in beginning to normalize the stance of monetary policy,” but also added the new description of their stance was “consistent” with past assurances that rates would stay low for a “considerable time.” Investors loved the punt, believing that the Fed is not likely to raise rates any time soon. All of the sudden, the Santa Claus Rally was ON! In fact, after a dismal start to the week, stocks powered higher Wednesday through Friday (the best three-day percentage gain for the Dow and the S&P 500 in three years) and finished within striking distance of all-time highs. Fears melted away about the oil plunge signifying a global growth slowdown and a possible financial contagion from the Russian currency crisis, allowing ol’ Saint Nick (via Saint Janet) to take control.

Meanwhile, consumers and retailers are preparing for the last gasp of holiday shopping before Christmas. Early results have been mixed, but that might have more to do with the season stretching out over a longer period, than the fact that people are spending less overall. Separate data from IBM’s real-time tracking index of digital shopping and Adobe confirm that consumers have already spent record amounts online and companies like Wal-Mart and Target reported strong holiday numbers.

These results fly in the face of the National Retail Federation’s finding that total projected sales tumbled 11 percent during the Thanksgiving holiday weekend, but it’s important to note that NRF data is based on a totally non-scientific survey, which asks random shoppers whether they plan to spend more or less than last holiday season. Considering that most consumers can hardly recall what they spent last week - let alone last year, most analysts have dismissed NRF findings.

To determine whether or not Santa delivered retailers a jolly holiday season, we’ll have to wait until the Commerce Department releases its monthly retail sales report in January and retailers report their earnings reports for the fourth quarter. Until then, it’s probably best to concentrate on the holidays themselves and not get wrapped up in guesswork.

MARKETS: Last week was a great lesson in volatility…and if you can’t take it, then you might want to consider reviewing your portfolio allocation. For the five days, Santa stuffed investors’ stockings with gifts, not lumps of coal, as indexes climbed within spitting distance of milestones (Dow 18K) and records (S&P 500 2075).

• DJIA: 17,804, up 3% on week, up 7.4% YTD
• S&P 500: 2070, up 3.4% on week, up 12% YTD
• NASDAQ: 4765, up 2.4% on week, up 14.1% YTD
• Russell 2000: 1196, up 3.8% on week, up 2.8% YTD
• 10-Year Treasury yield: 2.18% (from 2.08% a week ago)
• January Crude Oil: $56.52, down 2.2% on week
• February Gold: $1,196, down 2.1% on week
• AAA Nat'l average price for gallon of regular Gas: $2.43 (from $3.22 a year ago)

THE WEEK AHEAD: By Tuesday at 10:15ET, you can call it quits for the week!

Mon 12/22:

8:30 Chicago Fed Nat’l Activity

10:00 Existing Home Sales

Tues 12/23:

8:30 Durable Goods Orders

8:30 Q3 GDP (final reading, previous=3.9%)

8:30 Personal Income and Spending

10:00 New Home Sales

Weds 12/24:

1:00 US Markets close early for Christmas

Thurs 12/25: CHRISTMAS DAY – MOST GLOBAL MARKETS CLOSED

Fri 12/26:

#198 The Hanukkah, Pre-Christmas Show

As you scramble to complete your holiday shopping, listen to the great questions that we field this week. We start with Karen from Iowa, who holds a large nest egg in illiquid investments. We then shift to Karen, who is getting into the holiday spirit by gifting to her children. (Anyone can give up to $14,000 to an individual without worrying about taxation.

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Steve is trying to decide how to manage his rental income and Dennis wanted to know about Required Minimum Distributions (RMDs).

With just days to go before 2015, check out these year-end money moves!

• 8 Year-End Tax-Planning Tips
• 5 Year-End Retirement Tips

Our guest Gary Zimmerman of MaxMyInterest.com explains his cool new service is like “Uber for cash” and how it can help you boost your returns with NO RISK!

Thanks to everyone who participated and to Mark, the BEST producer in the world. Check out Mark's first-producing credit for this CBS Evening News segment that aired recently. If you have a financial question, there are lots of ways to contact us:

• Call 855-411-JILL and we'll schedule time to get you on the show LIVE 

• Send an email: askjill@jillonmoney.com 

• Tweet us: @jillonmoney and @MTalercio