Business

The Bull Market Turns 6 After Rising from Financial Crisis

Published

10 years ago

March 9, 2015

In this March 4, 2015 photo, people pose with the Charging Bull sculpture, by artist Arturo Di Modica, in New York’s Financial District. Six years after the Standard & Poor’s 500 index bottomed out at 676.53 on March 9, 2009, investors are enjoying one of the longest bull markets since the 1940s. (AP Photo/Richard Drew)

Steve Rothwell, ASSOCIATED PRESS

NEW YORK (AP) — In 2009 the stock market was filled with panic.

The housing market had collapsed. Lehman Brothers had gone under and General Motors was on the verge of bankruptcy reorganization. The U.S. was in a deep recession, and stocks had plunged 57 percent from their high in October 2007.

Fast forward six years, and investors are enjoying one of the longest bull markets since the 1940s.

The Standard & Poor’s 500 index has more than tripled since bottoming out at 676.53 on March 9, 2009. The bull has pushed through a U.S. debt crisis, an escalating conflict in the Middle East, renewed tensions with Russia over Ukraine and Europe’s stagnating economy.

So has this bull run its course? Most market strategists haven’t yet seen the signs that typically accompany a market peak. Investors are yet to become rash, or overconfident.

“Bull markets end not because they grow old. They end because some excesses build,” says Stephen Freedman, head of cross-asset strategy at UBS Wealth Management.

Here are questions and answers about the run-up in stocks:
Q: WHY DO STOCKS KEEP RISING?

A: It’s a powerful combination of higher corporate profits and a growing economy.

The main driver is company earnings. Companies slashed costs in response to the Great Recession that began in December 2007. That helped boost profit margins when demand began to recover. As a result, earnings per share have risen consistently since the end of the recession in 2009. Companies in the S&P 500 are forecast to generate record earnings of $119.35 per share this year, nearly double what they earned in 2009.

Hiring is picking up and costs are down, and that means Americans are more confident about the economy than at any time since the recession. Unemployment has fallen to 5.5 percent from a peak of 10 percent in 2009. A plunge in the price of oil has pushed down gas prices and put more money in Americans’ pockets. Most economists forecast growth of more than 3 percent this year.

As investors become more confident about growth, they’re willing to pay more for stocks. The average price-to-earnings ratio for an S&P 500 company, which measures how much investors are willing to pay for every dollar in earnings, stands at 17.2. Six years ago, it was 11.
Q: WHAT ROLE HAS THE FEDERAL RESERVE PLAYED?

The Federal Reserve has held its main lending rate close to zero since 2008. It has bought trillions of dollars in bonds to help hold down long-term interest rates. By cutting rates, policymakers have encouraged businesses and consumers to borrow and spend.

The historically low interest rates in the bond market have also made stocks look more attractive in comparison.

The average dividend yield, a measure of a company’s stock price compared to the dividend it pays, is 2.06 percent for S&P 500 stocks. The yield on the ultra-safe 10-year Treasury note is 2.24 percent.

“Essentially, by investing in the S&P, you’re getting the same yield as you would on a Treasury,” says Marc Pinto a portfolio manager at Janus. “But you have … the upside of stocks moving higher as companies grow their earnings.”

Low rates will likely help lift stocks for some time to come. While investors say there is a chance that the Fed may raise rates as soon as June, few expect a rapid series of rate hikes.
Q: HOW DOES THIS RUN COMPARE WITH PREVIOUS BULL MARKETS?

A: There have been 12 bull markets since the end of World War II, with the average run lasting 58 months, according to S&P Capital IQ. At 72 months, the current streak is the fourth longest in that period. While this run could be described as middle-aged, it is still a few years short of the longest streak, which started in 1990 and stretched 113 months into 2000.
Q: IF YOU INVESTED $10,000 AT THE BOTTON, HOW MUCH WOULD YOU HAVE MADE?

A: The S&P 500 has returned 253 percent since March 9, 2009. That means an investment of $10,000 would now be worth $25,262. Investing the same amount in the Dow Jones industrial average over the same time would have turned $10,000 into $22,428.
Q: HOW LONG CAN THIS BULL MARKET CONTINUE?

A: All bull markets must end. That’s simply the nature of financial markets. However, few analysts are calling the end of this one just yet.

The U.S. economy is continuing to strengthen and inflation remains tame. And while the Fed has ended its bond-buying program, other global central banks, like the European Central Bank and the Bank of Japan, are still providing stimulus to their economies.

“I don’t anticipate that stocks will face any challenges in the near-term,” says Michael Arone, chief investment strategist for State Street Global Advisors. “If there were some type of a recession, or a slowdown in the U.S., that would hurt for sure … but I don’t see that on the horizon.”

Also, many of the excesses that accompany bull-market peaks haven’t surfaced, says UBS Wealth Management’s Freedman. Think of the housing boom that preceded the bust that began in 2007, or the dot-com mania of 1999 and early 2000.

“Because the recovery has been so sluggish, nobody has had time to go overboard with the type of behavior that’s come back to haunt the markets,” he says.
Q: WHAT KILLS BULL MARKETS?

A: Typically, it’s a recession. Four of the five bull markets since 1970 ended as investors got spooked by a recession, or the anticipation of one.

Bank of America analysts say that the most likely threat to the bull market would be rising inflation. That could cause a sell-off in bonds, sending shock waves throughout financial markets.

Another threat is a slump in earnings. That could happen if the surging dollar, already at a 12-year high against the euro, grows even stronger, making U.S. goods more expensive to customers overseas and translating into fewer dollars to corporate bottom lines.

Some investors are planning for a sell-off.

James Abate, chief investment officer of Centre Funds, says he sees a much stronger probability of the U.S. economy falling into recession than most investors and analysts. He says the stock market’s gains are at odds with the performance of the economy. Growth remains steady, but could hardly be described as robust. That means companies will have a hard time boosting sales, ultimately undermining their earnings.

“We will not be celebrating the seventh anniversary of the current bull market,” Abate says.

Follow Steve Rothwell on Twitter @SteveRothwellAP.
Copyright 2015 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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‘Jim Crow Was and Remains Real in Alameda County (and) It Is What We Are Challenging and Trying to Fix Every Day,’ Says D.A. Pamela Price

“The legacy of Jim Crow is not just a legacy in Alameda County. It’s real. It is what is happening and how (the system is) operating, and that is what we are challenging and trying to fix every day,” said D.A. Price, speaking to the Oakland Post by telephone for over an hour last Saturday. “Racial disparities in this county have never been effectively eliminated, and we are applying and training our lawyers on the (state’s) Racial Justice Act, and we’re implementing it in Alameda County every day,” she said.

Published

2 hours ago

November 2, 2024

Oakland Post

Exclusive interview with County D.A. Price days before recall election. Photo by Ken Epstein.

By Ken Epstein

Part One

Alameda County District Attorney Pamela Price gave an exclusive in-depth interview, speaking with the Oakland Post about the continuing legacy of Jim Crow injustice that she is working to overturn and her major achievements, including:

restoring and expanding services for victims of crime,
finding funding for an alternative to incarceration and/or prosecution for substance use and mental health-related misdemeanors and
aggressively prosecuting corporations for toxic pollution and consumer violations.

“Racial disparities in this county have never been effectively eliminated, and we are applying and training our lawyers on the (state’s) Racial Justice Act, and we’re implementing it in Alameda County every day,” she said.

Passed by the State Legislature, this law “is an extremely helpful tool for us to address the racial disparities that continue to exist in our system,” she said.

(The law addresses) “the racial disparities that we find in our juvenile justice system, where 86% of all felony juvenile arrests in the county are Black or Brown children.

“We trained the entire workforce on the Racial Justice Act. We are creating a data system that will allow us to look at the trends and to clearly identify where racism has infected the process. We know that where law enforcement is still engaging in racial profiling and unfair targeting and arresting, we’re trying to make sure we’re catching that.”

Many people do not know much about the magnitude of Alameda County District Attorney’s job. Her office is a sprawling organization with 10 offices serving 1.6 million people living in 14 cities and six unincorporated areas, with a budget this year of about $104 million.

Asked about her major achievements since she took office last year, she is especially proud of the expanded and renewed victims’ services division in the DA’s Office, she said.

“We have expanded and reorganized the entire claims division so that we are now expediting as much as possible the benefits that victims are entitled to. Under my predecessor, they were having to wait anywhere, sometimes as long as a year, to 400 days to get benefits.

“Claims had been denied that should not have been denied. So, we’re helping people file appeals on claims that were denied under her tenure,” D.A. Price said.

“Under my predecessor, (the victims’ service office) was staffed by people who were not trained to provide trauma-informed services to victims, and yet they were the only people that the victims were in contact with. We immediately stopped that practice,” she continued.

“We had to expand the advocate workforce to include people who speak Hmong, the indigenous language of so many people in this county who are victims of crime.”

More African Americans advocates were hired because they represent the largest percentage of crime victims and we hired a transgender advocate and advocates who speak Cantonese and Mandarin. “The predominantly Chinese American community in Oakland was not being served by advocates who speak the language,” said D Price

“We reduced the lag time from the delivery of benefits to victims from 300 to 400 days down to less than 60 days.”

She increased victim advocacy by 38%, providing critical support to over 22,500 victims, a key component of community safety.

Other major achievements:

She recently filed 12 felony charges against a man accused of multiple armed robberies, demonstrating her seriousness about prosecuting violent crimes
In October, a jury delivered a guilty verdict in the double murder trial of former Alameda County Sheriff’s Deputy Devin Williams, showing DA Price’s commitment to holding law enforcement accountable.
She recently charged a man and woman in unincorporated San Leandro with murder, felony unlawful firearm activity, and felony carrying a loaded firearm in public.
A. Price’s office was awarded a $6 million grant by the state for its CARES Navigation Center diversion program. In partnership with the UnCuffed Project at a Seventh Day Adventist Church in Oakland, the program provides resources and referrals for services to residents as an alternative to incarceration and/or prosecution for substance use and mental health-related misdemeanors.

“This is the largest grant investment in the history of the Alameda County District Attorney’s Office,” said D.A. Price.

She explained that the program now has a mobile unit. “We have washers and dryers. We have a living room. We have a television. It’s a place where people can decompress, get themselves stabilized,” she said.

The project has “the ability to refer people to housing, to more long-term mental health services, to social services, and to assist them in other ways.”

Her office joined in a $49 million statewide settlement with Kaiser Health Plan and Hospitals, resolving allegations that the healthcare provider unlawfully disposed of hazardous waste, medical waste, and protected health information. The settlement, which involved the state and a half dozen counties, resulted in Alameda County receiving $7 million for its residents.
DA Price charged a former trucking company employee for embezzling over $4.3 million, showing her commitment to tackling white-collar crime.
For the first time, Alameda County won a criminal grand jury indictment of a major corporation with two corporate officers that have been sources of pollution. “They had a record of settlements and pollution in this community, and they had a fire that constituted a grave danger,” she said.

Attorney Walter Riley contributed to this article.

See Part Two

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Oakland Post: Week of October 30 – November 5, 2024

The printed Weekly Edition of the Oakland Post: Week of October 30 – November 5, 2024

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1 day ago

November 1, 2024

Oakland Post

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Business

Chevron Reports Progress in Flaring, Emissions at Community Town Hall

At the first in a series of community town halls on Oct. 16, Chevron Richmond reported a reduction in year-over-year flaring incidents, both in number and duration, and detailed new technologies and processes that will further drive down emissions and heighten community awareness about operations. Chevron employees also answered questions from the community and listened to concerns at the town hall, which was hosted by Ceres Policy Research and held at CoBiz in downtown Richmond.

Published

5 days ago

October 28, 2024

Oakland Post

Community member Kathleen Sullivan speaks at the Chevron town hall. Photo courtesy Richmond Standard.

By Mike Aldax

The Richmond Standard

Chevron employees also answered questions from the community and listened to concerns at the town hall, which was hosted by Ceres Policy Research and held at CoBiz in downtown Richmond.

Similar town halls will be held twice per year over the next five years as part of a settlement agreement with the Bay Area Air Quality Management District (BAAQMD).

The goal is to increase transparency about flaring and increase opportunities for the community to get answers to their questions about potential impacts to the community.

A key output is the creation of a Community Action Plan, or CAP. The CAP aims to create a two-way dialogue between Chevron and neighbors around flaring and environmental compliance.

“Chevron’s focus in this process is one of learning and engagement,” said Brian Hubinger, public affairs manager at Chevron Richmond. “We felt the most efficient way was to bring together a broad selection of community members rather than just think about what it would take to comply with the settlement agreement.”

The first town hall drew a few dozen members of the community, including Chevron employees, representatives of fence-line neighborhoods and members of local environmental organizations.

During the event, Chevron employees reported that 19 BAAQMD-reportable flaring incidents occurred at the refinery from October 2022 to September 2023 with a total duration of 270 hours. During the same period this year, 18 flaring incidents occurred with a total duration of 159 hours, marking a 41% decrease in duration.

Further gains are expected with the implementation of Flare IQ, set to be installed this year and next on all of the refinery’s flaring systems. Flare IQ is described as a supercomputer with an algorithm that gathers data from operations and enables employees to address potential issues before they occur.

Chevron also reported a 40% decrease in particulate matter emissions since the completion of the refinery modernization project in 2018.

In addition, flare gas volume related to Chevron’s new hydrogen plant project, built as part of the modernization project, decreased by 85% since 2019. The hydrogen plant has also reportedly made the refinery 20% more efficient.

“We’re really proud about that,” said Kris Battleson, manager of health, safety and environment at Chevon Richmond.

Neighborhood council leaders joined the president of the local NAACP in lauding the effort toward transparency and accountability. Among them was Vernon Whitmore, president of the Sante Fe Neighborhood Council and member of the 15-person CAP committee.

“The way we were able to talk openly and freely with Chevron – honestly, bluntly and frankly – while developing this program was very good,” Whitmore said. “And it was something that was well-needed at this time.”

Still, residents are skeptical, including Kathleen Sullivan, a longtime community advocate who also serves on the CAP committee. But she added, “you can’t complain about something and not be involved in the solution.”