Morning Business Memo…
The little guy is back. After years of shunning stocks, small investors have moved funds back into the market. The mutual fund industry says long term funds attracted nearly $65 billion in the first three weeks of the year. The averages are back up to their highest levels since 2007, before the crash. The Dow Jones index opens for business today above 14,000 after another rally on Friday.
With all the market euphoria, and a rally in the housing market, plus gains for auto sales, it may be surprising that U.S. consumers are still very cautious about spending money. A government survey released late last week showed the savings rate rose in December. Phil Orlando, chief equities strategist at Federated Investors, tells ABC News Radio: “If consumers and businesses were extraordinarily confident they would be going out and spending and bringing that savings rate down.” Gridlock in Congress may be one reason why consumers and businesses remain so cautious. “I think what’s been going on in Washington is an economic chilling effect,” says Orlando. “People just don’t know what to make of it and to some degree some businesses and consumers may have just held back a little bit.” Despite recent gains, consumer confidence remains well below its historical average.
What’s ahead for the economy this week? December factory orders highlight a light week of data. Orders for manufactured goods are due this morning. They were flat in November. Factories look to have been recovering from a slump in early 2012, but concerns remain that some weakness in global economy is holding back U.S. exports.
Something new from McDonalds. It’s offering its first new Happy Meal entree in a decade: Fish McBites. The world’s biggest hamburger chain – yes hamburgers – says Fish McBites will be widely available at U.S. restaurants starting this week through March, to coincide with Lent.
One day after the big game, the New Yorker’s financial guy James Surowiecki makes the case for ending the federal ban on sports betting. “Last week football fans across the country committed a crime: they bet on the Super Bowl,” he writes. Billions of dollars were wagered, but in many cases betting “makes criminals rich. People still gamble, after all: the National Gambling Impact Study Commission estimates that more than $300 billion dollars is bet on games annually.”
Richard Davies Business Correspondent ABC NEWS Radio ABCNews.com twitter.com/daviesabc