My opening comment last month was about declining oil prices and the same will be the case in this month’s letter. This morning, Brent Crude Oil has dropped below $65/barrel for the first time since 2009 and OPEC has cut their demand forecast for Crude Oil to a 12 year low. In November, OPEC pumped 30.56 million barrels a day, exceeding its collective target of 30 million for the sixth consecutive month and the demand for their crude next year will be below the 28.93 million required in 2009 and the lowest since 27.05 million in 2003.

 Yes, it has been nice to pay less at the pump, but a large concern today is that not only is the price decline due to over production (supply), but also is it possible that demand is decreasing more substantially than originally thought and that global economic growth is possibly in jeopardy? No one really has that answer at this moment, but the fear of it is causing the stock market to decline today. The Dow 30 Industrial Average is trading at this moment at 17,600 after only a few days ago trading 6 points shy of 18,000.

 LPL Research likes to take a longer view and looking ahead to 2015 they sense a favorable environment for stocks. Broad policy measures, such as the Affordable Care Act (ACA), tax reform, the federal budget, and regulations in certain sectors such as energy and financial services may be set up for a different dynamic policy in Washington. Additionally, and regardless of which party is in political power, the year before an election cycle has been historically a good one for stocks.

 The “Beige Book”, a recently released qualitative assessment of the U.S. economy and each of the 12 Federal Reserve (Fed) districts, suggests that market concerns regarding growth around the world may be overdone. LPL Research believes the latest “Beige Book” reflects a picture of the U. S. Economy that expanded in October and November. Also noted were a number of district contacts that remained optimistic about the future of economic activity and in general, this favorable view far outweighed pessimism. As it has over the past year or so , the December 3, 2014 “Beige Book” noted that in general, employers were having a difficult time finding qualified workers for skilled positons and that some reported upward wage pressures for particular industries and occupations. If this is true and continues into 2015, history suggests that it won’t be long until Fed policymakers begin to take note of a faster pace of wage inflation in their monetary policy deliberations. This is exactly what economists have been hoping for in this expansion, but have not seen until possibly now.

 Lastly, if you had a significant taxable event in 2014 outside of LPL Financial that we should be aware of, please let us know. It may be something we can adjust for.  Have a happy Holiday Season – Mark

                      ________________________________________________

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. No strategy assures success or protects against loss.  Some of this research material has been prepared by LPL Financial. The Dow Jones Industrial Average is comprised of 30 stocks that are major factors in their industries and widely held by individuals and institutional investors. Referenced material:  LPL Financial Weekly Economic Commentary and LPL Financial Weekly Market Commentary, both dated December 8, 2014.  Tracking #: 1-336310.