"Don't, don't you want me? You know I don't believe you when you say you don't need me."
-The Human League, Don't You Want Me

America has something the rest of the world wants. In fact, we have many things the rest of the world wants, but one thing in particular. This proverbial 800 pound gorilla helps protect the US economy and King Kong remains hungry. Who is King Kong?

You are! And so are your family, friends, colleagues, neighbors. In reality, it is not who you are, but what you are. Approximately 70% of the US economy is driven by consumer spending. This is around $11 trillion a year ($11,000,000,000,000!!!) and there are no signs of it slowing down any time soon.

"Colored lights can hypnotize, sparkle someone else's eyes."
-Guess Who, American Woman

But the strengthening dollar is making it less attractive to export our goods, China's economy is slowing, Europe is teetering on recession and there is turmoil in the middle east (when is there not?). Am I too much of an optimist? Am I blinded by the stars and stripes?

When I look through my sunglasses I see a country where we are experiencing positive job growth rates. Maybe job rates are not growing as fast as we would like to see, but still net positive growth which potentially leads to wage pressure. I see historically low interest rates and a Federal Reserve that is hesitant to raise rates which makes borrowing costs low. I also see oil prices at multi-year lows providing a great savings at the pump and home heating bills.

These factors suggest an overall increase in disposable income from wages, refinancing debt, lower energy prices, etc. But what is the likelihood that the average American is going to use the extra money in their pocket to pay down debt or even save it? I may be part optimist, but I'm also part realist. We Americans have a low historical savings rate. The extra money saved at the pump is more likely turning into another meal at a restaurant, clothing or reason to travel rather than ending up in a savings or investment account. King Kong will continue to feed the economy. This setting makes the US an attractive destination for foreign investors which would increase demand for American assets.

"Do you, you... feel like I do?"
-Peter Frampton, Do You Feel Like We Do

From an investment standpoint, I remain biased towards the US stock market as does Jeff Saut, Raymond James Chief Investment Strategist. On January 7, 2015, Jeff wrote that he "expects the S&P 500 (SPX/2002.61) to return somewhere between 10% and 12% for the year. Granted the 'wild card' should be the Federal Reserve. If they raise interest rates too fast, it will be discomforting for the equity markets and very likely cause price/earnings' (PE) multiples to contract. The quid pro quo is that if the Fed stays looser for longer than anticipated, 2015 could turn out to show better returns than 2014."

Whether interest rates remain low or begin to rise, investors need to understand reinvestment risk and the potential impact on their bond positions. Many bonds are maturing (or being called) and investors are experiencing difficulty in finding bonds of similar quality and yield in this low rate environment. Likewise, interest sensitive bonds have an inverse relationship to interest rates. If interest rates begin to rise, those bonds will begin to lose in value. The faster interest rates rise, the faster bond values may drop. This may lead investors to consider utilizing dividend paying stocks to attempt to generate income, growth of principle and attempt to minimize the aforementioned risks and therefore increase demand for stocks.

I hope you enjoy a happy and prosperous 2015!

Past performance may not be indicative of future results. There is no assurance the trends mentioned will continue or that the forecasts discussed will be realized. The market value of securities fluctuates and you may incur a profit or a loss. The performance mentioned does not include transaction costs which would reduce an investor's return. The S&P 500 is an unmanaged index of 500 widely held securities. An investment cannot be made directly in the index. Dividends are not guaranteed and will fluctuate.