Weekly Economic Update

Economic Update 11-28-2016

 

  • During a shortened Thanksgiving week, durable goods orders came in stronger than expected, which buoyed hopes for business capex spending.  In real estate, home prices and existing home sales both showed continued growth.
  • Stock markets in the U.S. ended with positive returns again, with several all-time highs reached in a variety of both large- and small-cap indexes.  Bonds were mixed as interest rates ticked upward a bit, but at a slower pace than prior weeks.  Commodities were slightly higher as industrial metals experienced gains, but oil declined slightly.

Continue reading

Posted in Economic News | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

Weekly Economic Update

Economic Update 11-21-2016

  • In the week after the election, attention refocused onto potential policies as well as the strength of current data to again gauge the probability of a Fed rate increase in December.  Retail sales and manufacturing data both came in better than expected, as did housing starts and jobless claims.  Inflation showed more tempered gains, as represented by PPI and CPI.
  • Equity markets gained in the U.S. in a continuation of a post-election rally.  Foreign stocks gained in local terms, but a stronger dollar headwind pared these to declines.  Investment-grade bonds lost ground again on higher interest rates, while floating rate debt fared well.  Commodities gained on the back of higher oil prices.

Continue reading

Posted in Economic News | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

Weekly Economic Update

Economic Update 11-15-2016

  • In a relatively light week for economic data, the political surprise was obviously the outcome of the U.S. Presidential election.  Otherwise, labor data was decent, while bank lending standards were little changed.
  • Equity markets moved sharply higher, before and somewhat after, election results came in.  Foreign stock results were also positive in local terms, but were reduced by the impact of a stronger dollar.  Bonds suffered with upward movements in interest rates across the yield curve.  Commodities declined, with oil prices falling upon supply concerns and gold losing ground due to higher interest rates.

Continue reading

Posted in Economic News | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

LSA Trade Day

** TRADE DATE SCHEDULED FOR Today – November 9th, 2016 **

  • Private Client (PC Blended/PC Traditional/PC L100k/BME/CBP/PC Income Strat)
  • ETF (including ETF Tactical models)
  • American Funds
  • DFA
  • Fidelity
  • Socially Responsible (SRI)
  • Vanguard

Investment Rationale: 

As 2016 begins to wind down, LSA will be recommending changes to all of the portfolios over the next two weeks to address some under-performing funds that have been placed on a watch-list and to continue with our movement of reducing risk or correlations in the portfolios.  As market volatility seems to have re-emerged, we believe that this will be a continued trend moving forward especially around the 2016 election.  The IPC will be recommending funds in the models with the attempt to reduce risk and to provide solid downside protection.  Although the IPC continues to believe that a recession is not eminent in 2016 or even in 2017, we do believe that the probability of a recession in the next couple of years has increased greatly over the last eight months.  The November 2016 model changes are not targeting big shifts in asset class exposures as we believe the portfolios have handled well in 2016, but we will continue to explore the use of alternatives to reduce correlations, emerging market equities to go after attractive valuations, and commodities as ways to combat inflation.

The high level thesis is that in 2018 the US economy will be faced with a couple of difficult headwinds that have greatly increased the probability of a recession taking place.  These headwinds are not limited to, but include, the idea that the Fed rate hikes that started in December of 2015 will be thirty plus months in play at that time.  Historically, recessions will occur thirty to forty months after the Fed begins to raise rates. The markets will also be facing the first major reset of bonds purchased by the Fed in the numerous QE programs.  We have already begun to see a slowdown in corporate earnings, and when you couple that with slow economic growth in the developed world it creates a case for difficult markets ahead.  The IPC will be looking to slowly reduce risk from the portfolios over the course of the next two years.  We believe such model changes could be particularly helpful during conditions of weakness for equities and/or other equity-correlated risk assets.

*As a reminder, the Revision Explanation Presentation/Video is posted in the “News & Announcements,” section.

Posted in Uncategorized | Leave a comment

Weekly Economic Update

Economic Update 11-07-2016

  • Economic news was highlighted by the Fed’s lack of action (which really was no news), while manufacturing activity was again mixed and non-manufacturing/services growth pared back a bit.  The employment situation report again disappointed relative to expectations, but wasn’t a complete loss, either.
  • Equity markets declined during the week in both the U.S. and aboard with election jitters and other policy headlines.  Bonds fared far better as interest rates across the yield curve declined.  Commodities fell sharply led by the price per barrel of oil dropping by several dollars on more supply concerns.

Continue reading

Posted in Economic News | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

Fed Note

Fed Note:

The FOMC decided to take no action at the end of their early November meeting.  With a ‘unique’ Presidential election just a few days away and no Q&A scheduled for this minor meeting anyway, nothing dramatic was expected.  There were two dissenting votes for this decision, one fewer than during the September meeting.

In their official statement, the FOMC noted that the case for a rate increase has strengthened, but decided to wait for further progress towards its objectives.  This includes an acknowledgement that inflation has increased further toward the committee’s objective of 2%.  Similar to recent meetings, strength in the labor market and consumer spending were noted, while business fixed investment remains soft.

Continue reading

Posted in Economic News | Leave a comment

Weekly Economic Update

Economic Update 11-01-2016

  • Economic data for the week showed mixed results, with a decent GDP report for Q3, but weaker durable goods orders.  Real estate prices showed continued gains, as did pending home sales, while new home sales came in a bit weaker than expected.
  • Global equity markets were generally lower, with mixed earnings and economic data.  Bonds lost ground as well, as interest rates rose along with expectations of a Fed hike in December.  Commodities declined in line with the price of oil falling by a few dollars a barrel.

Continue reading

Posted in Economic News | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

Weekly Economic Update

Economic Update 10-24-2016

  • Economic data last week offered mixed results for manufacturing and industrial production, as well as housing, while official inflation picked up a bit due strength in energy/gas prices.  Overall activity as described by the Fed Beige Book was a bit better than the previous month.
  • Equity markets were generally positive around the world, with foreign regions outperforming domestic. U.S.  Bonds also fared well with interest rates falling in key portions of the yield curve.  Commodities ended the week flattish with minimal net movement in oil, the usual key driver.

Continue reading

Posted in Economic News | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

Weekly Economic Update

Economic Update 10-17-2016

  • In a lighter week for economic data, retail sales came in stronger than in the previous few months, but remained lackluster.  Producer inflation picked up slightly, consumer sentiment fell a bit while labor was mixed with a drop in job openings but continued low jobless claims.
  • Global equity markets generally lost ground on the week, foreign markets outperforming U.S. in local terms, but the gains being reversed by a stronger dollar.  Bonds were mixed, with small positive results in the U.S. and losses in foreign debt due to the dollar effect.  Crude oil gained ground again, leading the commodity group upward.

Continue reading

Posted in Economic News | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

Weekly Economic Update

Economic Update 10-10-2016

  • Economic news last week was highlighted by strong reports in ISM manufacturing and non-manufacturing, and a decent but not outstanding September employment situation report.  The combination of data led to increased expectations for a Fed rate hike in December.
  • Equity markets were generally negative for the week, as was most fixed income, due to a rise in interest rates.  Commodities, however, were surprisingly resilient, led by continued gains in the price of crude oil.

Continue reading

Posted in Economic News | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

Weekly Economic Update

Economic Update 10-03-2016

  • In week packed with economic data, results showed weaker housing numbers for the prior month, flattish personal income/spending but somewhat stronger industrial numbers and consumer sentiment, and continued strong/low jobless claims.
  • Equity markets experienced small positive gains in the U.S. and were mixed overseas in a see-saw type week.  Bonds gained a bit as well, with interest rates declining slightly worldwide, with U.S. corporate high yield leading the way.  Oil prices jumped by several dollars upon OPEC members seeming to agree on production cuts.

Continue reading

Posted in Economic News | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

Weekly Economic Update

Economic Update 9-26-2016

  • Economic data for the week was largely focused around the FOMC meeting, where no interest rate policy action was taken.  Several housing metrics came out during the week, to mixed results, with stronger pricing and homebuilder sentiment, but weaker sales volume and starts/permits.
  • Stock markets rose globally with Fed policy holding steady, and Japan going a bit further, although gains were stronger abroad than domestically.  For similar reasons, bonds fared well on the week with the decline in interest rates.  Commodity indexes gained, led by a rise in oil prices.

Continue reading

Posted in Economic News | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | Leave a comment