Weekly Economic Update

Economic Update 4-12-2021

  • Economic data for the week included historical strength in ISM services, coupled with strength in job openings, and an especially strong increase in producer prices.
  • U.S. equity markets gained ground last week, outperforming foreign markets, which also showed gains to a lesser degree. Bonds also fared well with interest rates falling back a bit. Commodities were mixed, with agriculture and metals offsetting a pullback in energy prices.
Continue reading
Posted in Uncategorized | Leave a comment

April 2021 Revision Announcement

As the new administration begins to layout their agenda and we continue to reopen from COVID-19 concerns, as vaccines find their way into more arms, LSA is implementing updated revisions to all of the model portfolios over the next three weeks.  These changes will impact all solutions including the NTF portfolios.  In the LSA 2021 Outlook presentation, a number of investment themes were laid out that we would be focused on in 2021. Due to the recent weakness in fixed income, we will be making some model changes.  We will be releasing our updates in three blocks starting with Mutual fund models, second we will focus on direct mutual fund models and ETF solutions, and finally we will be releasing all variable annuity and VUL solutions.  Below you will find a breakdown of the upcoming changes:

The Week of April 5th

Posted Thursday, April 8th – Private Client Traditional, Private Client, Private Client IQ, SRI – targeted trade date – Thursday, April 15th.

Posted Friday, April 9th – PC L100k, PC Income Strat, BME, CBP – targeted trade date – Friday, April 16th.

*The mutual fund model revisions will impact the NTF models as well.

*As a reminder, the Revision Explanation Presentation/Video will be posted in the “Portfolio News,” section on each of the platform home pages.

The Week of April 12th:

The following models will be updated (American Funds, ETF, ETF Tactical, Fidelity, JNL Elite Access, Private Client Blended, Private Client Tax Eff, Sammons, TSP, Vanguard, Vanguard Tax Efficient, and Voya Select Advantage).  The revision schedule will be posted on Monday the 12th.

The Week of April 19th:

The following models will be updated (Allianz, AXA, Hartford, JNL, Jefferson National, Lincoln, Metlife, Nationwide, Ohio, Paclife, Protective Life, Prudential, SBL AD, SBL SD, Sunlife, Transamerica, Valic, Voya GS, and Voya VUL).  The revision schedule will be posted on Monday the 19th.

Investment Rationale:

See rationale on your LSA Dashboard (must be logged in) and more model-specific explanation under the Portfolio News section

Posted in Uncategorized | Leave a comment

Weekly Economic Update

Economic Update 4-05-2021

  • On a holiday-shortened week, economic data included strong manufacturing data, as well as continued growth in home prices and consumer confidence. Jobless claims rose a bit, but the March employment situation report came in showing stronger-than-expected recovery.
  • Global equity markets were mixed to higher last week, along with continued improving economic news. Bonds were also mixed, with rates little changed, but gains in corporates as spreads tightened. Commodities were flat on net, with gains in energy offset by declines in metals.
Continue reading
Posted in Uncategorized | Leave a comment

Weekly Economic Update

Economic Update 3-29-2021

  • Economic data for the week included a small upgrade for the prior month’s GDP growth rate, as well as declines in durable goods orders and several housing metrics—largely due to the prior month’s winter weather challenges. Consumer sentiment and jobless claims were slightly improved.
  • U.S. equity markets outperformed foreign last week, with help from the dollar, which appreciated nearly a percent against foreign currencies. Bonds earned positive returns as long-term treasury rates fell back a bit from recent increases. Commodities were mixed to lower, with continued volatility in crude oil, resulting from the Suez Canal shipping accident in the Middle East that created a major global trade bottleneck.
Continue reading
Posted in Uncategorized | Leave a comment

Weekly Economic Update

Economic Update 3-22-2021

  • Economic data for the week included a drop in February retail sales and industrial production, as did several housing metrics. However, several regional manufacturing indexes showed strong gains.
  • Global equity markets were mixed last week, as continued Covid concerns abroad competed with increasing activity, especially in the U.S., leading to rising interest rates. Bonds continued to lose ground, due to rates ticked higher upon ongoing market inflation fears for the near-term. Commodities were mixed, led by oil prices falling sharply.
Continue reading
Posted in Uncategorized | Leave a comment

Fed Update

Fed Note:

The Federal Reserve Open Market Committee made no change in policy, keeping the target short-term interest rate at 0.00-0.25%. Similarly, no change was made in the pace and magnitude of ‘quantitative easing,’ which is the ongoing treasury and mortgage bond purchase program.

The formal statement showed an upgrade in the economic outlook, with 2021 growth from 4.2% to 6.5%, unemployment lower from 5.0% to 4.5%, and PCE inflation up from 1.8% to 2.4% (core to 2.2%). However, it was noted that most sectors and inflation remain weak. On the dot plot graph, four members now believe a rate increase in 2022 is likely, while seven remain hinged on 2023.

In looking at the Fed’s mandates, all have improved, which raises questions about the timeline for keeping a low rate policy intact:

Continue reading
Posted in Uncategorized | Leave a comment

Weekly Economic Update

Economic Update 3-15-2021

  • Economic data for the week included tempered increases in both the producer price index and consumer price index, which appeared to calm some fears about rising inflation. Consumer sentiment continued to improve, as did several labor metrics on the margin.
  • Global equity markets gained, with the passage of the U.S. Congressional stimulus package, and stronger optimism surrounding vaccine distribution. Bonds fell back again, with interest rates ticking higher along with festering inflation fears. Commodities were little changed, with metals rising in price, while energy fell back from recent highs.
Continue reading
Posted in Uncategorized | Leave a comment

Weekly Economic Update

Economic Update 3-08-2021

  • Economic data for the week included improvements in manufacturing and construction spending, while services results fell back a bit. The February employment situation report came in stronger than expected, although still being negatively affected by winter weather during the month.
  • U.S. equity markets gained on net for the week, as several negative days based on investors digesting rising interest rates, were offset by a finalization of stimulus, stronger economic numbers, and the availability of a new third vaccine. Domestic markets outperformed foreign stocks, which were little changed on net. Bonds suffered for another week as interest rates ticked higher upon expectations for economic reflation and aftermath of the massive stimulus package. Commodities rose as a whole due to a spike in oil prices, while other segments, such as metals, declined.
Continue reading
Posted in Uncategorized | Leave a comment

Weekly Economic Update

Economic Update 3-01-2021

  • Economic data for the week included little change in 4th quarter GDP, while improvements were seen in personal income, durable goods orders, consumer confidence, and various housing sales metrics.
  • Global equity markets fell, as rising interest rates, fears of inflation, and general profit-taking appeared to dominate sentiment. Bonds also lost ground, being affected by rising rates even more directly. Commodities gained on the heels of stronger crude oil prices.

U.S. stocks declined across the board last week. The primary equity concern as of late appears to be less on the vaccine distribution (which is plugging along slowly in the U.S., and hampered by poor weather), but the incremental rise in interest rates across the middle and longer end of the curve. Thursday was an especially negative day, with more broad market concern over potential inflation pressures causing equity investors to question the current bull market recovery, and higher treasury rates.

By sector, energy gained over 4% along with strength in petroleum prices, while consumer discretionary, technology, and utilities were the worst-performing groups. The Nasdaq experienced its most severe decline in several months, as ‘long duration’ growth stocks were hit hardest by interest rate fears.

Foreign stocks in developed Europe and the U.K. fared slightly better than those in the U.S. A stronger British pound helped that region, as the recovery from Brexit is proceeding, lockdown removal plans are in place, and valuations there appear better than in other regions. Emerging markets declined sharply, by nearly -7%, led by weakness in Brazil and China. A stronger U.S. dollar and rising rates continues to often act as a headwind for EM nations, as it implies tighter liquidity and more difficult financing conditions.

U.S. bonds pulled back as the above-noted inflation concerns weighed on demand and pushed interest rates higher. Treasuries performed better than corporates, as spreads widened across the board. Foreign bonds performed negatively in developed and emerging markets as well, hampered by a rise in the U.S. dollar.

Commodities gained overall, despite the headwind of a rising dollar. This was led by gains in energy and agriculture, while precious metals fell back (gold’s relationship to inflation fears is inconsistent, but is generally inversely correlated to rising real yields). The price of crude oil rose by nearly 4% to $61.50/barrel, led by continued rising demand and contained supply. This offset a -7% drop in natural gas as the blizzard conditions nationwide tempered last week to more normal temperatures.

Period ending 2/26/20211 Week (%)YTD (%)
DJIA-1.701.41
S&P 500-2.411.72
NASDAQ-4.902.47
Russell 2000-2.8711.58
MSCI-EAFE-2.801.15
MSCI-EM-6.343.85
BBgBarc U.S. Aggregate-0.36-2.15
U.S. Treasury Yields3 Mo.2 Yr.5 Yr.10 Yr.30 Yr.
12/31/20200.090.130.360.931.65
2/19/20210.040.110.591.342.14
2/26/20210.040.140.751.442.17

Sources:  LSA Portfolio Analytics, American Association for Individual Investors (AAII), Associated Press, Barclays Capital, Bloomberg, Deutsche Bank, FactSet, Financial Times, Goldman Sachs, JPMorgan Asset Management, Kiplinger’s, Marketfield Asset Management, Minyanville, Morgan Stanley, MSCI, Morningstar, Northern Trust, Oppenheimer Funds, Payden & Rygel, PIMCO, Rafferty Capital Markets, LLC, Schroder’s, Standard & Poor’s, The Conference Board, Thomson Reuters, U.S. Bureau of Economic Analysis, U.S. Federal Reserve, Wells Capital Management, Yahoo!, Zacks Investment Research.  Index performance is shown as total return, which includes dividends, with the exception of MSCI-EM, which is quoted as price return/excluding dividends.  Performance for the MSCI-EAFE and MSCI-EM indexes is quoted in U.S. Dollar investor terms.

The information above has been obtained from sources considered reliable, but no representation is made as to its completeness, accuracy or timeliness.  All information and opinions expressed are subject to change without notice.  Information provided in this report is not intended to be, and should not be construed as, investment, legal or tax advice; and does not constitute an offer, or a solicitation of any offer, to buy or sell any security, investment or other product. 

FOR ADVISOR USE ONLY – NOT FOR DISTRIBUTION TO THE PUBLIC WITHOUT PRIOR APPROVAL FROM YOUR RESPECTIVE FIRM’S COMPLIANCE DEPARTMENT

Posted in Uncategorized | Leave a comment

Weekly Economic Update

Economic Update 2-22-2021

  • Economic data for the week included positive surprises in retail sales and industrial production, while housing results were mixed for the past month—although the recovery trend remains in place.
  • Global equity markets were mixed to lower globally, with the U.K. as the best performer. Bonds pulled back globally, as interest rates again nudged higher due to fears of stimulus leading to eventual inflation. Commodities gained ground, led by strength in industrial metals and natural gas.
Continue reading
Posted in Uncategorized | Leave a comment

February 2021 Model Revision Announcement

As the new administration begins to take over and we continue to reopen from COVID-19 concerns, as vaccines find their way into more arms,  LSA has implemented revisions to the following portfolios: DFA, DFA Blended, Private Client Blended , ETF and, ETF Tactical.  These changes have been implemented for the NTF solutions as well for the PC Blended models.  The LSA IPC has posted our 2021 Outlook presentation and video to help support the rational around the recent changes.  These are the only models being updated at this time.  

Posted Monday, February 15th, DFA and DFA Blended – targeted trade date – Friday, February 19th. 

Posted Tuesday, February 16th, Private Client Blended – targeted trade date – Monday February 22nd

Posted Wednesday, February 17th, ETF and ETF Tactical– targeted trade date – Tuesday,  February 23rd. 

*The PC Blended revisions will impact the NTF models as well. 

*As a reminder, the Revision Explanation Presentation/Video will be posted in the “Portfolio News,” section on each of the platform home pages. 

Investment Rationale: 

Continue reading
Posted in Uncategorized | Leave a comment

Weekly Economic Update

Economic Update 2-16-2021

  • Economic data for the week included inflation that continued to rise slightly (due to commodity prices largely), but still tempered levels on a trailing year basis. Labor metrics improved a bit, but remain challenged relative to pre-Covid levels.
  • Global stock markets experienced a positive week, with foreign outperforming U.S. equity markets. Domestic bonds fell back as interest rates ticked higher, while foreign bonds benefited from a weaker dollar. Commodities rose across the board, with strong demand and supply concerns, particularly for crude oil.
Continue reading
Posted in Uncategorized | Leave a comment