LSA is recommending a rebalance to a number of our Mutual Fund models at this time. When we experience volatility in the market place it can be a good time to rebalance models back to their original allocations. The mutual fund models have done really well, given all the recent volatility, and it is time to reset the risk level of these models by conducting a full re balance back to original allocations. There are a couple of funds that we are watching due to performance, but the IPC does not believe it constitutes replacements in the models at this time. The IPC would expect to see more potential fund/allocation shifts later in the year as we continue to prepare for a growing probability of recession, but at this time we continue to remain cautiously optimistic with four of our seven recession indicators in positive territory. Continue reading
Economic Update 6-17-2019
- Economic data for the week included generally as-expected reports for retail sales, producer prices and consumer prices, retail sales and industrial production came in higher than expected, while consumer sentiment and labor figures disappointed a bit.
- Global equity markets were relatively flat on net for the week, with U.S. stocks ending slightly in the positive, and foreign slightly in the negative. Bonds experienced similar results, with the yield curve little changed, upon few changes in investor risk preferences. Commodity markets were characterized by lower prices for crude oil offset by sharp price gains in the grains complex.
Economic Update 6-10-2019
- Economic data for the week included positive results in ISM non-manufacturing, while ISM manufacturing lost a bit of ground for the prior month. The employment situation report for May also came in weaker than expectations.
- U.S. and foreign equity markets recovered sharply last week, with hopes of the Fed lowering interest rates in response to growing economic headwinds. Bonds also fared positively, as rates declined across the yield curve. Commodities were mixed, with oil prices recovering slightly.
Economic Update 6-03-2019
- During a shortened week, economic data consisted of a downwardly-revised but still-strong Q1 GDP report, continued low jobless claims, and mixed consumer confidence. Housing data was again mixed to a bit weaker.
- Equity markets around the world lost significant ground on the week, as existing (China) and new (Mexico) trade issues drove sentiment in developed nations, while emerging markets gained ground. Bonds again rallied with U.S. treasury rates falling to their lowest levels in several years. Commodities also were hit, due to a recent sharp decline in crude oil prices, which offset higher prices for grains.
Economic Update 5-28-2019
- Economic data for the week included slightly disappointing housing sales, and weaker durable goods orders, but jobless claims that remained status quo at a strong cyclical level.
- Equity markets globally generally lost ground as trade tensions between the U.S. and China intensified. Bonds, as expected, fared well as investors fled from risk—pushing down interest rates. Commodities were mixed, with weather affects pushing commodity prices higher, while higher inventories and slowdown concerns damped sentiment for crude oil.
Economic Update 5-20-2019
- Economic data for the week included weakness in retail sales and industrial production, while several regional manufacturing surveys, jobless claims, consumer sentiment, and housing stats came in stronger than expected.
- Equity markets in the U.S. and in emerging markets ended the week with declines, while developed foreign regions gained slightly on net. On the other hand, bonds and real estate fared decently as interest rates declined. Commodities gained, despite the stronger dollar, due to agriculture and energy affected by sector-specific factors, such as weather and geopolitics.
Economic Update 5-13-2019
- Economic data for the week included ongoing mixed to lower reports for producer and consumer inflation, little changed conditions but lower demand for bank loans, and continued positive jobs markets and claims data.
- Equities fell across the globe last week, due to threats and eventual implementation of U.S.-China tariffs. Government bonds fared well as flows moved away from risk, while credit lagged a bit. Commodities were mixed to lower, with little change in either the dollar or crude oil prices.
Economic Update 5-06-2019
- Economic data for the week was characterized by a Federal Reserve meeting where policy was left unchanged. Positive data included a very strong employment situation report, and gains in consumer confidence, while the ISM services index tempered, but remained expansionary. On the negative side, the ISM manufacturing index and regional manufacturing data came in below expectations.
- U.S. and foreign equity markets both gained slightly on the week, despite mixed growth and policy news. Bonds were flat to slightly negative, as interest rates ticked just a bit higher. Commodities lost ground, led by lower prices for crude oil due to concerns over a near-term supply glut.
As predicted, today’s FOMC meeting ended with no change in policy, with all members on board with keeping the fed funds rate within a range of 2.25-2.50%. The formal statement was very little changed, noting continued strength in the labor market and economic growth; however, household and business spending were noted as slowing in the first quarter.
Demonstrated by the drama of the V-shaped financial market reaction from Q4-2018 through Q1-2019, many strategists have been surprised by the speed and magnitude of the Fed’s change in tone from moderately hawkish to much more dovish. The accompanying deceleration in economic progress around year-end has caused fed funds futures probabilities to now price in about a 50% chance of a rate cut by September and 65% chance of one by December, which is a different story than the Fed’s own comments over the past several months of ‘patience,’ and that more rate hikes could come prior to cuts.
The dashboard of Fed mandate items looks similar to recent readings, and while the most recent data is mixed to lackluster, there appear to be hopes for stronger growth in some camps slated for later in 2019. On net, in looking at all measures, conditions continue to look relatively neutral.
Economic Update 4-29-2019
- Economic data for the week was highlighted by advance first quarter GDP that came in stronger than expected, solid durable goods orders and new home sales, while existing home sales and jobless claims came in a bit worse than expected.
- U.S. equity markets gained due to decent corporate earnings results, while foreign stocks were held back a bit by a stronger dollar. Bonds gained as interest rates ticked down over most of the yield curve. Commodities lost ground on average, with early gains in crude oil retreating by week’s end.
Economic Update 4-22-2019
- Economic data for the week included stronger-than-expected retail sales, jobless claims and a tighter trade deficit, several regional manufacturing indexes showed mixed results, while housing starts again struggled.
- In a shortened week, U.S. equity markets were mixed, while foreign stocks gained slightly. Bonds were generally flat with little change in underlying interest rates. Commodities fell slightly, with a minimal rise in crude oil offset by declines in other sectors.
Economic Update 4-15-2019
- In a light week for economic data, producer and consumer prices rose a bit more than expected on the headline side, due to higher recent energy prices. Positive news included jobless claims again reaching multi-decade lows, while, on the negative side, the government JOLTS report indicated fewer job openings.
- Global equity markets experienced gains for the week, with foreign stocks helped by a weaker dollar. However, bonds fell back as interest rates ticked higher and the treasury yield curve again turned positive for the most part. Commodity indexes gained due to higher prices for crude oil and agriculture.