Weekly Economic Update

Economic Update 8-06-2018

  • Economic news during the week was highlighted by the Fed’s decision to keep interest rates steady, a lukewarm employment situation report for July but stronger labor data in other reports, decent housing numbers, but weaker ISM manufacturing and non-manufacturing numbers held back by tariff concerns.
  • U.S. stocks gained ground on the week, and offset losses in foreign stocks as the dollar strengthened.  U.S. bonds were little changed, but outperformed international bond markets due to the same dollar effect.  Commodities fell a bit, with most segments losing ground, including oil.

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Fed Update

Fed Update:

 

The FOMC concluded their monetary policy meeting today, which, as expected, resulted in no change to the fed funds rate—currently targeted to a range of 1.75-2.00%.  There were no dissenting votes.

The formal narrative again was positive in its assessment of overall conditions, with both economic activity and labor market descriptions being upgraded from ‘solid’ to ‘strong’.  As we’ve noted before, the FOMC statements have taken a decidedly more direct and business-like tone with Jerome Powell as chair, as opposed to the longer and more detailed releases under the Janet Yellen regime.  The movement away from the quantitative easing program, and various nuances with ‘tapering’, has also helped.  The periodic Q&A sessions (next scheduled for September) have been similarly more direct and in more straightforward language, which is not surprising considering the more diverse background of the current Fed chair compared the previous few, who originated from academia prior their tenures in the Federal Reserve system.

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Weekly Economic Update

Economic Update 7-30-2018

  • Economic data for the week was highlighted by the 2ndquarter GDP report, with the best results in five years.  Durable goods were mixed, as were jobless claims, while housing data generally came in below expectations.
  • U.S. equity markets rose last week, as trade tensions eased somewhat, although were outperformed by foreign, and especially emerging market equities.    Bond returns were mixed as interest rates rose across the curve, with higher-risk outperforming lower-risk globally.  Commodities gained on the week, led by a rise in prices of a variety of sectors.

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Weekly Economic Update

Economic Update 7-23-2018

  • Economic data for the week included a stronger-than-expected retail sales report, coupled with continued strength in the index of leading economic indicators, while industrial production and manufacturing data came in a bit mixed, and housing data disappointed, largely due to a drop in housing starts.
  • U.S. equities were flattish on the week, with low volatility, while foreign stocks fared slightly better.  U.S. bonds generally fell back as interest rates increased, coupled with mixed results from foreign bond markets.  Commodities declined with weaker prices for crude oil offsetting stronger agricultural prices.

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Weekly Economic Update

Economic Update 7-16-2018

  • Economic data for the week was focused on inflation, with the PPI and CPI both showing gains, and a stronger pace on a year-over-year basis.  Labor data, based on job openings and claims, continued to fare well.
  • Equity markets rose globally, proving strongest in the U.S., and more tempered abroad.  Bonds were little changed in keeping with little interest rate volatility, with corporate faring better than governments.  Commodities fell sharply due to a stronger dollar and led by a backward move in oil prices with anticipated additional supply coming.

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Weekly Economic Update

Economic Update 7-09-2018

  • Economic data was highlighted by another decent employment report, as well as gains in the ISM manufacturing and non-manufacturing indexes.
  • U.S. equity markets were stronger on the week as economic results outweighed trade/tariff worries; foreign stocks were mixed to flattish on the week.  Bonds fared decently with a minor decline in interest rates.  Commodities fell slightly, with lower metals prices being more meaningful than a little-changed price of oil.

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Weekly Economic Update

Economic Update 7-02-2018

  • Economic data for the week featured a slight downtick in first quarter GDP, a drop in durable goods orders, pending home sales and consumer confidence, while new home sales and jobless claims remained strong.
  • U.S. and foreign stocks all lost ground during the week, with trade tensions dominating.  By contrast, bonds gained globally as interest rates ticked lower, aside from higher-risk high yield and emerging market debt where the result was negative.  Commodities continued to gain ground, with a sharp spike in crude oil prices again last week.

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Weekly Economic Update

Economic Update 6-25-2018

  • Economic data last week saw manufacturing experience a bit of a decline, housing was mixed, although housing starts and prices were higher, jobless claims were mixed but remained strong, while the index of leading economic indicators continued to run at a high level.
  • U.S. stock markets fell back on the week, as did equity markets abroad in developed and emerging markets, with concern again over trade tensions.  Bonds were mixed domestically, with governments outperforming, while foreign bonds shined due to a weaker dollar.  Commodities gained solely due to the price of oil re-advancing following uncertainty over OPEC production changes.

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LSA Model Revisions Schedule – June 2018

Private Client Mutual Fund, ETF, Variable Annuity/Variable Universal Life Model Revisions!!

LSA will begin making revisions to all model portfolios over the next two weeks.  Please note the date that the revisions will be posted to the website.  These posts will be made at the end of each business day.  All revisions will be targeted to trade ONE WEEK later than the post date.

LSA will be making revisions to the following portfolios:

Posted Thursday, June 14th:  Private Client, PC Traditional, PC Tax Eff, Jackson National VA, Jefferson National – targeted trade date – Thursday, June, 21st.

Posted Friday, June 15th and Monday June 18th:  BME, CBP, PC L100k, Voya Golden Select, Voya Variable Universal Life, Nationwide, Sammons – targeted trade date – Friday, June 22nd.

Posted Tuesday, June 19th:  DFA, DFA Blended, Ohio National, Paclife, Protective Life, Security Benefit AD, Security Benefit SD, and Valic  – targeted trade date – Tuesday, June 26st.

Posted Wednesday, June 20th:  Allianz, AXA, Hartford, Lincoln, Metlife, Sunlife Transamerica, American Funds, Vanguard, Vanguard Tax Eff, Fidelity – targeted trade date – Wednesday, June 27th.

Posted Thursday, June 21st: ETF, ETF Tactical, PC Blended, PC Income Strategy, PC Income Focused, Voya Select Advantage, JNL Elite Access – targeted trade date – Thursday, June 28th.

*The Mutual Fund and ETF revisions will impact the NTF models as well.

* The Investment Rationale has been posted to the beta site for you to view.

* As a reminder, the Revision Explanation Presentation/Video will be posted in the very near future.

If you have any questions, please contact us and we’ll be happy to help.

The LSA Team

866-581-5724

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Weekly Economic Update

Economic Update 6-18-2018

  • Economic data for the week was dominated by the U.S. Federal Reserve raising short-term interest rates by a quarter point.  Otherwise, retail sales and manufacturing showed strong gains, as did jobless claims and consumer sentiment, while inflation rose mostly due to higher oil prices.
  • U.S. equity markets rose slightly last week, and outperformed foreign stocks, which were held back by a stronger dollar.  Bonds were similarly flat, with minimal changes to interest rates during the week, while foreign bonds also lagged.  Commodities fell across the board, including the price of crude oil on expected higher production.

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Fed Note

Fed Note:

The June FOMC meeting concluded with members deciding to raise the fed funds target rate by 0.25%, for the seventh time this cycle, to a new range of 1.75-2.00%.  As the probability of this happening was over 95%, in light of recent stronger economic and inflation data, this was far from a surprise.

The formal statement noted the recent strength in economic activity, upgrading their description from ‘moderate’ to ‘solid’, as well as mentioning a pickup in household spending and continuation of business spending growth.  Long-term inflation expectations were described as ‘little changed’.  Language regarding their policy expectations was simplified somewhat, but the same theme of ‘gradual’ rate increases noted in keeping with signs of positivity in key economic growth metrics.  The word ‘symmetric’ was again included as describing their inflation objective, with the implied meaning that 2% isn’t a hard target, but inflation could likely be allowed to float above and below that bound as needed in light of other policy aims.  No doubt there will be ample economist commentary on that component, as there already has.  Events in foreign markets were expected to make a cameo appearance in their write-up, particularly geopolitical rumblings in Italy and Spain in recent weeks, as a reflection of how such events can play into financial market volatility, even though they have no bearing on U.S. monetary policy functions directly—although today’s piece excluded any such references.

While this second hike of 2018 was expected, future moves are always ‘data dependent’.  Currently, the September meeting is assumed to result in another quarter-point move, while December is about 50/50—in keeping with continued debate between the ‘3 hike’ and ‘4 hike’ camps this year.  With such small rate hike increments, individual meetings may not be that critical, but over time, the impact of rate increases is cumulative.

The metrics are little changed, with similar themes and trends continuing:

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Weekly Economic Update

Economic Update 6-11-2018

  • Economic data for the week consisted of better-than-expected non-manufacturing index data and continued strength in job openings and jobless claims, while the trade deficit shrank a bit.
  • Equity markets continued their winning run with U.S. stocks outgaining foreign stocks, and emerging markets ending higher but to a lesser degree.  Bonds lost some ground as interest rates ticked up.  Commodities were mixed due to offsetting forces, although there was little change in the price of crude oil.

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