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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Weekly Economic Update

Economic Update 6-04-2018

 

  • Economic data for the week was highlighted by a slight reduction in Q1 GDP, strong manufacturing data, mixed housing data, but a stronger-than-expected employment situation report.
  • Equity markets gained on the week in the U.S., but foreign stocks were held back by concerns in Europe.  Bonds fared well, with interest rates falling slightly.  Commodities declined, led by a pullback in crude oil pricing from recent highs.

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Weekly Economic Update

Economic Update 5-29-2018

 

  • Economic data for the week was highlighted by a mixed durable goods report, slightly higher jobless claims, and weak housing results for new and existing home sales, as well as weaker consumer sentiment.
  • Equity markets the U.S. performed positively last week, while foreign equities lost ground.  Bonds fared well with rates dropping across various maturities.  Commodities also declined with a pareback in the price of crude oil.

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Weekly Economic Update

Economic Update 5-21-2018

  • Economic data for the week came in generally strong, with retail sales, industrial and manufacturing data, jobless claims and leading indicators all coming in solidly positive.  Housing starts, however, declined more than expected.
  • U.S. equity markets were mixed on the week with large-caps underperforming small-caps, which gained.  Emerging markets lost significant ground due to a variety of country-specific issues.  Bond prices declined with rising rates, with the exception of bank loans.  Commodities continued their push upward on the back of higher oil and agricultural prices.

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Weekly Economic Update

Economic Update 5-14-2018

  • Economic data for the week was highlighted by lower-than expected inflation as measured by PPI and CPI, decent consumer sentiment, as well as continued strong labor numbers.
  • U.S. markets gained sharply last week, with foreign equities also performing positively, although to a lesser degree.  Bonds were little changed, with corporates outperforming governments; foreign bonds lost a bit of ground overall.  Commodity prices gained generally, due to an uptick in the price of crude oil sparked by the U.S.’s exit from the Iran nuclear deal.

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Weekly Economic Update

Economic Update 5-07-2018

  • Economic data for the week was highlighted by a FOMC meeting in which policy was left unchanged, some mixed to lower results for a variety of manufacturing and services indexes; the April employment situation report was mixed as well but continued to point to a strong underlying labor market.
  • U.S. equity markets were mixed due to a waxing and waning of trade fears, while foreign stocks lost ground due to a stronger dollar.  Bonds were flat in the U.S. with little changes in rates, while foreign issues had similar dollar effects.  Commodities gained with higher prices in crude oil and metals.

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Fed Note

The May FOMC meeting ended with a unanimous vote of no action on the interest rate front, as predicted, with the fed funds rate target remaining at 1.50-1.75%.  The formal statement showed little change from the March edition, with continued growth noted broadly, with one edit noting strength in business fixed investment.  Inflation was upgraded as being near the Fed’s policy target, as opposed to running substantially below previously, with other risks appearing balanced following some upgrades in March.

Predictions for a June hike still remain high—as in 95% or better—according to fed funds futures markets.  This would keep the pace of 3-4 hikes for 2018 intact, with the number on either side of that estimate based on accelerating or decelerating of conditions (and reflected by a relatively even split seen in the December-dated futures).

In reviewing relevant policy considerations:

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5-01-2018 FANN Radio How Volatility in the 10 Year Treasury Rate is Impacting Portfolios

FANN Radio

  • Listen to Brad Kasper discuss how the recent volatility in the 10 Year Treasury rate is impacting portfolios and what talking points advisors should be communicating with their clients
  • Click the below link to to listen. This is for our LSA network only, so make sure to log-in to your LSA account BEFORE clicking link:

5-01-2018 FANN Radio How Volatility in the 10 Year Treasury is Impacting Portfolios

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Weekly Economic Update

Economic Update 4-30-2018

  • Economic data for the week featured GDP for the first quarter coming in a bit better than expected, as were durable goods orders.  In housing, home prices continued to rise, and home sales came in stronger than expected.  Consumer sentiment/confidence also improved, as did jobless claims to multi-decade low levels.
  • Equity markets were flattish to negative in the U.S., while positive results abroad were depressed by a stronger dollar.  Traditional bonds were mixed as interest rates ticked higher before retreating.  Commodities were also mixed as industrial and precious metals lost significant ground.

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Weekly Economic Update

Economic Update 4-23-2018

  • Economic data for the week was highlighted by stronger retail sales, industrial production and leading economic indicator reports, mixed manufacturing results, and lackluster housing data.
  • U.S. equity markets rose for the week, beating foreign stocks, with help from a stronger dollar.  Bonds lost significant ground as interest rates ticked higher.  Commodities were led by gains in industrial metals and crude oil.

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Monthly Portfolio Update- 1st Quarter Review

Monthly Portfolio Update

Log-in to your LSA account and click below:

While we all knew we would have a brush with volatility sooner or later many were surprised and concerned during February’s tumult. It is always surprising to see market swings after such an unusually long period of calm (and rising) market activity. Nonetheless corrections like these are the norm rather than an exception. We’ve had 17 periods of downturn in stocks since this bull market began back in 2009 and 4 of those (with February’s the most recent) were in excess of 10%.

Longer term, of course, stocks are driven by economic conditions and their effect on corporate earnings. Short term drivers though are really about perceptions of the future and how those perceptions might affect other investor’s decisions. February’s swoon was a great example of this as nothing really changed in the economy, with inflation or with corporate earnings. Instead, folks started to worry about how rising interest rates might eventually lead to the next recession. Rising rates can be harbingers of the end of the growth business cycle when the rates for short term debt exceed the rates of longer maturity debt (or put in other words, the yield curve flattens or inverts).

It is hard to make the case for a recession any time soon however. The difference between short and longer term rates remains positive, the leading economic indicators are pointing upward, (signaling better times ahead) and inflation remains modest. If the Fed raises rates too aggressively over the next 12 to 18 months it could signal the beginning of the end of this business cycle but so far the Fed has acted with caution, unwilling to squash the economy and not needing to rein in on inflation too heavily.

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First Quarter Client Letter

First Quarter Client Letter

 

Listen to a quick note from Brad Kasper on FANN Radio.

 

What a difference a quarter can make! Last year, quarter after quarter passed with all news treated as good news and the turmoil of the day pushed aside as markets cheerfully climbed higher. This last quarter was a bit different with a decidedly less cheerful tone as markets soared in January, plunged in February and investors kept a wary eye nervously focused on the news of the day.

 

While we all knew we would have a brush with volatility sooner or later many were surprised and concerned during February’s tumult. It is always surprising to see market swings after such an unusually long period of calm (and rising) market activity. Nonetheless corrections like these are the norm rather than an exception. We’ve had 17 periods of downturn in stocks since this bull market began back in 2009 and 4 of those (with February’s the most recent) were in excess of 10%.

Longer term, of course, stocks are driven by economic conditions and their effect on corporate earnings. Short term drivers though are really about perceptions of the future and how those perceptions might affect other investor’s decisions. February’s swoon was a great example of this as nothing really changed in the economy, with inflation or with corporate earnings. Instead, folks started to worry about how rising interest rates might eventually lead to the next recession. Rising rates can be harbingers of the end of the growth business cycle when the rates for short term debt exceed the rates of longer maturity debt (or put in other words, the yield curve flattens or inverts).

It is hard to make the case for a recession any time soon however. The difference between short and longer term rates remains positive, the leading economic indicators are pointing upward, (signaling better times ahead) and inflation remains modest. If the Fed raises rates too aggressively over the next 12 to 18 months it could signal the beginning of the end of this business cycle but so far the Fed has acted with caution, unwilling to squash the economy and not needing to rein in on inflation too heavily.

We would expect a return to more normal levels of volatility however as the anticipation of regulatory relief and tax cuts are displaced in investors’ minds by more mundane matters in the months ahead. Markets do tend to be forward looking and we would expect worries about the economy and future growth to persist, precipitating a more normal tussle between bull and bear as the year moves along.

Of course we won’t know until it is over but this year could very well turn out positive for stocks. The powerful global growth story continues, with most of the worlds economies moving forward at the same time. Valuations in domestic markets are a bit rich but not overly so and valuations look even better overseas. Inflation remains modest and interest rates remain reasonably low. Corporate profits should continue to grow, both organically in this growing economy, and by virtue of the corporate tax cut passed last year.

Given current conditions it seems prudent to expect continued good things while at the same time making sure we are prepared for the worst. Just like making preparation for a natural disaster at home (you do have your earthquake kit ready don’t you?) it makes sense to make sure your financial situation is prepared for the eventual slowdown sometime out in the future. Diversification is key to this preparation in your portfolio and we address this during our review meetings with you. There could be some further steps that help you bullet proof your financial life such as adequate cash reserves and proper anticipation of larger outlays and the resources dedicated to them. Planning is the key and we’re happy to review with you at our normal review meeting or most any time if you have current concerns!

We wish you the best sort of spring and happy times with family and friends, and we appreciate your trust and confidence in us and remain,

Optimistically yours,

 

 

“I have found that if you love life, life will love you back.”

Arthur Rubinstein

 

 

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