Economic Update 3-06-2017
LSA will be making revisions to all variable annuity platforms over the next two weeks. We will be releasing the revisions in three waves. The first wave has already been posted and will include: (Private Client Tax Efficient, JNL, JNL Elite Access, Jefferson National, Sammons, Voya Select Advantage). The revision allocation sheets have already been posted to the website and we will be posting the revision explanations and videos over the weekend with a targeted trade date of March 6th. Below, please find the next two waves of model changes to be released.
Investment Rationale: LSA will be recommending changes to all the VA model portfolios over the next two weeks to address some under-performing sub-accounts that have been placed on a watch-list and to continue with our movement of reducing risk or correlations in the portfolios. As market highs continue to be reached LSA would like to take the opportunity to realize some gains, reduce risk and square up the model portfolios. 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 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 March 2017 model changes are not targeting big shifts in asset class exposures. We believe the portfolios handled well in 2016, but we will continue to explore the use of alternatives. The alternatives will be used to reduce correlations, the potential for emerging market equities to go after attractive valuations, and commodities as ways to combat inflation. Continue reading
Economic Update 2-27-2017
Economic Update 2-21-2017
Economic Update 2-13-2017
Economic Update 2-06-2017
Fed Note
It wasn’t expected for the Fed to take any action at their meeting concluding today, so there were no disappointments (i.e. nothing happened from an interest rate standpoint, by unanimous vote).
Their formal statement reflected their views that the economy is continuing to expand at a ‘moderate’ pace, coupled with ‘solid’ labor growth. Overall, the language wasn’t altered much from December, but improvement was noted in consumer and business sentiment as well as higher inflation, despite continued low inflation expectations.
In looking at the dashboard of Fed mandates, the numbers similarly haven’t largely changed from the end of 2016, but we could be seeing more of a gradual evolution in a few areas, that may or may not be jump-started by stronger post-election business sentiment and/or legislative/fiscal action. The baseline case appears to be 2-3 rate hikes in 2017, perhaps spread out to about one per quarter or so, but that is certainly subject to change based on data releases and other conditions.
Economic Update 1-30-2017
Economic Update 1-17-2017
Economic Update 1-09-2017
Economic Update 12-27-2016
Economic Update 12-19-2016
LSA Connect 