Weekly Economic Update

Posted on February 9, 2015 by LSAConnect

Economic Update 2-09-2015

  • It was a relatively busy week for several economic reports, including a lackluster but positive ISM number and an employment report that came in better than expected.
  • U.S. equity markets rebounded strongly higher on the week with an easing in geopolitical concerns between the EU and Greece, stabilization in oil prices and end to a less-than-apocalyptic earnings season. Bonds suffered one of their worst weeks in some time with interest rates shooting higher.  Commodities also gained sharply on the back of oil’s gains.

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Chart of the Week: Volatility and the Stock Market

Posted on February 6, 2015 by LSAConnect

Chart of the Week: Volatility and Stock Returns

Vix to SP returns

This chart shows S&P 500 annual average returns relative tovolatility measured by the VIX Index. Currently, the VIX is hovering around a comfortable reading of 18, just shy of its average reading of 20. The VIX has not shown a monthly average over the 20 mark in over two years (June 2012), no doubt contributing to the attractive returns passive investing boasted during this time period. However, this long stretch of relatively calm activity appears to be coming to end as the VIX has been trending upward the past year. With the uncertainties of oil prices, currencies, geopolitical concerns, and Fed policy flooding the market, it is unlikely this trend will break anytime soon, shaping up 2015 to be a year to emphasize a diversified investing approach.

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Weekly Economic Update

Posted on February 2, 2015 by LSAConnect

Economic Update 2-02-2015

  • Economic data was highlighted by the conclusion of the FOMC meeting (status quo), GDP for Q4 was slightly weaker than expected, and housing numbers were mixed. Consumer confidence, however, on the heels of cheap gasoline, reached new highs.
  • Equity markets lost ground last week, upon a variety of geopolitical concerns, optimistic Fed sentiment and mixed corporate earnings results. Bonds again shined, as yields fell to lows not seen since mid-2012.  Commodities actually rebounded a bit, as oil markets continued to search for a bottom to prices.

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Chart of the Week: A Tale of Two Economies

Posted on January 29, 2015 by LSAConnect

Chart of the Week: A Tale of Two Economies

P1-BS611A_TWOTI_16U_20150128171805

This week’s chart comes straight from the Wall Street Journal that featured the research findings of Barry Cynamon of the St. Louis Fed and Steven Fazzari of Washington University in St. Louis. In their studies, Cynamon and Fazzari found that, since 2009, “average per household spending among the top 5% of U.S. income earners—adjusting for inflation—climbed 12% through 2012, the most recent data available. Over the same period, spending by all others fell 1% per household.” In their conclusion, they argue that inequality and the associated demand drag helps explain the slow recovery.

Read the full research paper here: http://ow.ly/I9UFe

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Fed Note

Posted on January 28, 2015 by LSAConnect

Fed Note:

The January FOMC meeting ended without incident, and without major change in strategy or language, as expected.  There are four new FOMC voting members this year, but this didn’t change the overall tone (no dissenters this time).  In the formal release, they upgraded language for economic activity as expanding from a ‘moderate’ to now ‘solid’ pace, and job gains from ‘solid’ to ‘strong.’  The decline in energy prices was noted as a positive for household purchasing power.  The ‘considerable time’ language for a low rate regime was removed, while the ‘patient’ approach was retained.  Continue reading →

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Weekly Economic Update

Posted on January 26, 2015 by LSAConnect

Economic Update 1-26-2015

 

  • A light week in U.S. economic data was dominated by housing numbers, which came in a little better than expected. The bigger news came from Europe, where the ECB announced a large quantitative easing program of 60 billion euro/month, targeting mostly sovereign and agency debt, in an attempt to boost inflationary impulses and economic growth.
  • Domestic stock markets were higher on the week, but dwarfed by strength in foreign equities—led by the ECB announcement. Bonds were mixed upon a flatter yield curve and strength in the U.S. dollar.  Crude oil was weaker again, falling to just over $45 with reports of high inventories coupled with demand uncertainty.

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Weekly Economic Update

Posted on January 22, 2015 by LSAConnect

Economic Update 1-22-2015

  • In a full week of economic releases, retail sales were somewhat disappointing (although cheap gasoline exacerbated the poor result), inflation declined dramatically due to cheaper energy costs, while sentiment improved to much higher levels.
  • Domestic equity markets were weaker, while foreign names generally experienced positive sentiment from Europe. Bonds gained ground on continued declines in yield, which also benefitted REITs to some degree.  Oil prices stabilized somewhat at just under $50/barrel.

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LSA Portfolio Revisions

Posted on January 15, 2015 by LSAConnect

 

** TRADE DATE SCHEDULED FOR Thursday, January 15th, 2015! **

Jackson National VA – Posted

Jackson Nation Elite Access – Posted

ING VUL – Posted

ING GoldenSelect – Posted

ING Select Advantage – Posted

Jefferson National – Posted

Protective Life – Posted

 

** TRADE DATE SCHEDULED FOR Friday, January 16th, 2015! **

(Trade sheets will be posted on Thursday)

Hartford

Lincoln

Nationwide

 

If you have any questions please feel free to contact us at support@LSAportfolios.com or call us at (866) 581-5724.  We will be addressing the remaining VA allocations in the coming days and will also be addressing the dropbox revisions to rider restricted portfolios over the weekend as well.

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Chart of the Week: Lowest Deficit in US Since 2007

Posted on January 15, 2015 by LSAConnect

Chart of the Week: Closing the Gap?

Deficit

A $2 billion surplus capped off a year that ended with the smallest deficit in the US since 2007, which preceded the $800 billion spending stimulus that started the Obama era. During this time, the deficit soared to 10% of GDP, the highest since WWII. It now sits at a more comfortable 3%, a stat that policy makers are waving proudly. Although this is a step in the right direction, what is not being brought to attention is that total national debt is still over $18 trillion dollars (101% of GDP) and growing. A reduced deficit is still a deficit, meaning the national debt is still increasing, albeit at a slower annual rate. And with the debt ceiling set to be reinstated March 16th of this year, a troublesome spring may be looming.

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Weekly Economic Update

Posted on January 12, 2015 by LSAConnect

Economic Update 1-12-2015

  • The economic news of the week was led by a somewhat disappointing ISM non-manufacturing report early, Fed minutes that were largely as expected and a mixed employment report with stronger payrolls but weaker wage growth.
  • Equity markets lost ground globally, while bonds of all types earned positive returns, as did real estate. Oil prices slipped again and closed under $50/barrel—one of the most closely watched items in recent months.

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Chart of the Week: Passive over Active?

Posted on January 9, 2015 by LSAConnect

Chart of the Week: Risks of Index Investing

PIMCO_Viewpoint_Moore_Spalding_Dec2014_Fig1

With the industry buzzing about the shortcomings of active management, it has never been more important to make clients fully aware of the risks of passive investing. This chart shows that, since the 2008 financial crisis, duration has increased about 50% in the Barclays US Aggregate Index, leaving passive fixed income investors historically more vulnerable to interest rate risk. The fall in yield during that time period from around 4% to around 2.2% also means their compensation for this added risk is limited. Do not forget that your clients’ assets need to be managed to a certain level of risk, and passive investing has no such parameters. It is not about what you make, it is about what you keep.

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Weekly Economic Update

Posted on January 6, 2015 by LSAConnect

Economic Update 1-5-2015

  • The most closely-watched economic releases were the ISM Manufacturing survey and Chicago PMI, which fell from last month and under expectations. Housing/construction data was mixed, while consumer confidence was a bit better.
  • Ending the year, both U.S. and developed foreign equities fell, while emerging market stocks and real estate gained. Investment-grade bonds generally gained, while crude oil led commodities down for yet another week.

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