Weekly Economic Update

Posted on June 9, 2014 by LSAConnect

Economic Update:

  • Featured by an unusual correction in the manufacturing ISM, economic data for the week was decent.  The more dramatic news came from Europe, where the ECB provided additional easing and elected a new ‘negative interest rate’ policy, the first of its kind for a major central bank.
  • Equity markets generally rose across the board on positive economic data in the U.S. and ECB easing; this was coincident with higher U.S. interest rates.

Stocks experienced a bullish week and new S&P 500 highs due to better economic data, positive payrolls and the ECB easing all noted above.  Domestically, industrials and financials led from a sector standpoint, while telecom lagged as the only negative performing area.  Higher-beta small-caps beat large-caps, in keeping with the stronger sentiment.  That pulled small-caps out of their negative year-to-date position. Continue reading →

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Weekly Economic Update

Posted on June 2, 2014 by LSAConnect

Economic Update:

  • Economic data looked a bit better, as winter weather problems continue to dissipate towards more normal ordering and manufacturing conditions.  However, some data remains lackluster (GDP for the first quarter was revised down into negative territory).  The ECB stands poised to ease to stem deflation fears and spur economic growth.
  • Markets reached new all-time highs again, as large-caps outperformed small-caps.  Bonds also gained as interest rates fell to their lowest levels in months.

U.S. stocks experienced a generally flat-to-slightly positive week, as the S&P set a new all-time high again.  From a sector standpoint, defensive utilities and consumer staples outperformed, while consumer discretionary and industrials lagged by gaining just under a percent.  While all market caps were sharply higher, large-caps outperformed small-caps again and the Russell remains in negative territory on the year.

In foreign markets, Europe and Japan gained a percent and a half while the U.K. was flat.  In Japan, business confidence and employment have improved, demonstrating that the recent sales tax increase may not have been as damaging as first feared.  European peripherals such as Italy and Spain performed well, in light of an upcoming ECB meeting where expectations are for an easing of monetary conditions.  German unemployment rose by 25k, which was higher than expected, but didn’t excessively weigh due to the upcoming policy meetings. Continue reading →

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Weekly Economic Update

Posted on May 28, 2014 by LSAConnect

Economic Update

  • Stronger reading in May’s preliminary Market PMI index brought optimism to the second half of this year.
  • Housing sales data were mixed: New home sales rebounded in April after two months of declines; and existing house sales were up less than expected, staying well below the unit level in April 2013.
  • Initial jobless claims came in weaker than the consensus expectation with a small improvement for the 4-week moving average and continuing claims.
  • U.S. tech and small cap stocks helped the market approach an all-time high before the long Memorial Day weekend.

Heading into Memorial Day weekend, U.S. equity markets were led higher by technology and small cap stocks.  Small cap stocks outperformed mid cap and large cap stocks.  Cyclical and economic sensitive sectors beat defensive sectors.  Technology, consumer cyclical and financial sectors led the market, all generating north of a 1.5% return, while utilities, consumer defensive and telecom sectors lagged.  In general, growth-style outperformed value-style.

Outside the U.S., international developed stocks underperformed U.S. and emerging market stocks.  The MSCI Europe index lagged the MSCI Pacific index by 55 bps for the week.

Continue reading →

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Portfolio Manager Commentary

Posted on May 20, 2014 by LSAConnect

Portfolio Manager Commentary: Short Duration Credit

May 15, 2014

Robert A. Lee  Partner & Director of Taxable Fixed Income

Andrew H. O’Brien, CFA  Partner, Portfolio Manager

 Lord Abbett Partners Rob Lee and Andy O’Brien talk about the trends that are affecting fixed-income markets, and how they are positioning their portfolio now.

https://www.lordabbett.com/en/perspectives/fixedincomeinsights/portfolio-update-short-duration-credit-video.html

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Weekly Economic Update

Posted on May 19, 2014 by LSAConnect

Economic Update:

  • Economic numbers were mixed, with April figures like retail sales lower, but regional Fed surveys for May showing a bit more promise.  Inflation in CPI/PPI was higher than expected, with food price and housing increases being the primary drivers.
  • Markets were mixed, but small cap stocks have suffered in the last two months.  Bond continued to rally as treasury yields have hit the lowest levels in several months.

The more notable consumer price index for April rose +0.3%, which was on par with forecast; the core number was roughly twice expectations at +0.2%.  That took the year-over-year gain in CPI for the headline and core measures to +2.0% and 1.8%, respectively.  The headline portion was heavily influenced by its differentiating components of food and energy, as both were several tenths of a percent higher; the core portion was led by +1% higher transportation prices, which in itself was broken out into gains in both airline tickets and used cars (you think it would be more substantial than these types of things).  Rent of primary residence and owners’ equivalent rent were both a third of a percent higher, which added to underlying upward pressure.

We list the inflation metrics as somewhat neutral in terms of impact, since they are good and bad.  No one wants to see too much inflation begin to emerge, as that has economic consequences, but having some is a byproduct of growth.  The higher food price component is often weather-related and typically self-correcting over time, so not as worrisome, at least in wealthier developed economies that can handle that strain relative to emerging nations, where a higher percentage of household budgets are dedicated to food spending. Continue reading →

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MainStay Marketfield Update

Posted on May 19, 2014 by LSAConnect

mainstay

The 75 day performance of Marketfield has generated some questions.  As I write this, MFLDX is down 6.10% YTD. These results, though disappointing, are believed to be short term in nature by the team.  I genuinely appreciate your past support, and want to make sure that I am visible and available when times are good, and when times are not so good. Over the next several weeks, I will be allocating time every day to conduct conference calls and meet in person when I am able.  I have attached some resources to assist with understanding our past and present positioning.

First and foremost, fund AUM (~$20B) has had no impact on performance as per Michael Aronstein.  The underperformance is attributable to the posturing of the portfolio toward economically sensitive holdings.  Michael Aronstein has publicly shared their macro views, portfolio positioning and performance in the past two monthly commentaries and quarterly conference call .  Defensive sectors in equities and high quality fixed income have performed well which is contrary to their intermediate outlook and positioning.  The pullback in Japan and economically sensitive sectors that do well in an expansionary economic cycle have underperformed and is therefore, reflected in fund performance. Continue reading →

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Weekly Economic Update

Posted on May 12, 2014 by LSAConnect
  • It was a slow week for economic news, but a few pieces came out positively.  Janet Yellen’s congressional testimony was also benign and dovish—alluding to at least another year of easy monetary conditions.
  • Equity markets were generally flattish on the week, although a trend of large-cap outperforming small-cap names has continued, in line with valuation differences between the two.

Stocks experienced a generally uneventful week, with the S&P ending just slightly lower and the Dow reaching a new all-time high, with no major economic releases or high-profile earnings reports to excite or depress investors.  From a sector standpoint, consumer staples and materials were strongest, while technology and consumer discretionary lagged.  The biggest news seemed to be Apple in the market to buy a company that makes headphones.  Small caps lost ground relative to large caps, continuing the trend of higher momentum and higher-valued issues falling off.  Perhaps the overvaluation that we and many others (including some small-cap PMs we speak with and even Yellen during her Q&A last week) recognize the lessened opportunities there.  From a sentiment standpoint, Lipper noted that last week was the 18th straight positive week for U.S. equities in terms of cash inflows ($1.6 billion for the week). Continue reading →

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Weekly Economic Update

Posted on May 5, 2014 by LSAConnect
  • It was a busy week for economic data, with several key releases including 1st Quarter GDP—which disappointed.  The Friday release of job growth, however, was strong.
  • The Russia/Ukraine situation continues to simmer, but not yet boiling over, despite regional incidents and increasing sanctions against targeted Russian interests.

U.S. stocks experienced another up week with M&A activity picking up and decent economic news.  From an earnings standpoint, three-quarters of firms in the S&P have reported, and three-quarters of those topped estimates (of course, on lowered expectations), with growth of 4% over a year ago.  From a sector standpoint, telecom and technology stocks outperformed, while utilities and energy lagged.  Small caps again showed weakness versus the larger-cap group.

In foreign markets, U.K. gained 2.5%, outperforming Europe and Japan—all outperforming the U.S. on the week.  Mario Draghi of the ECB had apparently mentioned in a meeting that quantitative easing could be a policy option, but was unlikely—offering a mixed message.  Interestingly, EU consumer confidence has now reached its highest point since 2007, although it remains negative in the majority of countries (U.K. and Germany being the exceptions among the larger nations).  The problem children of the emerging markets, such as Russia and Turkey, were interestingly the best performing stocks on the week.  China was one of the few losing regions on the week.

Bonds had a good week, with rates falling following a weak GDP report and Ukrainian concerns.  Long-term bonds experienced the best returns, in both treasuries and corporates.  Emerging market bonds also performed well, outperforming developed market issues, especially those of Japan.  Continue reading →

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Fund Closing Announcement

Posted on May 1, 2014 by LSAConnect

It was just announced that T. Rowe Price Cap App is going to be conducting a more formal soft close.  LSA is recommending that you keep any current positions and utilize the following funds as possible replacements:

Janus Balanced – JDBAX

FPA Crescent – FPACX

IMPORTANT: Fund Closing Announcement

Please read this entire document. It contains very important information regarding a specific mutual fund closing and intermediary client requirements. Continue reading →

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Fed Note

Posted on April 30, 2014 by LSAConnect

Fed Note:

The Federal Reserve Open Market Committee completed their two-day April meeting today, with no real surprises.  As many expected, the group announced an additional tapering amount of $10 bil./month, which now lowers the monthly treasuries and mortgage-backed securities being purchased down to $45 bil./month.

This was an FOMC ‘lite,’ so no press conference scheduled afterward and no release of Fed economic projections, so less to bicker about than normal.  The committee’s formal release noted that broader economic factors have been impacted negatively by the winter weather, but are showing signs of improvement, as has household spending; however, business fixed investment fell during the period. Continue reading →

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First Quarter Market Update

Posted on April 29, 2014 by LSAConnect

 First Quarter Market Update with Bud Kasper & Dean Barber

April 29th, 2014

bnd

LSA has posted the 1Q14 Market update call that Bud and Dean host live for their clients and prospects. This program allows Bud and Dean to communicate with their clients about what is happening in the market place today.  Hear what two leading advisors are saying to clients to keep them informed and confident in their retirement.  To listen to this recording simply log in to the LSA website and click on “Resources/FANN Radio”.  If you are not a member but would like to listen to the show e-mail us at support@lsaportfolios.com .

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Weekly Economic Update

Posted on April 28, 2014 by LSAConnect

Economic Update:

 

  • U.S. economic data – including manufacturing, new orders for durable goods, and consumer confidence – were strong, exceeding consensus expectation.
  • Housing sales and initial jobless claims came in weaker than consensus expectation.
  • Conflict between Russia and Ukraine weighed on the market.  Investors hid in safe-haven assets such as long-term government bonds and defensive stocks.

Boosted by positive economic news, U.S. equity markets were trending upward in the first half of the week.  Toward the end of the week, investors’ concern on escalating tensions between Russia and Ukraine helped push the market lower.  Large cap stocks outperformed both mid cap and small cap stocks.  Defensive sectors beat cyclical sectors.  Utilities and healthcare led the market with a small positive return, while telecom and consumer cyclical lagged with a small negative return.  In general, value style outperformed growth style. Continue reading →

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