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Economic Update 6-24-2019

  • Economic data for the week included no action by the FOMC, although the communication was far more dovish. Other news included a sharp decline in several key regional manufacturing indexes, a flattish index of leading economic indicators, mixed to lower housing market metrics, while jobless claims improved again to low levels.
  • U.S. and foreign equity markets both experienced strong gains for the week, led by optimism for trade resolution and dovish central bank language about interest rates. Bonds fared well also, due to the recent ongoing drop in interest rates across the developed world, led by comments from the Fed and ECB. Commodities gained ground due to higher oil prices following rising tensions in the Middle East.

Fed Update 6-19-2019

6/19/2019 scott

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Fed Note:

Following their June meeting, the Federal Open Market Committee (FOMC) made no change to the 2.25-2.50% range for the fed funds rate. However, member appeared split on the outlook, with one member voting for a cut today, while others expect cuts towards the end of the year. This does seem to raise the probability significantly for a cut in July or September.

The formal statement reflected a change in economic growth from ‘solid’ to ‘moderate,’ and although household spending has picked up, business capex spending has remained soft. The inflation picture was acknowledged as weakening, while long-term expectations remained unchanged. As expected, the term ‘patient’ was removed, with concerned noted about a variety of ‘uncertainties.’

This was largely as expected, although in recent weeks, futures markets had begun to price in a 20-25% chance of a quarter-point cut at this meeting. The odds for a rate cut down the road, though, have risen sharply, with December futures implying probabilities for 2-3 cuts by year-end, and more in 2020. This seems a bit extreme on the surface, but markets do tend to overshoot, with the fed funds assumption markets being no exception.

The narrative, at least from the market’s perspective, has certainly changed, with the possibility of easier monetary policy rising in light of a possible longer trade negotiation with China and the ramifications of imposed tariffs in the meantime resulting in global slowdown risks. However, in recent speeches, the Fed hasn’t alluded to cutting rates specifically—merely that they would do as they always do and ‘act as appropriate’ to stabilize the economy. This is particularly tricky now, though, with economic conditions continuing to show modest expansion for the most part, but with greater uncertainty on the margin, so the Fed has been put into a bit of a corner. Historically, merely seeing potential for slowing hasn’t been a clear path to rate cuts without concrete reports of deteriorating data. This is in contrast to hopes by some for ‘insurance’ cuts, which would presumably be made as a hedge against bad outcomes that may or may not unfold—a strategy that the Fed hasn’t generally used. The President’s continued calls for lower interest rates to sustain the economic expansion have also represented a political (and an integrity) burden on an otherwise independent entity...

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Economic Update 6-17-2019

  • Economic data for the week included generally as-expected reports for retail sales, producer prices and consumer prices, retail sales and industrial production came in higher than expected, while consumer sentiment and labor figures disappointed a bit.
  • Global equity markets were relatively flat on net for the week, with U.S. stocks ending slightly in the positive, and foreign slightly in the negative. Bonds experienced similar results, with the yield curve little changed, upon few changes in investor risk preferences. Commodity markets were characterized by lower prices for crude oil offset by sharp price gains in the grains complex.
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Economic Update 6-10-2019

  • Economic data for the week included positive results in ISM non-manufacturing, while ISM manufacturing lost a bit of ground for the prior month. The employment situation report for May also came in weaker than expectations.
  • U.S. and foreign equity markets recovered sharply last week, with hopes of the Fed lowering interest rates in response to growing economic headwinds. Bonds also fared positively, as rates declined across the yield curve. Commodities were mixed, with oil prices recovering slightly.
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Economic Update 5-28-2019

  • Economic data for the week included slightly disappointing housing sales, and weaker durable goods orders, but jobless claims that remained status quo at a strong cyclical level.
  • Equity markets globally generally lost ground as trade tensions between the U.S. and China intensified. Bonds, as expected, fared well as investors fled from risk—pushing down interest rates. Commodities were mixed, with weather affects pushing commodity prices higher, while higher inventories and slowdown concerns damped sentiment for crude oil.
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Economic Update 6-03-2019

  • During a shortened week, economic data consisted of a downwardly-revised but still-strong Q1 GDP report, continued low jobless claims, and mixed consumer confidence. Housing data was again mixed to a bit weaker.
  • Equity markets around the world lost significant ground on the week, as existing (China) and new (Mexico) trade issues drove sentiment in developed nations, while emerging markets gained ground. Bonds again rallied with U.S. treasury rates falling to their lowest levels in several years. Commodities also were hit, due to a recent sharp decline in crude oil prices, which offset higher prices for grains.


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Economic Update 5-20-2019

  • Economic data for the week included weakness in retail sales and industrial production, while several regional manufacturing surveys, jobless claims, consumer sentiment, and housing stats came in stronger than expected.
  • Equity markets in the U.S. and in emerging markets ended the week with declines, while developed foreign regions gained slightly on net. On the other hand, bonds and real estate fared decently as interest rates declined. Commodities gained, despite the stronger dollar, due to agriculture and energy affected by sector-specific factors, such as weather and geopolitics.
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Economic Update 5-13-2019

  • Economic data for the week included ongoing mixed to lower reports for producer and consumer inflation, little changed conditions but lower demand for bank loans, and continued positive jobs markets and claims data.
  • Equities fell across the globe last week, due to threats and eventual implementation of U.S.-China tariffs. Government bonds fared well as flows moved away from risk, while credit lagged a bit. Commodities were mixed to lower, with little change in either the dollar or crude oil prices.


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Economic Update 5-06-2019

  • Economic data for the week was characterized by a Federal Reserve meeting where policy was left unchanged. Positive data included a very strong employment situation report, and gains in consumer confidence, while the ISM services index tempered, but remained expansionary. On the negative side, the ISM manufacturing index and regional manufacturing data came in below expectations.
  • U.S. and foreign equity markets both gained slightly on the week, despite mixed growth and policy news. Bonds were flat to slightly negative, as interest rates ticked just a bit higher. Commodities lost ground, led by lower prices for crude oil due to concerns over a near-term supply glut.

Fed Update 5-01-2019

5/1/2019 scott

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Fed Note:

As predicted, today’s FOMC meeting ended with no change in policy, with all members on board with keeping the fed funds rate within a range of 2.25-2.50%. The formal statement was very little changed, noting continued strength in the labor market and economic growth; however, household and business spending were noted as slowing in the first quarter.

Demonstrated by the drama of the V-shaped financial market reaction from Q4-2018 through Q1-2019, many strategists have been surprised by the speed and magnitude of the Fed’s change in tone from moderately hawkish to much more dovish. The accompanying deceleration in economic progress around year-end has caused fed funds futures probabilities to now price in about a 50% chance of a rate cut by September and 65% chance of one by December, which is a different story than the Fed’s own comments over the past several months of ‘patience,’ and that more rate hikes could come prior to cuts.

The dashboard of Fed mandate items looks similar to recent readings, and while the most recent data is mixed to lackluster, there appear to be hopes for stronger growth in some camps slated for later in 2019. On net, in looking at all measures, conditions continue to look relatively neutral.

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Economic Update 4-29-2019

  • Economic data for the week was highlighted by advance first quarter GDP that came in stronger than expected, solid durable goods orders and new home sales, while existing home sales and jobless claims came in a bit worse than expected.
  • U.S. equity markets gained due to decent corporate earnings results, while foreign stocks were held back a bit by a stronger dollar. Bonds gained as interest rates ticked down over most of the yield curve. Commodities lost ground on average, with early gains in crude oil retreating by week’s end.
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Economic Update 4-22-2019

  • Economic data for the week included stronger-than-expected retail sales, jobless claims and a tighter trade deficit, several regional manufacturing indexes showed mixed results, while housing starts again struggled.
  • In a shortened week, U.S. equity markets were mixed, while foreign stocks gained slightly. Bonds were generally flat with little change in underlying interest rates. Commodities fell slightly, with a minimal rise in crude oil offset by declines in other sectors.
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Economic Update 4-15-2019

  • In a light week for economic data, producer and consumer prices rose a bit more than expected on the headline side, due to higher recent energy prices. Positive news included jobless claims again reaching multi-decade lows, while, on the negative side, the government JOLTS report indicated fewer job openings.
  • Global equity markets experienced gains for the week, with foreign stocks helped by a weaker dollar. However, bonds fell back as interest rates ticked higher and the treasury yield curve again turned positive for the most part. Commodity indexes gained due to higher prices for crude oil and agriculture.

Fed Update 3-20-2019

4/11/2019 scott

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Fed Note:

The March FOMC meeting ended as many predicted—with no change to the fed funds rate, which is currently set at 2.25-2.50%. Regardless, the meeting was closely watched in terms of how the Fed planned to communicate a stance on policy for the remainder of 2019.

The formal statement noted a slowing in economic growth from the last meeting in January, including slower growth in household and business spending, while employment remained strong and inflation remained lower recently. The summary of economic projections, released quarterly, showed a downgrade in the ‘dot plots’ (which are generally averaged visually) to essentially zero implied rate changes for 2019, and perhaps only a handful at best over the next few years.

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Economic Update 4-08-2019

  • Economic data for the week featured a decline in ISM services, retail sales and durable goods orders, while the employment situation report showed decent recovery growth from poor winter results in prior months, ISM manufacturing measures rebounded and jobless claims again reached multi-decade lows.
  • U.S. equity markets gained on the week, with positive economic and labor data, as did foreign equities with the better sentiment. Bonds, however, suffered declines as long-term interest rates ticked higher. Commodities rose due to continued gains in the price of crude oil, as well as agriculture.
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Economic Update 4-01-2019

  • Economic news for the week included a downward revision to last quarter’s economic growth in the U.S., mixed housing results, manufacturing sentiment and consumer sentiment, but a stronger trade balance.
  • U.S. equity markets gained ground last week, while foreign stocks declined a bit, after being negatively affected by a stronger dollar. U.S. bonds rose for another week, with slower global growth pulling down interest rates and future expectations for yields generally. Commodities were mixed, with oil prices creeping upward slightly.
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Economic Update 3-25-2019

  • Economic news for the week centered on the U.S. Federal Reserve’s decision to leave rates unchanged, but, more importantly, revised expectations toward no further rate hikes in 2019. Manufacturing sentiment surpassed expectations, as did data for housing, jobless claims, and a composite of leading economic indicators. However, weaker data abroad appeared to outweigh these benign results.
  • Global equity markets bounced around in the positive during the week before ending in the red by Friday. Due to investor risk aversion away from stocks, bond markets rallied as yields fell to lows not seen in months. Commodities gained a bit, due to slightly higher oil prices, but other segments ended the week mixed.


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Economic Update 3-20-2019

  • A busy week for economic data included stronger-than-expected results in retail sales, durable goods, construction spending, consumer sentiment and several jobs indicators, while industrial production fell short. Several inflation measures also came in a bit lower than anticipated.
  • U.S. and foreign markets both experienced solid gains for the week. Bonds also fared positively, led by riskier sectors, such as high yield and emerging markets. Commodities gained along with a weaker dollar and higher pricing for crude oil.
  • U.S. stocks fared well during the week, as economic data on the macro side was supportive of fundamentals, although offering few big surprises. Optimism persists over a potential U.S.-China trade deal in coming weeks, along with a Chinese pledge last week to not rely on currency devaluation as a trade leveraging tool.
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Economic Update 3-11-2019

  • Economic data for the week, with a delayed schedule still affected by the government shutdown, showed positive results for ISM non-manufacturing/services and housing, coupled with a lackluster February employment report, which looked to have strongly negative winter weather effects.
  • Equity markets declined by several percent globally, due to concerns over world growth, with a stronger U.S. dollar punishing local returns a bit more for foreign stock markets. In fixed income, safe haven U.S. government bonds gained ground, while high yield struggled. Commodities were little changed, in keeping with a rare calm week for crude oil prices.
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Economic Update 3-04-2019

  • Economic data for the week consisted of prior quarter GDP growth coming in late but a bit better than expected, mixed results for housing and consumer sentiment, while ISM manufacturing and jobless claims were weaker.
  • U.S. equity markets gained slightly, as did those in foreign developed markets, while emerging markets declined. Bonds lost some ground as interest rates increased. Commodities fell, led by declines in multiple segments, including the price of crude oil by several percent.
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Economic Update 2-25-2019

  • Economic data for the week consisted of weaker results from durable goods orders and a key regional manufacturing index, as well as a lower existing home sales. An index of leading economic indicators was flattish, with incomplete data. However, jobless claims and homebuilder sentiment improved.
  • Global equity markets earned positive returns again, as sentiment stayed buoyant, and emerging markets leading the way. Bonds were flat, in keeping with minimal changes in interest rates. Commodities rose as the result of gains in industrial metals, natural gas and crude oil.


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Economic Update 2-19-2019

  • Economic data for the week included poor showings from retail sales and industrial production, in addition to higher jobless claims; inflation came in relatively muted on a producer and consumer basis; on the positive side, manufacturing and consumer sentiment survey data were better than expected.
  • U.S. equity and developed foreign markets experienced sharp gains on the week, outperforming weaker results in emerging markets. Bonds were little changed, other than riskier debt outperforming treasuries. Commodities pushed higher on the back of a strong week in crude oil.
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Economic Update 2-11-2019

  • Economic releases were again light, as the impact of the government shutdown has altered schedules for now-stale data, but the week did see a weaker, but still strong, result for ISM non-manufacturing, a trade balance that moved further into deficit than expected, and jobless claims continued to indicate strength in labor markets.
  • U.S. equity markets were flattish on the week as earlier optimism again tapered off due to skepticism about a U.S.-China trade agreement, although foreign stocks fared worse due to a stronger dollar.  Bonds performed decently on the back of lower interest rates.  Commodities declined on the week, driven by lower prices for crude oil and natural gas.
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Economic Update 2-04-2019

  • Economic data for the week included no change in the Federal Reserve’s policy interest rate, and more mixed results from housing, while positive results originated from ISM manufacturing data and labor markets, particularly the employment situation for January.
  • U.S. equity markets gained for the week, with foreign equities just behind.  Bonds eked out a minor gain as interest rates declined along the yield curve.  Commodities rose a bit upon a further recovery in crude oil prices.

Fed Update 1-30-2019

1/31/2019 scott

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The FOMC unanimously decided on no policy action upon the conclusion of their January meeting, which was as expected.

The formal statement noted continued strength in the labor market and economic activity rising at a ‘solid’ rate (downgraded from December’s ‘strong’).  While household spending has continued to grow, a slowdown in business fixed investment last year was also mentioned.  Notably, the committee’s description of being ‘patient’ about determining future changes was newly inserted into the brief note, in consideration of both muted inflation but also global economic and financial developments as of late.  In fact, all mention of the ‘gradual increase’ path for interest rates was removed, which was telling.

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Economic Update 1-28-2019

• Economic data for the week was again limited by the government shutdown, and consisted of stronger house prices but weaker existing home sales, a tick down in the incomplete leading economic indicators, and sharply better and again record-breaking jobless claims.

• Global equity markets were mixed with foreign stocks outperforming U.S., with the help of a weaker dollar. Bonds gained slightly, as lower interest rates outweighed other factors, with foreign also outperforming due to currency effects. Commodities were down overall, with natural gas prices dropping sharply.


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Economic Update 1-14-2019

  • Economic data for the week was lighter than usual, due to the Federal government shutdown, but was highlighted by a tempered but still-strong ISM services report, pullback in consumer inflation, decent labor data and release of the minutes from the last Fed meeting.
  • Global equity markets recovered by several percent, in a continued effort to shake off the bear market of last quarter.  Bonds were mixed, with interest rates inching higher.  Commodities gained ground, again led by a recovery in crude oil pricing.
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Economic Update 1-07-2019

  • Economic data was sparse in the first week of the new year, with ISM manufacturing data disappointing, but employment numbers came in much stronger than expected.
  • U.S. equity markets recovered during the week, largely due to Friday’s job news and optimistically-received Fed remarks; international stocks were not far behind, with more tempered gains.  Bonds also gained a bit of ground along with lower interest rates.  Commodities earned positive returns, due to a recovery in crude oil prices.

Fed Update 12-19-2018

12/19/2018 scott

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Fed Note:

The Federal Reserve Open Market Committee raised the fed funds target rate by 0.25% to a new level of 2.25-2.50%.  This was widely anticipated, with a high futures market probability of this outcome beforehand.  There were no committee dissents.

The formal statement was little altered from November, noting that economic activity remains strong, unemployment remained low, household spending has continued to grow, business fixed income has moderated, and inflation remains near the policy target.  However, there was a tempering of language in terms of further rate hikes (including insertion of the word ‘some’) as well as a comment that the Fed ‘will continue to monitor global economic and financial developments’ for assessment in future policy actions.  Overall, the updated economic output pointed to a base case of about two interest rate increases next year.

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Economic Update 12-17-2018

  • Economic data for the week came in mixed to decent, with retail sales a bit stronger than expected, continued strength in job openings and jobless claims, as well as tempered producer and consumer inflation results.
  • U.S. equity markets declined over fears of possible slowing growth, as did foreign stocks, with small gains turned to losses after being adjusted for a stronger dollar.  Bonds were mixed, with impacts dependent on duration, credit quality and currency last week.  Commodities lost ground due to the stronger dollar and continued falling energy prices.
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Economic Update 12-10-2018

  • Economic data for the week was highlighted by stronger results for ISM reports in manufacturing and services, while factory orders and employment numbers for November came in showing slower growth than expected.
  • Global equity markets slumped, with foreign faring a bit better than U.S. with help from a weaker dollar.  Government bonds performed well, being the recipient of investor flows.  Commodities rebounded as well, as crude oil prices rebounded higher.
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Economic Update 12-03-2018

  • Economic data for the week included an updated release of prior-quarter GDP that was unchanged, stronger housing prices but weaker housing sales metrics, slightly weaker consumer confidence and an increase in jobless claims.
  • U.S. equity markets rebounded sharply with decent economic numbers and less aggressive language toward interest rate tightening from the Federal Reserve.  Foreign stocks followed suit, with emerging markets outpacing developed.  Bonds gained ground as interest rates declined, in both U.S. and foreign markets.  Commodities were mixed, while crude oil prices rebounded slightly.


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Economic Update 11-26-2018

  • On a holiday-shortened week, economic data consisted of growth, albeit at a tempered pace, of the Leading Economic Indicators, mixed housing data and jobless claims, as well as weaker durable goods orders and consumer sentiment. 
  • Global equity markets declined for another week, as all regions fell back in unison.  Bonds were mixed as U.S. high quality bonds were little changed, but foreign bonds were negatively impacted by a stronger dollar.  Commodities were again punished by another large decline in the price of crude oil.
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Economic Update 11-19-2018


  • Economic data for the week was highlighted by higher retail sales, driven by energy prices, mixed regional manufacturing results, tempered inflation and jobless claims that rose slightly.
  • Equity markets in the U.S. and developed Europe declined last week, while emerging markets fared positively, as sentiment improved.  Flows away from risk and falling interest rates benefitted fixed income.  Commodities were mixed but were generally led lower by a continued decline in crude oil prices but a sharp spike higher in natural gas.
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Economic Update 11-12-2018

  • Economic news for the week included a FOMC meeting where interest rates were held steady, manufacturing ISM declined but remained strongly positive, and jobless claims continued to show labor market strength.
  • U.S. equity markets gained some ground last week, following the conclusion of the mid-term elections, while foreign stocks were mixed to lower on net.  Bonds were positive as interest rates declined a bit following the Fed’s meeting.  Commodities fell a few percent driven primarily by lows in crude oil, which is now in a bear market.
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Economic Update 11-05-2018

  • Economic data for the week was highlighted by a decent government employment report, as well as strong results from other labor measures, and stronger consumer confidence, yet weaker manufacturing data.
  • Equity markets in both the U.S. and abroad bounced back last week, gaining several percent.  On the other hand, fixed income markets ended the week negatively due to flows back toward risk and rising interest rates.  Commodities lost several percent solely due to the higher crude oil supplies, which drove prices down sharply.


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Economic Update 10-15-2018

  • Economic data for the week featured more tempered inflation results than expected as seen in last month’s PPI and CPI, lowering the trailing year’s results.  Consumer sentiment declined and jobless claims ticked upward a bit due to hurricane-related effects.
  • Global equity markets suffered a volatile week, with the worst down day stretch seen in over six months.  Bonds fared positively, due to cash flows moving to less risky assets.  Commodities were mixed to down, as the price of crude oil declined sharply.
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Economic Update 10-29-2018

  • Economic data for the week was highlighted by GDP results for the third quarter that came a bit better than expected, strong durable goods orders and jobless claims, as well as mixed housing and sentiment results.
  • Global equity markets fell sharply again, coupled with higher levels of volatility.  Bonds fared well, as investors sought out safety, causing interest rates to decline.  Commodities declined as well, due to weaker energy prices.
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Market Pullbacks

It’s easy to get caught up in complacency when conditions are good, the sun is shining and the market is rising without interruption.  But, as we know intuitively (but often still forget), such parabolic conditions aren’t realistic or even desirable.  In theory, markets that moved upward without any risk of an occasional downward slide would eventually become prohibitively expensive as discounts would be wrung out of the system and create a market situation far more fragile than one with a healthy balance that reacts, digests/disregards and interprets news as it occurs.  Good or bad, this is the essence of how markets have operated over the course of the last few centuries.

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Economic Update 10-08-2018

  • Economic data for the week was highlighted by a weather-suppressed but otherwise decent employment report, strong results from other labor metrics such as private employment and claims, and mixed manufacturing results.
  • Equity markets in both the U.S. and overseas experienced a negative week as interest rates ticked sharply higher.  As expected, fixed income was similarly affected across the board.  Commodities, however, ticked higher due to stronger agricultural and energy prices.


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Economic Update 10-01-2018

  • Economic data for the week was highlighted by the Federal Reserve raising rates by a quarter-percent as expected, final GDP data for the second quarter coming in unchanged yet strong, mixed results for housing, and decelerating but also strong industrial data.
  • Global equity markets lost ground for the week, with the U.S. outperforming foreign regions generally.  Bonds were little changed in keeping with a flattish yield curve, despite the Fed raising rates.  Commodities gained several percent due to the continued momentum of rising crude oil prices.

Fed Update 9-27-2018

9/27/2018 scott

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Fed Note:

The FOMC decided to raise short-term interest rates by another quarter-percent—the third hike this year—bringing the fed funds target range to 2.00-2.25%.  This was largely as expected, with formal probabilities of such a move being pegged at around 95% based on futures markets.  There were no dissents.

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Economic Update 9-24-2018

  • Economic data last week showed continued signs of expansion, seen by a continued upward trend in an index of broad leading economic indicators, as well as stronger manufacturing and job markets; however, housing data continued mixed.
  • U.S. equity markets rose to hit new highs, but were surpassed by foreign stocks, helped by a weaker dollar.  Domestic bonds lost ground with higher interest rates, while emerging market debt fared better.  Commodities gained with currency impacts and higher oil and metals prices.
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Economic Update 9-17-2018

  • Economic news for the month included mediocre retail sales numbers, several inflation results that came in a bit lower than expected and continued strong labor market data.
  • Equity markets gained globally, as sentiment about trade improved somewhat.  Bonds were mixed with interest rates moving higher, as credit outperformed governments.  Commodities gained slightly, as oil prices moved higher.
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Economic Update 9-10-2018

  • Economic data for the week was dominated by a decent employment situation report for August, continued strong results in other labor metrics, as well as positive results from the ISM manufacturing and non-manufacturing surveys.
  • U.S. equity markets declined for the holiday-shortened week, as did foreign stocks with continued weakness in emerging markets.  Bonds fell also as interest rates ticked higher.  Commodities ticked downward along with lower crude oil prices.
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Economic Update 9-04-2018

  • Economic data for the week was led by an upwardly-revised GDP number, stronger consumer confidence and sentiment as well as continued low levels of jobless claims, while housing results were again mixed.
  • U.S. equity markets gained with improved sentiment for trade conditions, while foreign stocks were mixed.  Bonds lagged on the week as interest rates ticked higher.  Commodities were slightly higher as oil prices moved up again toward $70/barrel.
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Economic Update 8-27-2018 

  • Economic data for the week consisted of continued strong showings for jobless claims, and mixed results for durable goods, while housing data was weak in terms of new and existing home sales.
  • Equity markets gained globally, with U.S. stocks reaching new records but still being outpaced by foreign stocks that were helped by a weaker U.S. dollar.  Bonds gained ground domestically with long-term interest rates falling, while foreign debt was also boosted by the dollar’s drop.  Commodities gained as crude oil prices rose back up toward $70/barrel upon Iranian supply concerns.
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Economic Update 8-20-2018

  • Economic data for the week was highlighted by stronger data for retail sales and leading economic indicators, mixed regional manufacturing survey results, while sentiment and housing data disappointed.
  • U.S. equity markets ticked higher last week, while foreign stocks suffered, and emerging markets faring worst.  Bonds were flattish as interest rates ended the week little changed.  Commodities lost ground, with crude oil prices losing a few dollars per barrel.
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Economic Update 8-13-2018

  • Economic data for the week was light but led by stronger inflation implied by the consumer price index, less so for producer prices, while labor markets continued their run of strength.
  • Equity markets lost ground overall during the week, with additional concerns over global trade and a currency crisis in Turkey.  U.S. bonds, on the other hand, earned positive returns with lower yields, while foreign bonds lagged with the headwind of a strong dollar.  Commodities were mixed, with oil prices declining somewhat, and offset by strength in metals and other segments.
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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.


Fed Update 8-01-2018

8/1/2018 scott

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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.

The committee has been on a pace of raising the fed funds once per quarter.  The consensus view expects the FOMC to continue on this trajectory, with a 90% probability of a 0.25% hike at the September meeting.  The odds for a fourth hike this year in December have grown from 50-50 a few months ago to more like two-thirds today.  Based on what we know now, based on the current level of economic growth as well as strength in labor and inflation, 2019 could look similar to 2018 with 3-4 increases projected.  However, that remains a long time away, with some of the impact from the recent tax cuts waning a bit by then, and such a pace will no doubt depend on continued strength in the Fed’s key metrics outlined below...

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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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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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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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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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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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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.

Fed Update 6-13-2018

6/13/2018 scott

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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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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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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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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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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.

Fed Update 5-02-2018

5/2/2018 scott

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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).


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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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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- March 2018

Monthly Portfolio Update

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%...

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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....

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Economic Update 4-16-2018

  • Economic data for the week included producer and consumer inflation reports that showed pricing ticking upward, as expected, while sentiment declined and labor data, while strong, came in below expectations.
  • Global equities gained upon more tempered language between the U.S. and China over trade policy, while bonds succumbed to interest rates pushing higher.  Commodity prices rose, led by oil’s jump as a result of expected military action in Syria.
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Economic Update 4-09-2018

  • Economic data for the week was led by weaker-but-still-robust reports for manufacturing and non-manufacturing activity, yet mixed results for jobless claims and a weaker-than-expected employment situation report for March—likely weather-affected.
  • U.S. equity markets swung dramatically in both directions during the week, ending lower with ongoing market concerns over trade tariffs.  European equities bucked the trend by gaining ground, while emerging markets declined.  Bonds were flattish to slightly negative as interest rates ticked up again during the week.  Commodities declined a few percent as positive results from non-energy groups were unable to offset declines in crude oil.
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Economic Update 4-02-2018

  • On a holiday-shortened week, home sales and price data came in solidly, as did jobless claims; manufacturing data came in expansionary but at a slower pace, while consumer sentiment declined a bit.
  • Equity markets recovered globally last week, as rhetoric over a trade war with China dissipated a bit.  U.S. bonds fared well, with interest rates falling back from recent high levels.  Commodities fell a bit on the week, led by declines in the prices of crude oil and gold.
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Economic Update 3-26-2018

  • Economic data for the week included an increase in the short-term interest rate by the Federal Reserve, as well as stronger durable goods orders and leading indicator results.  Housing and jobless claims results were mixed to some degree.
  • Global equity markets declined due to a variety of negative inputs, including fears of a widespread deterioration in global trade conditions.  This pulled the dollar down by nearly a percent, helping temper losses for foreign stocks.  Bonds ended the week slightly higher, as interest rates tempered a bit, with foreign outpacing U.S.  Commodities gain on the heels of a sharp move higher in the price of crude oil.


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Economic Update 2-26-2018

  • In a slower, holiday-shortened week, a sparse amount of economic data was led by a decline in existing home sales, a sharp move higher in leading economic indicators, a strong jobless claims report, coupled with FOMC minutes from January that leaned toward economic optimism.
  • U.S. equity markets moved forward on the week, as did emerging markets, while foreign developed markets were held back by a stronger dollar.  Bonds were flattish, with little change in interest rates during the week.  Commodities were pushed higher by stronger pricing again in crude oil and natural gas.


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Economic Update 2-20-2018 

  • In a busy week for economic releases, highlights included weakness in retail sales and some hints of increasing inflation as measured by import prices, PPI and CPI.  On the positive side, manufacturing continues to look robust in several regional surveys and jobless claims remain very low.
  • Equity markets around the globe gained sharply on the week to rebound from their recent correction.  Bonds fell back again as interest rates inched higher in reaction to higher inflation and expectations of stronger growth.  Commodities regained some ground as well, led by higher crude oil prices and a weaker dollar.
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Economic Update 2-12-2018

  • Economic news for the week was light, relative to that of financial markets, but highlighted by gains in the ISM non-manufacturing survey and continued strong labor market data.
  • Continuing a trend begun the prior week, stock markets lost more ground, passing through the -10% correction threshold.  Bond markets were slightly negative as rates fluctuated before returning to their starting point.  Commodities lost ground led by declines in crude oil.
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No doubt some of you have been fielding client questions or considering ways to ‘remind’ clients about more normal market volatility that has resurfaced over the past week. 

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Economic Update 2-05-2018

  • Economic news for the week was highlighted by the FOMC keeping interest rates unchanged in their first meeting of the year, Manufacturing surveys showed a bit of a drop while remaining high, housing data showed gains, and the employment situation report came in stronger than expected.
  • Global equity markets declined sharply on the week, led by weakness in the U.S. coupled with higher interest rates.  These same rates increases also punished bond markets, particularly on the long-term part of the yield curve.  Commodities also came in lower, due to a pareback in energy prices for the week.

Fed Update 1-31-2018

1/31/2018 scott

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The first FOMC meeting of the year was uneventful, as expected, with no action on the interest rate policy front, with short-term rates kept to a targeted range of 1.25-1.50%.  There were no dissents.  As there was also no planned press conference, formal comments and a Q&A session from new Chair Powell will have to wait until March.

The official statement noted several items, including that the labor market has continued to strengthen, and economic activity has been rising at a solid rate.  This is in addition to improvements in employment, household and business spending.  However, inflation was noted as continuing to run at a sub-target pace, but some progress has been seen recently.  This fairly optimistic assessment was largely taken as a sign of another interest rate hike in March, which would be in keeping with their recent pace.

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Economic Update 1-30-2018

  • Economic data for the week was highlighted by a weaker-than-expected result for the prior quarter’s GDP and prior-month housing sales, but stronger showings in durable goods, jobless claims and the index of leading economic indicators.
  • Equity markets continued to grind higher in both the U.S. and abroad, with the latter helped by a sharp decline in the U.S. dollar, as the result of off-the-cuff comments from the administration.  Bonds were flattish with little changes in interest rates, while commodities gained ground.
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Economic Update 1-23-2018

  • Economic data for the week was mixed, with decent results reported in industrial production, while regional manufacturing results, housing starts and consumer sentiment came in weaker.  The Fed’s anecdotal Beige Book showed general strength across most segments of the U.S. economy.
  • Equity markets in the U.S. rallied for yet another week, with continued strong economic data, despite a more dramatic political backdrop.  Stronger global growth and a weaker dollar propelled foreign stocks to another week of leadership.  Bonds lost ground as interest rates rose for a variety of reasons, while commodities declined along with a pareback in crude oil prices.
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Economic Update 1-16-2018

  • Economic data for the week was led by growth in retail sales, tempered inflation results and mixed but continued strong labor market metrics.
  • Equity markets gained ground again, with U.S. markets leading the way upon strong sentiment.  Foreign markets also gained, with a help from a weaker dollar.  Domestic bonds generally lost ground with interest rates ticking higher.  Commodities gained across the board, but particularly due to higher crude and natural gas prices last week.
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Economic Update 1-02-2018

  • With an extremely light holiday calendar for economic data, highlights included stronger housing and regional purchasing data and weaker consumer confidence and jobless claims.
  • U.S. stock markets fell during the last week of the year, while international equities gained with the help of a weaker dollar.  Bonds fared well as interest rates declined for the week, and foreign bond markets also benefited from the dollar’s move.  Commodities across the board experienced a positive week.
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Economic Update 12-18-2017

  • Economic activity for the week centered on the Federal Reserve, which raised short-term interest rates another quarter-percent, as expected.  Retail sales gained more sharply than expected, while industrial results were mixed and inflation came in weaker than consensus though several measures.  Labor force gains remain robust.
  • U.S. equities gain for the week, with positive sentiment related to tax reform.  Foreign markets were mixed on net, falling behind U.S. stocks for the week with little change in the dollar.  Bonds on net made slight gains, with the treasury yield curve flattening further.  Commodities were generally little changed with crude oil experiencing a quieter week.

Fed Update 12-13-2017

12/13/2017 scott

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Fed Note:

The December FOMC meeting was considered one in the ‘important’ category, in that additional materials were released, a press conference was scheduled afterward, as well as it being the last of the year.  Based on economic and inflation data released over the past few weeks, odds of a rate hike had moved to nearly 99%, and the Fed didn’t disappoint.  For the third time this year, the rate on fed funds were raised by +0.25% to a new range of 1.25-1.50%. 

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Economic Update 12-12-2017

  • Economic releases were mixed on the week, with weaker results in non-manufacturing ISM, factory orders and lower sentiment.  On the other hand, labor markets continued to perform, with jobless claims running at cyclical low levels and the monthly employment situation report coming in stronger than expected.
  • U.S. stocks gained for the week, as did developed foreign markets despite the tempering influence of a stronger dollar.  Bonds were generally flat, while commodities also fell due to the dollar’s strength coupled with other specific factors.
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Many Americans are surprised to learn that some publicly traded U.S. companies are conducting business with nations defined as State Sponsors of Terror. Even as U.S. is engaged in a war on terror these companies provide funding and resources that may assist the opposition. Terror-free investing, however, is a growing investment movement that is intended to limit this type of corporate behavior. By choosing to invest terror-free, an investor prohibits their funds from being invested in any company doing business in State Sponsors of Terror, such as Iran and Syria.

In addition to the many compelling moral reasons to divest from terror, there are also a number of reasons to consider it from a portfolio risk perspective. The SEC performs a thorough due diligence review of all known terror related investment activity. Starting in 2005, the office of Global Security Risk provides investors with detailed information of known organizations that have performed investment activity with State Sponsors of Terror. Global security risk is broadly defined as the risk to share value stemming from a company’s international business activities and security related concerns, such as terrorism. Despite the growing problem and institutional acceptance, investment options for individual investors demanding divestment have been very limited. 

When global crises arise, the average citizen may be left feeling helpless. Most cannot pick up a weapon and join the physical fight against terror. However, terror-free investing may be a powerful tool in the fight against terrorism, genocide, racism, fascism and all kinds of injustices. It is not only an investment in the future of an individual, but perhaps an investment in the future of humanity itself.

Investing involves risk. Every prospectus, management brochure, television commercial and piece of media that has anything to do with the investment industry must have a disclaimer. These disclosures are required to ensure individuals who are choosing to invest are fully aware that something unforeseen could occur and the strategy could not go as planned.

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Economic Update 11-27-2017

  • On a shortened Thanksgiving week, the few economic reports that surfaced were mixed, with slightly weaker durable goods orders, while existing home sales and jobless claims were positive, and the index of leading economic indicators was quite strong.
  • Global equity markets fared positively, with U.S. small caps and foreign stocks faring well on the heels of a weaker dollar.  Bonds ended up with slight gains as interest rates ticked downward slightly, with foreign bonds faring better.  Commodity indexes were higher as crude oil rose to its highest price in over two years.
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Economic Update 11-20-2017


  • Economic data for the week was highlighted by stronger retail sales, mixed-but-still-strong manufacturing and industrial production results, along with slightly higher inflation.  Homebuilder sentiment improved, while jobless claims remained very low.
  • U.S. equity markets were mixed with small caps outperforming large caps.  Emerging market stocks similarly outperformed developed market equities.  Bonds achieved positive gains, while foreign bonds were helped by a weaker dollar.  Commodities lost a bit of ground with crude oil prices ending flat for the week.
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Economic Update 11-06-2017

  • Economic news for the week was dominated by a Fed meeting that resulted in no policy change, mixed manufacturing results, stronger optimism and a below-par employment situation report—several releases continue to demonstrate the effects of recent hurricanes.
  • Equities continued their run of success, with gains in the U.S. and foreign markets, on the back of strong earnings and economic growth.  Bonds also fared well as rates decreased.  Commodities gained on the week, in keeping with higher oil demand and lower production.
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Economic Update 10-09-2017

  • Economic data for the week was led by especially strong ISM manufacturing and non-manufacturing reports, decent construction spending, while the employment situation report for September was a mixed bag of
  • U.S. stock markets continued to churn forward, while a stronger dollar held back developed foreign markets—with the exception of emerging markets, which outperformed all groups.  Bond returns were tempered, as U.S. rates rose a bit.  Commodities lagged due to a drop in the price of crude oil and natural gas.
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Economic Update 10-02-2017

  • Economic news for the week included generally few surprises—a small revision upward for prior-quarter GDP, strong manufacturing results, mixed but generally disappointing housing data, slightly weaker sentiment and weather-affected jobless claims.
  • U.S. equity markets rose, led by small-cap stocks, while foreign markets were mixed, being negatively affected by a stronger U.S. dollar.  Bonds lost ground on the government side with higher rates, while credit fared better.  Commodities were mixed, as a pullback in metals was matched by higher pricing for crude oil.
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Economic Update 1-21-2019

  • Although limited to some extent due to the Federal government shutdown, economic data for the week included a slight decline in producer prices, weaker consumer sentiment, mixed regional manufacturing results, but strong industrial production and jobless claims.
  • U.S. equity markets continued their recovery upward upon stronger sentiment, with foreign stocks in developed and emerging markets just behind.  Bonds ended the week with negative returns, as interest rates again ticked higher.  Commodities gained on the back of crude oil, which regained ground by several percent on the week.
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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.