Our Blog


Quality Independent, Unbiased, Financial Advice and Wealth Management

-Family Owned Since 1985

 
 
 
 

Housing Hiatus?

The most recent figures on gross domestic product (GDP) — the broadest measure of economic activity — revealed that residential investment (a.k.a.housing) grew at an 8.8% annualized pace between the first and secondquarters of 2014. As a result, housing contributed 0.3 percentage points to the overall 4.6% gain in GDP in Q2. It was the first time since Q3 2013 that housing added to GDP growth; but it marked the 12th quarter of the last 15, dating back to late 2010, that housing has made a positive contribution to GDP. Prior to that, between late 2005 and late 2010, housing had been a drag on the overall economy in 17 of the 20 quarters (or five years), as the economy endured the housing-induced Great Recession and its aftermath…

Housing Hiatus?

 

Mind The Gap

On September 17, 2014, the Federal Reserve’s (Fed) policymaking arm, the Federal Open Market Committee (FOMC), met for the sixth time this year. On the one hand, the FOMC surprised markets by announcing “how” it

would exit from quantitative easing (QE) and reduce the size of its balance sheet in the coming years. On the other hand, the FOMC calmed markets by not making any substantive changes to its forward guidance to the public

and financial markets on when it would begin raising rates. The statement released after the meeting once again said that the FOMC would keep rates low for a “considerable time” after QE ends. However,the new set of economic

and rate forecasts by FOMC members indicated…

Mind The Gap

 

Fall FOMC Watch

On Tuesday, September 16 and Wednesday, September 17, 2014, the Federal Reserve (Fed) will hold the sixth of its eight Federal Open Market Committee (FOMC) meetings of the year. This meeting will include a press

conference by Fed Chair Janet Yellen and FOMC members’ forecasts for the economy, the timing of the first fed funds rate hike, and the level of the fed funds rate at the end of 2014, 2015, 2016, 2017, and in the long run. In

recent years, markets have been conditioned to expect a greater possibility of policy changes at meetings accompanied by press conferences and new forecasts and, as a result, market participants have increased their odds that

the Fed will change “something” at this meeting. Although we continue to expect the Fed will again cut the pace of its bond purchase program (quantitative easing or QE) and remain on pace to exit QE by the fourth quarter of

2014, the odds have increased in recent weeks that the Fed will take some additional action. Arranged from most likely to least likely (in our view), at this week’s meeting the Fed….

Fall FOMC Watch

 

Midterms May Mean More Gains for Stocks

With the midterm elections now just two months away and campaigning starting to heat up, we thought we would share our current views on the political landscape and what it may mean for U.S equities. In our two Outlook

2014 publications for this year, we posited that the U.S. economy and corporate profits may drive the stock market higher and investors could turn their attention away from policymakers in Washington, who were such a

distraction in 2013 and earlier in the current economic expansion. We continue to see opportunities for further stock market gains over the…

Midterms May Mean More Gains for Stocks

 

Ready, Set, HIKE!

In only 10 days, the NFL regular season begins. Teams and coaches will be analyzing each other’s moves and plays, looking for any indication that can give them an edge to succeed. Some will play strong offense, others good defense from the moment of the first kickoff. Although some big plays could happen during the first kickoff or first hike, we know this is only the start of the game, and in turn only the start of the season. History suggests the same is true for the first Federal Reserve (Fed) interest rate hike as it relates to the stock market and economy. While football teams are looking for an edge against their opponents on the field, investors will be keeping a close eye on the Fed to try and gain an edge as to when it will finish winding down its bond-buying program (quantitative easing 3) and eventually begin hiking short-term interest rates. Investors appear to be comfortable with the end of quantitative easing following…

Ready, Set, HIKE!

 

Crystal Ball?

Since the dawn of financial markets, investors have been searching for signals of impending declines. Many economic indicators correlate highlywith the stock market, which means they are coincident and not leading,

and they tend to move at the same time as stocks. Some are lagging, meaning they move after stocks, which of course is not very predictive. An important goal for all investors is to find leading indicators in an attempt to

anticipate big down moves. One leading indicator that we have found with reliable predictive power is the Conference Board Index of Leading Economic Indicators (LEI). Itis always difficult to predict small stock market

pullbacks, such as the two 4 – 6% drops that the S&P 500 Index has experienced in 2014. Such pullbacks can be driven….

Crystal Ball?

Turning Down the Noise

Volume has picked up during the recent downturn. No, we are not talking about trading volumes; we are talking about the volume from your TVs with talking heads warning about an impending stock market downturn. If you turn off the TV and focus on what the market is telling you, rather than the talking heads, you can tune out the noise. The way we listen to the market in our investment process is through technical analysis, where we assess the behavior of the market and its underlying drivers. Analyzing market breadth has been an especially useful technical analysis tool for predicting recessions and bear markets. There are various ways to look at market breadth, and we will be looking at two critical areas in this week’s commentary. Market breadth can be tracked by looking at the number of stocks that…

Turning Down the Noise

Reconnected?

Recently, we wrote about the potential disconnect between the weak performance of the economy as measured by gross domestic product (GDP) in the first quarter of 2014 and the run of strong economic data

for April, May, and June 2014. On balance, the economic data release in recent weeks for July 2014 continued to meet or exceed analysts’ expectations, including data released last week (July 28 – August 1, 2014)

on second quarter GDP, July employment, and the July readings on the Institute for Supply Management’s (ISM) manufacturing survey and vehicle sales. In this week’s commentary, we’ll examine whether or not a reconnect

has occurred and also revisit Federal Reserve (Fed) Chair Yellen’s labor market dashboard in the wake of the release of the July 2014 Employment….

Reconnected?

 

Midsummer Madness

Eight times per year, the outcome of the Federal Reserve’s (Fed) Federal Open Market Committee (FOMC) meeting becomes the focal point for market participants. Four times each year, the Bureau of Economic Analysis’

(BEA) first estimate of gross domestic product (GDP), the first look at the health of the economy in the prior quarter, dominates the headlines. Similarly, at the start of each month, the Report on Business from the

Institute for Supply Management (ISM) and the monthly labor market report from the U.S. Department of Labor are the centerpieces of any trading week. This week (July 28 – August 1, 2014), all four of these key events are

on the docket. How rare is this? In the 760 weeks between…

Midsummer Madness

Gauging Global Growth in 2014 & 2015

The outlook for global growth is important to investors, since it defines the ultimate pace of activity that creates value for countries, companies, and consumers. This week, as investors begin to digest the S&P 500 earningsreports for the second quarter of 2014, we provide an update on how estimates for economic growth for 2014 and 2015 in the United States and across the globe have evolved over the past few years. Last week, Christine Lagarde, Managing Director of The International Monetary Fund (IMF), signaled that the IMF would cut its global growth forecasts for both 2014 and 2015, when it releases its mid-year forecast update later this month. Although the release garnered plenty of headlines in the media, the majority of financial market participants took little notice of the report. Why? Because consensus…

Gauging Global Growth in 2014 & 2015