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MWBoone – Exciting News

MWBoone and Associates, LLC is becoming Boone Wealth Advisors, LLC. Same great people, awesome new look!

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Five Forecasters: Few Warning Signs

The Five Forecasters favor the continuation of the current economic expansion and bull market. The Five Forecasters are five indicators that, collectively, have historically signaled increasing fragility of the U.S. economy and a transition to the late stage of the economic cycle, with increased potential of an oncoming recession. Although bear markets (defined as a 20% or more drop in the stock market) are not always accompanied by recessions, more often than not they come together. As a result, we believe these indicators can be used to give some advance warning of a bear market.

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Corporate Beige Book: Q2 Offers Few Signs of Improvement

Corporate sentiment improved little based on our analysis of earnings conference call transcripts for second quarter earnings season. The message from our earnings recap commentary three weeks ago, “We Were Hoping for More,” is also appropriate for our latest Corporate Beige Book. We did see some signs of improvement in managements’ tone based on the use of more strong words. Talk of recession was virtually non-existent in the U.S., and the Brexit vote in the U.K. was generally not as disruptive as some may have feared. However, the ratio of strong words to weak ones suggests only tentative improvement, while foreign currency remained a drag and low oil prices are still in focus…

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OVERCOMING A WALL OF WORRIES

With weaker than expected jobs growth in May, the Federal Reserve’s (Fed) recent disappointing economic forecast, negative interest rates around the globe, and the Brexit, the list of worries for investors continues to pile up. The U.S. economic recovery will turn seven at the end of this month, but very few realize that or feel like it has helped them. In the face of all the bad news, the S&P 500 is still only 2.8% away from a new all-time high. So maybe things aren’t so bad?

This week we examine some of the biggest worries we have when it comes to the stock market and the economy, but we also list some reasons to be positive. The worries tend to dominate…

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ALL ABOUT THE DOT PLOTS

As the fourth of eight Federal Open Market Committee (FOMC) meetings of 2016 approaches later this week, the market and the Federal Reserve (Fed) again remain deeply divided over the timing and pace of Fed rate hikes. The FOMC’s latest forecast (March 2016) puts the fed funds rate at 0.875% by the end of 2016. As of June 13, 2016, the market (according to fed funds futures) puts the fed funds rate at around 0.50% by the end of 2016…

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BEIGE BOOK: WINDOW ON MAIN STREET

The latest Beige Book suggests that the U.S. economy is still growing near its long-term trend, and that the drag from a stronger dollar and weaker energy prices is fading. However, oil production — which has continued to decline despite the run-up in oil prices from the mid-$20 per barrel range in January 2016 to near $50 today — is weighing on economic conditions in the energy-producing states. In addition, our analysis of the Beige Book confirms that there continues to be some

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JAM-PACKED JUNE

There are a number of big market events coming up next month that may go a long way toward determining the direction of equity markets over the balance of the year:

ECB policy meeting (June 2). The European Central Bank (ECB) has embarked on a massive bond buying program (quantitative easing [QE]) — similar to the Fed’s programs in recent years — to help reinvigorate the region’s economy and fight deflation. A major shift in policy at the June meeting is unlikely given the central bank will not start…

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SPINNING OUR WHEELS

The one-year anniversary of the S&P 500’s all-time high took place on May 21, 2016. Stocks have largely been spinning their wheels for the past year. The S&P 500 has failed to return to its May 21, 2015, record high for 12 months. Stocks have actually been spinning their wheels for even longer, considering the S&P 500 is at the same level as it was on November 18, 2014 — an 18-month stretch. This week we take a look at what the stock market’s lackluster performance since the last record high might mean for the current bull market, now the second longest since 1950.

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CORPORATE BEIGE BOOK

Our analysis of earnings conference call transcripts for the first quarter earnings period provides a mixed picture. The good news is that economic fears and drags from oil and the dollar are abating and earnings are almost certainly putting in a growth trough. However, conference call transcripts do not suggest sentiment is improving much, and management commentary is consistent with a continued slow growth environment. All of this casts some doubt regarding the strength of a potential second half earnings rebound.

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TAKING STOCK AFTER THE RALLY

Stocks have had quite a nice run. Since the February 11, 2016 lows the S&P 500 has gained 14%. The rally has been driven by many factors — chief among them, better U.S. economic data, higher oil prices, the Federal Reserve’s (Fed) slower rate hike timetable, increased confidence in China, and more stimulus from overseas central banks. These factors have enabled stocks to trade more on fundamentals than fear, and have pushed the S&P 500 to just 2.4% below its all-time high. Here we assess the likelihood that the rally continues from this point forward, and, if so, how much further it might have to go.

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