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Monthly Archives: April 2013

Soft Spot Arrives on Schedule

There are certain things we have gotten used to counting on each spring: the season changes and the weather warms, baseball games bring fans to the stadiums, the economy weakens, and investors “sell in May and go away.” The old Wall Street adage “sell in May and go away” refers to the seasonal tendency of stocks’ performance to weaken in the spring until the fall. In recent years, this spring slide in the stock market was driven by the arrival of a spring soft spot in the economy. This soft spot has emerged again — for the fourth year in a row…

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Soft Spot Arrives on Schedule

Search for Income

The first quarter of 2013 presented a mixed bag for income-seeking investors but did little to ease the difficult task of income-generation in today’s low-yield environment. High-quality bond prices declined over the first quarter, but weakness was modest and yields increased only slightly, limiting opportunity for income-seeking investors. Lower-rated bonds, such as high-yield bonds, bank loans, and preferred securities, witnessed price gains over the first quarter. Higher prices boosted total returns, but the lower yields on these higher yielding segments more than offset the modest increase in high-quality bond yields, making the job of income-seeking investors more difficult…

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Search for Income

Is Investor Complacency Finally Ending?

Last week, U.S. stocks suffered their worst drop since June 1, 2012, measured by a 2.1% loss — totaling 318 points — in the Dow Jones Industrial Average. The week began with a terrorist attack that disrupted the Boston Marathon and a report that China’s economic growth unexpectedly slowed in the first quarter of 2013. Throughout the week, first quarter 2013 earnings results, including widely watched companies such as…

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Is Investor Complacency Finally Ending?

Assessing Interest Rate Risk

It seems there is no shortage of investors willing to forecast the impending doom for the bond market stemming from a reversal of the long decline in interest rates. Last week, the commissioner of the Securities and Exchange Commission (SEC) Daniel Gallagher stated that “financial armageddon” awaits municipal bond investors due to rising interest rates. Commissioner Gallagher tried to retract comments late in the week, saying he was merely trying to make bond investors aware of potential risks, but nonetheless joined a long list of doomsdayers who have used…

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Assessing Interest Rate Risk

Updating Our Thoughts on Gold

In light of the dramatic move in gold prices, we would like to take this opportunity to clarify our views on the precious metal. Many factors have played a role in the sharp recent decline in gold prices, but the central bank of Cyprus being forced to sell gold reserves to raise cash in conjunction with its recent bailout was the news that drove the accelerated, seemingly indiscriminate selling that began on…

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Updating Our Thoughts on Gold

First Quarter Earnings Insights

Four times a year, investors focus on the most fundamental driver of investment performance: earnings. Unfortunately, like the economy, earnings growth remains sluggish. The first quarter of 2013 is likely to mark the fourth quarter in a row of low to mid-single-digit earnings per share growth. The dollar amount of earnings per share for the S&P 500 companies is expected to be…

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First Quarter Earnings Insights

#TheWeekInTweets

Each time we publish the Weekly Economic Commentary, we include our calendar on page 3 that details all the key economic and policy events for the week. While we try to keep the Weekly Economic Commentary “relevant” by tying our commentary to one of the events of the week, many times we don’t refer to the calendar at all. This week, we thought we would try something a little different and incorporate the event calendar into the publication by providing a 140-character Tweet about each of the key calendar entries of the coming week. We’ll also sprinkle in a few charts…

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#TheWeekInTweets

Searching for Inspiration

The S&P 500 Index closed at 1553 on Friday, April 5, the level the current rally first reached a month ago. The stock market’s stalling momentum and increasing volatility, combined with other signs evident in the market’s recent behavior, suggest investors might be looking for new inspiration…

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Searching for Inspiration

What’s Fueling Gasoline?

This week, markets digest a variety of reports on the U.S. economy in February, March, and April 2013. Of particular interest to market participants will be the reports on producer prices and retail sales for March — both due out on Friday, April 12. The Consumer Price Index (CPI) is due out next Tuesday, April 16, 2013. The price of gasoline will feature prominently in all three reports. This time of year, gasoline prices typically garner plenty of attention from the…

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What’s Fueling Gasoline?

Business Capital Spending

On March 28, 2013, the Bureau of Economic Analysis (BEA) of the U.S. Department of Commerce reported that corporate profits of all U.S.-based corporate entities — as measured in the National Income and Product Accounts (NIPA) — hit an all-time high in the fourth quarter of 2012. The bulk of companies in the S&P 500, a subset of the companies in the NIPA profits data, will report their earnings for the first quarter of 2013 in the coming weeks…

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Business Capital Spending