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Monthly Archives: June 2016

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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