Phone: (253) 848-2840

edgecombe_coplin_social_facebook.png  Edgecombe Coplin Client Account Login

  • The Journey

    “If you don’t know exactly where you’re going, how will you know when you get there?” 

     

    Steve Maraboli, Life, the Truth, and Being Free

     

  • Integrity

    "The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively."

     

    Bob Marley 

  • Team Work

    "Teamwork divides a task and multiplies the success."

     

    Author Unknown

  • Imagine

    "Life is art.
    Life is beautiful.
    Life is love.
    Life is all you can…
    Imagine."

     

    Author Unknown

  • Quality of Life

    "The greatest day in your life and mine is when we take responsibility for our attitudes. That’s the day we truly grow up."

     

    John C. Maxwell

Archived Newsletters

Weekly Economic Update - 4.24.17

EXISTING HOME SALES HIT A 10-YEAR PEAK

Rising 4.4% for March, resales surpassed expectations – analysts polled by Reuters projected a gain of 2.5%. The National Association of Realtors said that sales were 5.9% improved from a year before, and that put them at their best level since February 2007, even with existing home inventory 6.6% slimmer than in March 2016.1

      

CONSTRUCTION ACTIVITY WANES

Department of Commerce data showed a 6.8% reduction in housing starts in March. Even with that fall, starts were up 9.2% in 12 months. Building permits rose 3.6% last month, resulting in a 17.0% annualized increase.2

 

LIGHT SWEET CRUDE SLIDES 7% IN 5 TRADING DAYS

WTI crude settled at $49.62 Friday, 7.4% below where it had closed a week earlier. One influence was a Baker Hughes report showing that the number of active rigs had increased for a fourteenth consecutive week.3

  

STOCKS END CHOPPY WEEK HIGHER

Five days of rollercoastering ultimately sent the S&P 500 to a 0.85% weekly gain. The Dow Jones Industrial Average and Nasdaq Composite respectively advanced 0.46% and 1.82% in the same stretch. At Friday’s close, the Dow settled at 20,547.76; the S&P, at 2,348.69; and the Nasdaq, at 5,910.52.4

 

THIS WEEK: Monday, earnings arrive from Coach, Express Scripts, Halliburton, Hasbro, Kimberly-Clark, Newmont Mining, and T. Rowe Price. The Conference Board’s April consumer confidence index, the February S&P/Case-Shiller home price index, and March new home sales data appear Tuesday, along with earnings from 3M, AT&T, Baker Hughes, Biogen, Capital One, Caterpillar, Chubb, Coca-Cola, Eli Lilly, Fifth Third, Freeport-McMoRan, McDonald’s, Northern Trust, Novartis, and Xerox. On Wednesday, the earnings lineup includes Alaska Air, Amgen, Anthem, Boeing, Credit Suisse, Dr. Pepper Snapple Group, Equifax, GlaxoSmithKline, Hershey, Ingersoll-Rand, Norfolk Southern, O'Reilly Auto Parts, PepsiCo, Procter & Gamble, Rockwell Automation, State Street, and T-Mobile. Earnings from Alphabet, Amazon, American Airlines, Comcast, Dow Chemical, Expedia, Ford Motor Co., MGM Resorts, Microsoft, Parker-Hannifin, Southwest Airlines, Under Armour, and Western Digital all roll out Thursday, complementing reports on initial jobless claims and March durable goods orders and housing contract activity. Exxon Mobil, General Motors, Phillips 66, UBS Group AG, and Weyerhaeuser issue earnings news Friday, as investors also consider the federal government’s first estimate of Q1 growth and the University of Michigan’s final April consumer sentiment index.

 

% CHANGE

Y-T-D

1-YR CHG

5-YR AVG

10-YR AVG

DJIA

+3.97

+14.27

+11.54

+5.85

NASDAQ

+9.80

+19.50

+19.40

+13.40

S&P 500

+4.91

+12.30

+14.08

+5.82

REAL YIELD

4/21 RATE

1 YR AGO

5 YRS AGO

10 YRS AGO

10 YR TIPS

0.40%

0.24%

-0.24%

2.27%

 

 


Sources: wsj.com, bigcharts.com, treasury.gov - 4/21/174,5,6,7

Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year TIPS real yield = projected return at maturity given expected inflation.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor's 500 (S&P 500) is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world's largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

 

Citations.

1 - reuters.com/article/us-usa-economy-housing-idUSKBN17N1QU [4/21/17]

2 - marketwatch.com/story/housing-starts-fall-7-but-permits-pick-up-the-slack-in-march-2017-04-18 [4/18/17]

3 - foxbusiness.com/markets/2017/04/21/oil-ends-under-50-as-signs-rising-us-output-cast-doubts-over-opec-cut-extension.html [4/21/17]

4 - markets.wsj.com/us [4/21/17]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=4%2F21%2F16&x=0&y=0 [4/21/17]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=4%2F21%2F16&x=0&y=0 [4/21/17]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=4%2F21%2F16&x=0&y=0 [4/21/17]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=4%2F20%2F12&x=0&y=0 [4/21/17]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=4%2F20%2F12&x=0&y=0 [4/21/17]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=4%2F20%2F12&x=0&y=0 [4/21/17]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=4%2F20%2F07&x=0&y=0 [4/21/17]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=4%2F20%2F07&x=0&y=0 [4/21/17]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=4%2F20%2F07&x=0&y=0 [4/21/17]

6 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [4/21/17]

7 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [4/21/17]  


Weekly Economic Update - 4.17.17

PRICES DECLINE IN MARCH

In March, the Consumer Price Index retreated for the first time in 13 months. Its 0.3% dip left annualized consumer inflation at a moderate 2.4%. Fuels, autos, and groceries have all become less expensive recently, according to Bureau of Labor Statistics data. Core consumer prices were up 2.0% in the year ending in March. The Producer Price Index fell just 0.1% in March, with the yearly PPI gain left at 2.3%.1,2

      

RETAIL SALES FALL

March’s 0.2% decrease followed a 0.3% pullback in February. The silver lining? Minus gas and vehicle sales, retail sales were up 0.1% last month. Core retail sales were flat for March.2

 

AN IMPROVEMENT FOR CONSUMER SENTIMENT

Rising to an initial April reading of 98.0, the University of Michigan’s consumer sentiment index improved 2.1 points from its final March level. The index’s current conditions component increased 2.0 points to an outstandingly high 115.2.2

  

A VOLATILE WEEK FOR STOCKS

Selling outweighed buying during this past, abbreviated market week. Across four trading days, the S&P 500 fell 1.12% as U.S. investors considered both corporate earnings and global tensions. The Nasdaq Composite’s weekly losses were slightly deeper at 1.21%; the Dow Jones Industrial Average declined only 0.97%. Friday’s settlements: Dow, 20,453.25; Nasdaq, 5,805.15; S&P, 2,328.95.3,4

 

THIS WEEK: Earnings from Celanese, DISH Network, J.B. Hunt, and Netflix appear Monday. Tuesday, investors review earnings from Bank of America, Charles Schwab, Citrix, Goldman Sachs, Harley-Davidson, IBM, Johnson & Johnson, Kinder Morgan, UnitedHealth, W.W. Grainger, and Yahoo!, along with data on March housing starts, building permits, and industrial output; also, Facebook’s F8 conference begins. Earnings announcements from Abbott Labs, American Express, BlackRock, CSX, eBay, Kaiser Aluminum, Morgan Stanley, Qualcomm, TD Ameritrade, and U.S. Bancorp emerge Wednesday, plus a new Federal Reserve Beige Book. On Thursday, the earnings parade includes Alliance Data, American Airlines, BB&T, BONY Mellon, Briggs & Stratton, D.R. Horton, E*TRADE, GATX, Imax, KeyCorp, Mattel, Nucor, PPG, Philip Morris, Sherwin-Williams, Snap-On, Travelers Companies, Unilever, Verizon, and Visa. March existing home sales figures are out Friday, along with earnings from General Electric, Honeywell International, Rockwell Collins, Schlumberger, Stanley Black & Decker, and SunTrust Banks.

 

% CHANGE

Y-T-D

1-YR CHG

5-YR AVG

10-YR AVG

DJIA

+3.49

+14.10

+11.83

+6.22

NASDAQ

+7.84

+17.37

+18.56

+13.30

S&P 500

+4.03

+11.82

+13.99

+6.03

REAL YIELD

4/14 RATE

1 YR AGO

5 YRS AGO

10 YRS AGO

10 YR TIPS

0.32%

0.24%

-0.25%

2.31%

 

 


Sources: wsj.com, bigcharts.com, treasury.gov - 4/14/174,5,6,7

Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year TIPS real yield = projected return at maturity given expected inflation.

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor's 500 (S&P 500) is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world's largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

 

Citations.

1 - marketwatch.com/story/inflation-falls-for-first-time-in-13-months-cpi-shows-2017-04-14 [4/14/17]

2 - investing.com/economic-calendar [4/14/17]

3 - google.com/finance?q=INDEXDJX%3A.DJI&ei=4PbwWNn_O8-w2AbUyJ7ICQ [4/14/17]

4 - markets.wsj.com/us [4/14/17]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=4%2F14%2F16&x=0&y=0 [4/14/17]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=4%2F14%2F16&x=0&y=0 [4/14/17]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=4%2F14%2F16&x=0&y=0 [4/14/17]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=4%2F13%2F12&x=0&y=0 [4/14/17]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=4%2F13%2F12&x=0&y=0 [4/14/17]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=4%2F13%2F12&x=0&y=0 [4/14/17]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=4%2F13%2F07&x=0&y=0 [4/14/17]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=4%2F13%2F07&x=0&y=0 [4/14/17]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=4%2F13%2F07&x=0&y=0 [4/14/17]

6 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [4/14/17]

7 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [4/14/17]  


Weekly Economic Update - 4.10.17

COMPANIES ADDED FEWER WORKERS IN MARCH

Just 98,000 net new jobs were created last month, and some analysts think Winter Storm Stella may have held hiring back. Even so, the Department of Labor’s latest employment report showed the U-3 jobless rate decreasing 0.2% to 4.5%; the broader U-6 rate fell 0.3% to 8.9%. The big factor in both declines: 326,000 people leaving the ranks of the unemployed. If all this seems incongruous, consider that the Bureau of Labor Statistics compiles data from two separate surveys: one focusing on payroll growth; the other, on the employment status of individuals.1

      

STRONG EXPANSION FOR SERVICE, FACTORY SECTORS

Another month, another wave of growth for industry and retail businesses – this was the tale told by the two purchasing manager indices at the Institute for Supply Management. For March, ISM’s service sector PMI came in at 55.2; its factory PMI, at 57.2. The services PMI lost 2.4 points from its February mark; the factory PMI, 0.5 points. Still, these readings were well above the crucial 50 level.2

 

FED MAY START TO REDUCE ITS BALANCE SHEET

According to the minutes of the March Federal Reserve policy meeting, most Federal Open Market Committee members believe that the central bank should begin shrinking its vast portfolio of mortgage-backed securities and Treasuries later in 2017. The minutes noted that whether the FOMC decides to phase out or halt reinvestments, the shift in balance sheet policy “should be communicated…well in advance of an actual change.”3

  

STOCKS MOVE SLIGHTLY LOWER

Wall Street’s three major equity indices pulled back a bit last week. Over five days, the Dow ceded just 0.03% to 20,656.10. But the S&P 500 (closed at 2,355.54) and Nasdaq (closed at 5,877.81) took deeper respective losses of 0.30% and 0.57%. The Russell 2000 slipped 1.54% for the week to 1,364.56; the CBOE VIX “fear index” rose 4.04% to 12.87.4

 

THIS WEEK: On Monday evening, Federal Reserve chair Janet Yellen discusses monetary policy at the University of Michigan. Bank of the Ozarks reports Q1 results Tuesday. Earnings from Delta Air Lines, Fastenal, and Pier 1 Imports arrive Wednesday. On Thursday, the Q1 earnings season gathers steam, with Citigroup, JPMorgan Chase, PNC Financial Services Group, and Wells Fargo all reporting; apart from that, the March Producer Price Index, the preliminary April University of Michigan consumer sentiment index, and a new initial claims report also appear. Friday brings March retail sales figures and the March Consumer Price Index.

 

% CHANGE

Y-T-D

1-YR CHG

5-YR AVG

10-YR AVG

DJIA

+4.52

+17.75

+11.63

+6.45

NASDAQ

+9.19

+21.23

+18.16

+13.78

S&P 500

+5.21

+15.36

+13.70

+6.32

REAL YIELD

4/7 RATE

1 YR AGO

5 YRS AGO

10 YRS AGO

10 YR TIPS

0.44%

0.12%

-0.16%

2.27%

 

 


Sources: wsj.com, bigcharts.com, treasury.gov - 4/7/174,5,6,7

Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year TIPS real yield = projected return at maturity given expected inflation.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor's 500 (S&P 500) is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world's largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

 

Citations.

1 - forbes.com/sites/maggiemcgrath/2017/04/07/u-s-adds-just-98000-jobs-in-march-missing-expectations-by-a-wide-margin/ [4/7/17]

2 - instituteforsupplymanagement.org/ismreport/nonmfgrob.cfm?SSO=1 [4/5/17]

3 - reuters.com/article/us-usa-fed-minutes-idUSKBN1772G4 [4/5/17]

4 - markets.wsj.com/us [4/7/17]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=4%2F7%2F16&x=0&y=0 [4/7/17]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=4%2F7%2F16&x=0&y=0 [4/7/17]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=4%2F7%2F16&x=0&y=0 [4/7/17]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=4%2F5%2F12&x=0&y=0 [4/7/17]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=4%2F5%2F12&x=0&y=0 [4/7/17]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=4%2F5%2F12&x=0&y=0 [4/7/17]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=4%2F5%2F07&x=0&y=0 [4/7/17]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=4%2F5%2F07&x=0&y=0 [4/7/17]

5 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=4%2F5%2F07&x=0&y=0 [4/7/17]

6 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [4/7/17]

7 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [4/7/17]  


Weekly Economic Update - 4.3.17

PERSONAL SPENDING SLOWS

Consumers apparently chose saving over spending in the second month of the year. Last week, a Department of Commerce report noted only a 0.1% gain for personal spending in February. That happened even with personal incomes rising 0.4%, nearly matching the 0.5% January advance. In other news concerning personal spending, the Bureau of Economic Analysis raised its estimate of fourth-quarter GDP to a final reading of 2.1% from the previous 1.9%.1

      

HOUSEHOLDS MAINTAIN THEIR OPTIMISM

The Conference Board’s much-watched consumer confidence index came in at 125.6 for March, soaring 9.5 points to a level unseen since December 2000. Economists polled by Reuters expected the index to descend slightly to 114.0. Losing 0.7 points from its preliminary March result, the University of Michigan’s household sentiment index remained high at 96.9.1,2

 

A BOOST FOR PENDING HOME SALES

Housing contract activity increased 5.5% in February by the estimate of the National Association of Realtors, more than reversing January’s 2.8% decline. The latest S&P/Case-Shiller 20-city home price index (January) showed a 0.2% seasonally adjusted monthly gain and a 5.7% year-over-year improvement.1

  

A GREAT QUARTER ENDS WITH GAINS

The past five trading days left the three major indices higher: during March 27-31, the Nasdaq Composite advanced 1.42%; the S&P 500, 0.80%; and the Dow Jones Industrial Average, 0.32%. The quarter-ending settlements: Dow, 20,663.22; Nasdaq, 5,911.74; S&P, 2,362.72. Of the three, only the Nasdaq had a winning March, but the year-to-date column in the table below confirms the strength of the first quarter.3

 

THIS WEEK: Monday, the Institute for Supply Management releases its March manufacturing PMI. A report on February factory orders appears Tuesday. Wednesday, investors consider minutes from the March Federal Reserve policy meeting, the latest ISM service sector PMI, a fresh ADP payrolls report, and earnings from Bed Bath & Beyond, Monsanto, Rite Aid, and Walgreens Boots Alliance. The March Challenger job-cut report and new initial claims figures arrive Thursday, along with earnings from CarMax, Constellation Brands, Fred’s, Ruby Tuesday, and WD-40. The Department of Labor issues its March employment report on Friday.

 

% CHANGE

Y-T-D

1-YR CHG

5-YR AVG

10-YR AVG

DJIA

+4.56

+16.84

+11.28

+6.73

NASDAQ

+9.82

+21.39

+18.24

+14.41

S&P 500

+5.53

+14.71

+13.55

+6.63

REAL YIELD

3/31 RATE

1 YR AGO

5 YRS AGO

10 YRS AGO

10 YR TIPS

0.43%

0.16%

-0.09%

2.21%

 

 


Sources: wsj.com, bigcharts.com, treasury.gov - 3/31/173,4,5,6

Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year TIPS real yield = projected return at maturity given expected inflation.

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor's 500 (S&P 500) is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world's largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

 

Citations.

1 - investing.com/economic-calendar/ [3/31/17]

2 - cnbc.com/2017/03/28/us-consumer-confidence-hits-1256-in-march-vs-estimate-of-114.html [3/28/17]

3 - markets.wsj.com/us [3/31/17]

4 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=3%2F31%2F16&x=0&y=0 [3/31/17]

4 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=3%2F31%2F16&x=0&y=0 [3/31/17]

4 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=3%2F31%2F16&x=0&y=0 [3/31/17]

4 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=3%2F30%2F12&x=0&y=0 [3/31/17]

4 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=3%2F30%2F12&x=0&y=0 [3/31/17]

4 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=3%2F30%2F12&x=0&y=0 [3/31/17]

4 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=3%2F30%2F07&x=0&y=0 [3/31/17]

4 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=3%2F30%2F07&x=0&y=0 [3/31/17]

4 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=3%2F30%2F07&x=0&y=0 [3/31/17]

5 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [3/31/17]

6 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [3/31/17]


Monthly Economic Update - April 2017

THE MONTH IN BRIEF
Stocks went sideways rather than north in March, with the S&P 500 losing just 0.04%. The Federal Reserve made another quarter-point interest rate move, and overseas, the United Kingdom initiated Brexit proceedings. While new data showed weak consumer spending, consumer optimism remained high and hiring was once again strong. A subpar month for commodities did bring major gains for two energy futures. In the housing market, existing home sales decelerated, while new home sales picked up. A little volatility did not upset the primarily bullish outlook on Wall Street.1

    

DOMESTIC ECONOMIC HEALTH
On March 15, the Federal Reserve felt confident enough in the economy to raise the benchmark interest rate to the 0.75%-1.00% range. The central bank left its 2017 dot-plot unchanged – its forecast still calls for a total of three rate hikes this year.2 

  

Last month, most of the major indicators affirmed the health of the economy. The only question mark concerned household spending, and the 0.1% February gain may have just been an aberration. Consumer incomes did increase 0.4% in February, so it appeared households were pocketing more of what they had made; in fact, there was only a 0.1% February rise in retail sales. Speaking of consumer spending, the Bureau of Economic Analysis revised fourth-quarter growth up to 2.1% as the month ended; even with that upgrade to the Q4 GDP number, the economy grew just 1.6% last year, a full percentage point less than in 2015.3,4

 

Americans felt very confident about the state of the economy in March. The Conference Board’s index jumped up 9.5 points in a month to a remarkably high reading of 125.6. The University of Michigan’s monthly index of consumer sentiment finished March at 96.9, up 0.6 points from its final February mark.5,6

 

The labor market showed further strength. Department of Labor data showed the economy adding 235,000 net new jobs in February, with the construction and education/health care sectors accounting for 120,000 of them. This sent the U-3 unemployment rate down 0.1% further to 4.7%, while the U-6 rate measuring “total” unemployment declined another 0.2% to 9.2%.7

 

In the opening week of March, the latest Institute for Supply Management gauges of manufacturing and service sector activity showed both sectors in good shape during February. At 57.6, the ISM services PMI reached its highest point since October 2015; the U.S. service sector saw its eighty-sixth straight month of expansion. The ISM factory PMI rose 1.7 points in February to 57.7.8

                

The Federal Reserve’s preferred inflation gauge, the PCE price index, showed a 2.1% annualized gain for the year ending in February. That was a 5-year peak. Surpassing that, the headline Consumer Price Index rose 2.7% in the 12 months concluding in February, even with a mere 0.1% monthly advance. Producer prices were up 2.2% year-over-year with a February increase of 0.3%.3,5

 

GLOBAL ECONOMIC HEALTH
Just before March ended, United Kingdom Prime Minister Theresa May invoked Article 50 of the Lisbon Treaty, formally triggering the start of the Brexit process. The clock is now ticking: within two years, the U.K. will make either a “hard” or “soft” exit from the European Union, with the first round of negotiations getting underway at an E.U. summit commencing April 29. The big question is whether the U.K. will be able to stay in the E.U.’s single market after the Brexit; it has said it might forfeit such trade access in exchange for curbing immigration from other E.U. member nations. Should it retain that trade access, U.K. citizens will still be allowed to work and live in other E.U. countries without getting visas. If negotiations somehow do not result in an exit deal by April 2019, then the terms of the Brexit could be left to the courts and/or the rules of the World Trade Organization.9

    

By World Bank projections, five Asian economies will expand by 6.5% or more this year: Laos (7.0%); Cambodia, Myanmar, and the Philippines (6.9%); and China (6.5%). China’s growth is at a 26-year low in 2017, but foreign investment in the Chinese economy is forecast to rise to 15.0% this year, compared to only 4.1% in 2016. The March impeachment of South Korean President Park Geun-hye delivered another black eye to the fourth largest economy in Asia; Park and several Samsung officials were disgraced with corruption charges this winter, an especially troubling development given that the Samsung conglomerate accounts for about 15% of the South Korean economy. South Korea has already seen the collapse of Hanjin Shipping, one of the world’s major cargo lines, and its government also recently bailed out its major shipbuilders.10,11

         

WORLD MARKETS
March saw many foreign benchmarks advance. At the forefront was Spain’s IBEX 35. It rose 9.50% for the month. Several other indices added 3% or more in March: Argentina’s MERVAL, 5.92%; France’s CAC 40, 5.43%; Germany’s DAX, 4.04%; Mexico’s Bolsa, 3.60%; Korea’s KOSPI, 3.28%; India’s Sensex, 3.05%; the FTSE Eurofirst 300, 3.03%. Other March gains: Australia’s All Ordinaries, 2.48%; MSCI Emerging Markets, 2.35%; Hong Kong’s Hang Seng, 1.56%; Canada’s TSX Composite, 0.96%; the United Kingdom’s FTSE 100, 0.82%; MSCI World, 0.82%.12,13

 

There were also three notable retreats. China’s Shanghai Composite declined 0.59%; Japan’s Nikkei 225 lost 1.10%; and Russia’s MICEX fell 1.96%.12

          

COMMODITIES MARKETS

The price of both natural gas and unleaded gasoline climbed in March: the first of those two commodities gained 15.28%, the second 12.17%. Cocoa futures added 3.87% last month; wheat futures, 0.29%. In sum, that was the good news.14


Unfortunately, many commodities turned south in March. Oil made a 5.83% descent on the NYMEX, settling at $50.85 as the month ended. Copper fell 2.07%; heating oil, 3.17%; platinum, 7.39%; soybeans, 7.75%; and sugar, 12.95%. Losses of less than 1% were incurred by silver (0.14%), cotton (0.21%), corn (0.48%), and coffee (0.64%). Gold closed March at $1,247.40; silver at $18.28. The U.S. Dollar Index fell 0.79% to 100.56, slipping to -1.61% YTD.1,14

     

REAL ESTATE
Reports from the National Association of Realtors brought good news and bad news. February had seen a 3.7% dip in existing home sales; on the other hand, there was a 5.5% gain for pending home sales. A Census Bureau report showed new home buying improving 6.1% in February; this was on the heels of a 5.3% gain in January.5

 

The latest (January) edition of the 20-city S&P/Case-Shiller home price index displayed a 0.2% monthly gain, which left its 12-month advance at 5.7%. Housing starts rose 3.0% in February after a 1.9% dip in January, while permits for future construction fell 6.2% after a 4.6% January boost.5  

 

Home loan rates did creep a bit higher across March. In Freddie Mac’s March 30 Primary Mortgage Market Survey, the 30-year fixed had an average interest rate of 4.14%, up from 4.10% on March 2. In the same period, the average interest rate on the 15-year FRM moved from 3.32% to 3.39%, while the average rate on the 5/1-year ARM increased from 3.14% to 3.18%.15

        

LOOKING BACK…LOOKING FORWARD
The Nasdaq Composite was the only one of the three major indices to post a March gain, adding a healthy 1.48%. Both the S&P 500 and Russell 2000 took tiny losses, respectively declining 0.04% and 0.05%. The Dow Jones Industrial Average fell 0.72%. The CBOE VIX pulled back 4.26%. When Wall Street closed on March 31, these indices settled as follows: S&P, 2,362.72; DJIA, 20,663.22; NASDAQ, 5,911.74; RUT, 1,385.92; VIX, 12.37. Looking further at market statistics, one notices a 28.30% 52-week gain for the Russell 2000 through the end of March. The best performer last month was the PHLX Semiconductor Sector index, which rose 4.33% to take its 52-week advance to 52.04%.1

       

% CHANGE

Y-T-D

1-YR CHG

5-YR AVG

10-YR AVG

DJIA

+4.56

+16.84

+11.28

+6.73

NASDAQ

+9.82

+21.39

+18.24

+14.41

S&P 500

+5.53

+14.71

+13.55

+6.63

REAL YIELD

3/31 RATE

1 YR AGO

5 YRS AGO

10 YRS AGO

10 YR TIPS

0.43%

0.16%

-0.09%

2.21%

 

 


Sources: barchart.com, bigcharts.com, treasury.gov – 3/31/171,16,17,18

Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year TIPS real yield = projected return at maturity given expected inflation.

         

March ended quietly, with the bulls taking a breather. Will investors find hopes or fundamentals to rally around in April? The next earnings season is two weeks ahead, and FactSet forecasts annualized earnings growth of 9.1% for S&P 500 firms – a bullish projection, indeed, that would represent the best year-over-year improvement since Q4 2011. Any nascent plans for tax reform could also stoke bullish sentiment, even though reforms could take many months to enact. While the rally waned at the end of March, it could find some fresh legs as the second quarter begins, with the markets experiencing relatively placid weather so far in 2017.19

     

UPCOMING ECONOMIC RELEASES: What major news items will Wall Street watch for in April? The March Challenger job-cut report (4/6), the Department of Labor’s March employment report (4/7), the March PPI and the preliminary April consumer sentiment index from the University of Michigan (4/13), March retail sales and the March CPI (4/14), March industrial production, housing starts and building permits (4/18), a new Federal Reserve Beige Book (4/19), the Conference Board’s latest leading indicators report (4/20), March existing home sales (4/21), the April Conference Board consumer confidence index and March new home sales (4/25), March hard goods orders and pending home sales (4/27), and then, the federal government’s initial estimate of first-quarter growth and the final April consumer sentiment index from the University of Michigan (4/28). The March consumer spending report and PCE price index will both be released on May 1.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor's 500 (S&P 500) is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe. The CBOE Volatility Index® (VIX®) is a key measure of market expectations of near-term volatility conveyed by S&P 500 stock index option prices. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world's largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. The IBEX 35 is the benchmark stock market index of the Bolsa de Madrid, Spain's principal stock exchange. The MERVAL Index (MERcado de VALores, literally Stock Exchange) is the most important index of the Buenos Aires Stock Exchange. The CAC-40 Index is a narrow-based, modified capitalization-weighted index of 40 companies listed on the Paris Bourse. The DAX 30 is a Blue Chip stock market index consisting of the 30 major German companies trading on the Frankfurt Stock Exchange. The Mexican Stock Exchange, commonly known as Mexican Bolsa, Mexbol, or BMV, is the only stock exchange in Mexico. The Korea Composite Stock Price Index or KOSPI is the major stock market index of South Korea, representing all common stocks traded on the Korea Exchange. The BSE SENSEX (Bombay Stock Exchange Sensitive Index), also-called the BSE 30 (BOMBAY STOCK EXCHANGE) or simply the SENSEX, is a free-float market capitalization-weighted stock market index of 30 well-established and financially sound companies listed on the Bombay Stock Exchange (BSE). The FTSE Eurofirst 300 measures the performance of Europe's largest 300 companies by market capitalization and covers 70% of Europe's market cap. The All Ordinaries (XAO) is considered a total market barometer for the Australian stock market and contains the 500 largest ASX-listed companies by way of market capitalization. The MSCI Emerging Markets Index is a float-adjusted market capitalization index consisting of indices in more than 25 emerging economies. The Hang Seng Index is a free float-adjusted market capitalization-weighted stock market index that is the main indicator of the overall market performance in Hong Kong. The S&P/TSX Composite Index is an index of the stock (equity) prices of the largest companies on the Toronto Stock Exchange (TSX) as measured by market capitalization. The FTSE 100 Index is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. The MSCI World Index is a free-float weighted equity index that includes developed world markets, and does not include emerging markets.  The SSE Composite Index is an index of all stocks (A shares and B shares) that are traded at the Shanghai Stock Exchange. Nikkei 225 (Ticker: ^N225) is a stock market index for the Tokyo Stock Exchange (TSE).  The Nikkei average is the most watched index of Asian stocks. The MICEX 10 Index (Russian: Индекс ММВБ10) is an unweighted price index that tracks the ten most liquid Russian stocks listed on MICEX-RTS in Moscow. The US Dollar Index measures the performance of the U.S. dollar against a basket of six currencies. PHLX Semiconductor Sector (SOX) is a Philadelphia Stock Exchange capitalization-weighted index composed of companies primarily involved in the design, distribution, manufacture, and sale of semiconductors. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

 

Citations.

1 - barchart.com/stocks/indices#/viewName=performance [3/31/17]

2 - marketwatch.com/story/fed-raises-interest-rates-by-a-quarter-point-sees-two-move-moves-this-year-2017-03-15 [3/15/17]

3 - schaeffersresearch.com/content/ezines/2017/03/31/dow-jones-industrial-average-futures-slip-but-stocks-set-for-strong-quarter [3/31/17]

4 - reuters.com/article/us-usa-economy-gdp-idUSKBN1711MX [3/31/17]

5 - investing.com/economic-calendar/ [3/31/17]

6 - sca.isr.umich.edu/ [3/31/17]

7 - equities.com/news/a-strong-jobs-report-and-a-growing-divergence-between-jobs-and-employment [3/10/17]

8 - instituteforsupplymanagement.org/ISMReport/NonMfgROB.cfm [3/3/17]

9 - usatoday.com/story/news/world/2017/03/29/britain-invokes-article-50-4-things-know-brexit/99769996/ [3/29/17]   

10 - forbes.com/sites/ralphjennings/2017/03/23/east-asias-5-fastest-growing-countries-in-2017/ [3/23/17]

11 - money.cnn.com/2017/03/10/news/economy/south-korea-economy-president-park-out/ [3/10/17]

12 - markets.on.nytimes.com/research/markets/worldmarkets/worldmarkets.asp [3/31/17]

13 - msci.com/end-of-day-data-search [3/31/17]

14 - money.cnn.com/data/commodities/ [3/31/17]

15 - freddiemac.com/pmms/archive.html?year=2017 [4/2/17]

16 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=3%2F31%2F16&x=0&y=0 [3/31/17]

16 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=3%2F31%2F16&x=0&y=0 [3/31/17]

16 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=3%2F31%2F16&x=0&y=0 [3/31/17]

16 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=3%2F30%2F12&x=0&y=0 [3/31/17]

16 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=3%2F30%2F12&x=0&y=0 [3/31/17]

16 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=3%2F30%2F12&x=0&y=0 [3/31/17]

16 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=3%2F30%2F07&x=0&y=0 [3/31/17]

16 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=3%2F30%2F07&x=0&y=0 [3/31/17]

16 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=3%2F30%2F07&x=0&y=0 [3/31/17]

17 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [3/31/17]

18 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [3/31/17]

19 - kiplinger.com/article/investing/T052-C008-S001-market-outlook-for-q2.html [3/31/17]


Quarterly Economic Update - Q1 2017

THE QUARTER IN BRIEF
The opening quarter of 2017 was a historic one for Wall Street as the Dow Jones Industrial Average topped 20,000 for the first time. Equities rallied through January and February, then lost momentum in March; even so, the S&P 500 had gained 5.53% YTD when the quarter ended. The Federal Reserve raised the federal funds rate for only the third time in a decade, in response to strengthening inflation pressure and other signals of economic acceleration. Consumer confidence remained high. Commodities had a decidedly mixed quarter. New home sales improved, while existing home sales tapered off. The U.K. took another step toward its Brexit; the U.S. left the Trans-Pacific Partnership. Wall Street kept its hopes up for tax reform and lighter business and banking industry regulation.1,2

   

DOMESTIC ECONOMIC HEALTH
As the stock market climbed, so did the Conference Board’s consumer confidence index. By March, it had reached an astonishingly high mark of 125.6. The University of Michigan’s household sentiment index declined from 98.5 to 96.9 across the quarter, but it remained well above its historical average of 86.0.3,4

 

Factory and service sectors expanded nicely during Q1, according to the Institute for Supply Management. The Arizona-based organization’s manufacturing purchasing manager index was at 56.0 in January, 57.7 in February, and 57.2 in March. Its service sector PMI (the March number was not available at this writing) came in at 56.5 in January and 57.6 in February. All these numbers indicate solid growth.5,6

 

One other sign of economic growth, of course, is inflation. In Q1, it became more palpable. By February, the Consumer Price Index had risen 2.7% in a year (the annualized advance on the core CPI was 2.2%). Producer prices were up as well. The headline PPI showed a 2.2% yearly advance in February, with core prices gaining 1.5% over 12 months.3

 

Currently available data shows tepid consumer spending at the beginning of 2017. Personal spending was up just 0.2% in the opening month of the year and only 0.1% in February. Consumer incomes, however, rose 0.5% in January, then 0.4% in February. Households sent headline retail sales 0.6% higher in January, but only 0.1% a month later. There were gains in durable goods orders in both January (2.3%) and February (1.7%).3,7

 

January’s Department of Labor jobs report showed the headline jobless rate at 4.8% and the U-6 rate measuring underemployment at 9.4%; a month later, those unemployment rates were respectively lower at 4.7% and 9.2%. Hiring was strong in both January and February, with 238,000 net new jobs added to payrolls in the first month and 235,000 net new jobs added in the second.8

 

All this data encouraged the Federal Reserve to make its first interest rate move of the year. On March 15, it announced a widely expected, quarter-point hike, taking the federal funds rate to a target range of 0.75-1.00%. As Fed chair Janet Yellen told the media after the policy announcement, “The simple message is, the economy is doing well.” Investors who assumed the hike was coming scrutinized the Fed’s dot-plot forecast for any 2017 changes; they did not find any. Two incremental rate increases are still projected before the year ends.9

 

Elsewhere in Washington, President Donald Trump signed an executive order commissioning a review of the Dodd-Frank Act. As Q1 ended, hearings on portions of Dodd-Frank were set to start in early April, with a chance of reform legislation being introduced in Congress during Q2.10

      

GLOBAL ECONOMIC HEALTH
In late March, the United Kingdom formally triggered Article 50 of the Lisbon Treaty – the beginning of the Brexit, if you will. It now has until April 2019 to negotiate the terms of its departure from the European Union. Will it retain single market access after the Brexit, so that its citizens can keep working and living in other E.U. countries without visas? Or will it make a “hard” Brexit, a divorce dictated by court decisions and/or World Trade Organization rules that would cause its people to lose E.U. citizenship rights? In April, the negotiations begin. The euro area jobless rate stood at 9.5% as of February, a low unseen since May 2009. Eurostat estimated an inflation rate of 1.5% for the euro area for March, an 0.5% decline from February.11,12

       

As the United States left the Trans-Pacific Partnership during the quarter, Asia-Pacific nations seeking a regional trade pact turned to Plan B – Plan B being the Regional Comprehensive Economic Partnership. This free trade agreement, now in negotiation, would bring China, Japan, and India into an economic accord with 13 other Asia-Pacific neighbors, including some of the region’s poorest nations, such as Myanmar and Laos. Asia-Pacific manufacturing purchasing manager indices improved as Q1 ended, with China’s official PMI advancing 0.2 points to 51.8 in March for its best reading since April 2012. Japanese and Indian factory activity also accelerated in March, with India’s PMI hitting a 5-month high.13,14

    

WORLD MARKETS
As of March 31, the five best YTD performers among consequential global stock indices were Argentina’s MERVAL at +19.8%, Spain’s IBEX 35 at +11.9%, India’s Sensex at +11.2%, the MSCI Emerging Markets at +11.1%, and Singapore’s Straits Times at +10.2%. There were other big quarterly gains: 7.9% for Brazil’s Bovespa, 7.2% for Germany’s DAX, 6.5% for Italy’s FTSE MIB, 6.4% for the Euro Stoxx 50, 6.3% for the Global Dow, 9.6% for Hong Kong’s Hang Seng, and 6.6% for South Korea’s Kospi.15,16

 

In fact, it is hard to find a marquee stock index that retreated in Q1. Scrutiny reveals two: Russia’s RTS slipped 3.3%, and Japan’s Nikkei 225 lost 1.1%. To round things out, China’s Shanghai Composite gained 3.8% in Q1; the United Kingdom’s FTSE 100, 2.5%; and the MSCI World, 5.9%.15,16

       

COMMODITIES MARKETS
For metals investors, the first quarter brought much to cheer about. Investors in soft commodities had less to celebrate.

  

Palladium had a great Q1, rising 17.46%; aluminum was not far behind at 14.87%. COMEX silver ended the quarter at $18.28, gaining 14.50%. COMEX gold futures advanced 8.64% to settle at $1,247.40. Lastly, copper gained 5.84%, and platinum, 5.21%. Cotton led the way in ag futures with a 9.46% Q1 improvement; rice was next with a gain of 5.77%. CBOT wheat futures rose 4.53%, while corn futures added 3.48%.17,18

 

The quarter also saw some double-digit drops. Orange juice futures stumbled 20.75%; natural gas, 14.85%; and sugar, 14.10%. Other setbacks occurred for heating oil (8.89%), soybean oil (7.67%), WTI crude (5.81%), soybeans (5.07%), tin (4.56%), oats (1.86%), cocoa (1.46%), and nickel (1.39%). Oil finished the quarter at a NYMEX price of $50.85.17,18

          

REAL ESTATE
Q: Did mortgage rates ascend or descend in the first quarter? A: They descended. On December 29, the average interest rate on a conventional home loan was 4.32%, according to Freddie Mac’s Primary Mortgage Market Survey. By the March 30 PMMS, it was just 4.14%. Similar declines were seen for the average rate on the refinancer’s favorite, the 15-year FRM (3.55% to 3.39%), and the average rate on the 5/1-year ARM (3.30% to 3.18%).19,20

 

Census Bureau data showed new home sales rising 5.3% in January and another 6.1% in February. Resales wavered, increasing 3.3% for January and decreasing 3.7% the next month, according to the National Association of Realtors.3

 

Regarding the sales numbers that matter most (the annualized ones), existing home sales were up 5.4% in the year ending in February; new home sales, 12.8%. In the second month of 2017, the median price for an existing home was up 7.7% from a year ago at $228,400. The median new home price was up at $329,900 as of December, but it had fallen to $296,200 by February.21,22

  

What did other key real estate indicators do in the quarter? Housing starts and building permits went in opposite directions. Starts fell 1.9% in January, then rose 3.0% a month later; permits advanced 4.6% for January, but retreated 6.2% in February. NAR’s pending home sales index rose 5.5% to 112.3 in February after slipping 2.8% in January. Finally, January’s 20-city S&P/Case-Shiller home price index arrived in late March, revealing an 0.2% monthly improvement and a 5.7% annualized advance.3

      

LOOKING BACK…LOOKING FORWARD
On March 31, the key U.S. equity indices settled at these levels: Dow, 20,663.22; Nasdaq, 5,911.74; S&P 500, 2,362.72; Russell 2000, 1,385.92. The Russell did not quite gain as much as the big three in Q1 – it was up 2.12% YTD when March concluded. The CBOE VIX? It finished Q1 down 11.89% YTD – in fact, it was the worst performer among significant indices. The PHLX Housing Index was the quarter’s best performer, gaining 11.96%; the Nasdaq 100 was a close second, advancing 11.77%.2

 

Some truly remarkable things happened in Q1. The Dow closed at a record high for 12 straight trading days – a feat that last occurred in 1987. The blue chips also went on an 8-session losing streak for the first time since 2011. As the table below shows, the Nasdaq gained more in three months than it did during all of 2016.1

    

% CHANGE

Q1 CHG

2016

1-YR CHG

10-YR AVG

DJIA

+4.56

+13.42

+16.84

+6.73

NASDAQ

+9.82

+7.50

+21.39

+14.41

S&P 500

+5.53

+9.54

+14.71

+6.63

REAL YIELD

3/31 RATE

1 YR AGO

5 YRS AGO

10 YRS AGO

10 YR TIPS

0.43%

0.16%

-0.09%

2.25%

 

 


Sources: barchart.com, bigcharts.com, treasury.gov – 3/31/172,23,24,25

Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly.

These returns do not include dividends.

  

With this great quarter now history, investors wonder what to expect out of Q2. A bullish outlook still predominates on Wall Street; though, questions linger. Is the market overbought, with a correction ahead? Is the market at a top? How much of a lift can stocks get from this next earnings season? Unless yearly earnings growth is dramatic, perhaps only a minor one. The stock market has once again outperformed the economy, but that has not troubled Wall Street to significant degree. This old bull market has already surpassed analyst projections – in March, Fortune reported that the consensus forecast for 2017 had improved to a yearly gain of somewhere between 4-10%. Could the bulls run all through this next quarter and, perhaps, for several more to come? As CFRA chief investment strategist Sam Stovall recently commented, “Bull markets don’t die of old age, they die of fright. And what they are most afraid of is recession.” With no hint of recession on the near-term horizon, the upward stock market trend may continue through spring.26

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor's 500 (S&P 500) is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world's largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. The MERVAL Index (MERcado de VALores, literally Stock Exchange) is the most important index of the Buenos Aires Stock Exchange. The IBEX 35 is the benchmark stock market index of the Bolsa de Madrid, Spain's principal stock exchange. BSE Sensex or Bombay Stock Exchange Sensitivity Index is a value-weighted index composed of 30 stocks that started January 1, 1986. The MSCI Emerging Markets Index is a float-adjusted market capitalization index consisting of indices in more than 25 emerging economies. The Straits Times Index (STI), maintained & calculated by FTSE, is the most globally-recognised benchmark index and market barometer for Singapore. The Bovespa Index is an index of about 50 stocks that are traded on the São Paulo Stock, Mercantile & Futures Exchange. The DAX 30 is a Blue Chip stock market index consisting of the 30 major German companies trading on the Frankfurt Stock Exchange. The FTSE MIB (Milano Italia Borsa) is the benchmark stock market index for the Borsa Italiana, the Italian national stock exchange. The EURO STOXX 50 Index, Europe's leading Blue-chip index for the Eurozone, provides a Blue-chip representation of supersector leaders in the Eurozone. The Global Dow (GDOW) is a 150-stock index of corporations from around the world, created by Dow Jones & Company. Only blue-chip stocks are included in the index. The Hang Seng Index is a free float-adjusted market capitalization-weighted stock market index that is the main indicator of the overall market performance in Hong Kong. The Korea Composite Stock Price Index or KOSPI is the major stock market index of South Korea, representing all common stocks traded on the Korea Exchange. The RTS Index "Russia Trading System is a free-float capitalization-weighted index of 50 Russian stocks traded on the Moscow Exchange in Moscow, Russia. Nikkei 225 (Ticker: ^N225) is a stock market index for the Tokyo Stock Exchange (TSE). The Nikkei average is the most watched index of Asian stocks. The SSE Composite Index is an index of all stocks (A and B shares) that are traded at the Shanghai Stock Exchange. The FTSE 100 Index is a share index of the 100 most highly capitalized companies listed on the London Stock Exchange. The MSCI World Index is a free-float weighted equity index that includes developed world markets, and does not include emerging markets. The Russell 2000 Index is a small-cap stock market index of the bottom 2,000 stocks in the Russell 3000 Index. The CBOE Volatility Index® is a key measure of market expectations of near-term volatility conveyed by S&P 500 stock index option prices. The PHLX Housing Sector Index (HGX) is a modified market capitalization-weighted index composed of companies whose primary lines of business are directly associated with the U.S. housing construction market. The Nasdaq-100 Index includes 100 of the largest domestic and international non-financial companies listed on The Nasdaq Stock Market based on market capitalization. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

 

 

Citations.

1 - marketwatch.com/story/markets-were-full-of-green-in-the-first-quarter-with-a-few-dashes-of-red-2017-03-31 [3/31/17]

2 - barchart.com/stocks/indices#/viewName=performance [3/31/17]

3 - investing.com/economic-calendar/ [3/31/17]

4 - tradingeconomics.com/united-states/consumer-confidence [4/2/17]

5 - instituteforsupplymanagement.org/about/MediaRoom/newsreleasedetail.cfm?ItemNumber=30697 [4/3/17]

6 - instituteforsupplymanagement.org/ISMReport/NonMfgROB.cfm [3/3/17]

7 - arkansasonline.com/news/2017/apr/01/u-s-consumer-spending-up-0-1-20170401/ [4/1/17]

8 - equities.com/news/a-strong-jobs-report-and-a-growing-divergence-between-jobs-and-employment [3/10/17]

9 - marketwatch.com/story/fed-raises-interest-rates-by-a-quarter-point-sees-two-move-moves-this-year-2017-03-15 [3/15/17]

10 - thehill.com/policy/finance/325703-week-ahead-gop-digs-into-dodd-frank-reform-senate-panel-to-vote-on-trump-labor [3/27/17]

11 - usatoday.com/story/news/world/2017/03/29/britain-invokes-article-50-4-things-know-brexit/99769996/ [3/29/17]

12 - ec.europa.eu/eurostat/ [4/3/17]

13 - seattletimes.com/business/asia-economies-hold-trade-pact-talks-after-trump-dumps-tpp/ [2/26/17]

14 - reuters.com/article/us-global-economy-idUSKBN1750H4 [3/31/17]

15 - online.wsj.com/mdc/public/page/2_3022-intlstkidx.html [3/31/17]

16 - msci.com/end-of-day-data-search [3/31/17]

17 - seekingalpha.com/article/4059685-commodities-first-quarter-overview-outlook-q2 [4/3/17]

18 - money.cnn.com/data/commodities/ [3/31/17]

19 - freddiemac.com/pmms/pmms_archives.html [4/3/17]

20 - freddiemac.com/pmms/archive.html?year=2016 [12/29/16]

21 - inman.com/2017/03/22/existing-home-sales-backtrack-in-february-after-january-high/ [3/22/17]

22 - constructiondive.com/news/new-home-sales-hit-7-month-high-in-february/438768/ [3/23/17]

23 - barchart.com/stocks/indices.php?view=performance [12/30/16]

24 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=3%2F31%2F16&x=0&y=0 [3/31/17]

24 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=3%2F31%2F16&x=0&y=0 [3/31/17]

24 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=3%2F31%2F16&x=0&y=0 [3/31/17]

24 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=3%2F30%2F07&x=0&y=0 [3/31/17]

24 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=3%2F30%2F07&x=0&y=0 [3/31/17]

24 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=3%2F30%2F07&x=0&y=0 [3/31/17]

25 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [4/3/17]

26 - fortune.com/2017/03/09/stock-market-bull-market-longest/ [3/9/17]


Website Design For Financial Services Professionals | Copyright 2017 AdvisorWebsites.com. All rights reserved