Insight & Commentaries

Focus on Quality and Diversification

The market will digest the latest twist in the ongoing Greek bailout saga this week, Janet Yellen’s semiannual testimony before Congress on the economy and monetary policy, and a series of earnings reports including several of the major banks.  Our comments this week focus on how higher volatility shares reflect changed investor attitudes regarding risk in recent years. Macro View While the return of a risk-taking attitude is helpful for the economy to grow, we are mindful that there is an eventual limit to the amount of risk that markets will ultimately be willing to assume.  Increasing risk tolerance can…

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Greece’s Troubles

Greece’s troubles enter a new and uncharted phase this morning, as Greek negotiators abandoned talks this weekend with creditors and, instead, called for a July 5 referendum where the Greek people will vote on whether they agree with the latest proposal by creditors (which actually no longer exists).  Greece’s creditors rejected Greece’s request for an extension of the current loan program, which means that the Greek government will not have access to a remaining 16 billion Euros of additional funding.  Consequently, the Greek government will most likely miss a €1.5 billion Euro payment due to the International Monetary Fund (IMF)…

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Six Recent Signs of a Pickup

Fundamental conditions began to slip last fall and continued through the first quarter of this year. Stocks lagged behind bonds during most of this time, and the economy ground to a halt in the first quarter. Now, it appears that conditions are firming somewhat as we enter the summer months. If this sounds familiar, it should. Last year, we saw a similar pattern. After contracting at a 2.1% annualized pace in the first quarter of 2014, the economy roared back in the subsequent two quarters with growth nearing a 5% pace through mid-year. With worry over the Federal Reserve (Fed),…

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Revisiting Long-Run Views

This week: The Federal Open Market Committee (FOMC) will make an announcement Wednesday at 2:00 p.m. Eastern Time, with a press conference to follow.  Greek negotiations continue.  May industrial production data due out today (expectation +0.3%). Macro View This week will bring the Federal Reserve Board’s (Fed) next move into focus as they announce its latest policy decision on Wednesday (forecasts updated and press conference to follow).  Ultimately, we expect the Fed to continue toward a September hike, given the recent firming in employment and other data. Mixed views have been expressed recently from other members of the FOMC, but the…

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Employment Gains Back On Track

The May employment report was solid and brings the three-month average job growth number to 206,000. The unemployment rate of 5.5% is within a range that could be considered within earshot of “full employment.” Wages are picking up modestly, as hourly earnings continue to show signs of lift (now above 2% year over year). Hours worked remain relatively steady. Consequently, the “output gap” continues to narrow, and all signs are pointing to a rate increase by the Federal Reserve (Fed) later this year. This action is out of step with broader global indicators of growth, and this was highlighted by…

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In Support of Rising Dividends

We believe companies with a history of increasing dividends provide a good starting place in a search for fundamentally strong and growing companies. Importantly, steady dividend growth often follows consistent profitability and shareholder-focused management. A dividend growth perspective looks beyond today’s yield and considers other factors, such as quality, growth, risk, and value. A track record of dividend increases can be viewed as a tangible signal by a company’s management that they are both willing and able to boost a payment to shareholders. This commitment suggests quality fundamentals currently and an expectation of continued improvement into the future. Full report

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European Equities

Europe represents the largest part of the developed world’s equity markets outside the United States.  An analysis of opportunities in Europe requires a perspective on economic performance that is in some ways like our own, and in other ways very different.  On the one hand, Europe offers lower multiples and higher yield than U.S. equities, but growth has been stagnant for a long time. Much of the issue surrounding European prospects involves deep-rooted structural issues intertwined with a set of often-conflicted macroeconomic policies.  The combination of all of this has served to consistently depress growth below the growth rate of…

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Second Quarter Asset Allocation Report

Six years beyond the recession, we thought it would be helpful to pause and take stock of how far we have come.  Gross domestic product is about two trillion greater than where it stood during the recession.  Corporate earnings and dividends have ballooned.  Employment rolls are filling, and the unemployment rate is down considerably.  Lower fuel costs and accelerating personal income trends are helping to drive domestic sales increases.  This is a very good outcome compared with where we were just a few short years ago… For the complete report, please click here.

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Year Six and Counting

Year Six and Counting This Friday will bring another employment situation report, and expectations are for another addition of 248,000 jobs with the unemployment rate expected to hold steady near 5.5%. To put the progress in perspective, we thought we would use this week’s News You Can Use to lay on the table a simple overview of the economic progress made to date.  We are now six years beyond the deepest recession since the Great Depression, and we are beyond the recovery phase and into the expansion phase.  Although we’ve seen some slippage in the data of late, the broader…

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Fed Sees Softer Economy

The dollar halted its relentless rise of the past few months last week as the Federal Open Market Committee (FOMC) offered a set of macro forecasts that were much weaker than the markets expected.  Forecasts were cut across the board for growth and inflation for both 2015 and 2016.  The longer run expectation for inflation remained at 2%, while the longer run expectation for unemployment was reduced to 5-5.2%.  At the same time, the FOMC (as expected) removed their “patient” language in describing their posture with regard to the timing of an initial rate increase.  The combination of the lowered…

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Nightly Business Report: Market Monitor: Kevin Caron

Published on Mar 16, 2015 Our Market Monitor has a list of stocks to buy that may provide some stability for your portfolio.

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What the U.S. Offers Global Investors

It is easy to lose sight of the fact that two of the world’s three largest economies — namely Europe and China — are significantly out of step with our own economy.  Consider that the unemployment rate in the Eurozone is still above 11% and deflation is a reality (consumer prices are down 0.3% year-over-year).  China just reported another month of plunging imports (down 20% on a year-over-year basis for a second month in a row). Europe is readying a program of 60 billion Euros in monthly asset purchases to address stagnating growth and a falling price level.  The program…

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