Insight & Commentaries
THE WEEK AHEAD President Trump delivers State of the Union Tuesday; Federal Open Market Committee (FOMC) decision Wednesday (no change expected); Manufacturing and Employment data should be strong. MACROECONOMIC INSIGHT There is plenty of good feeling about growth these days. Recently, the International Monetary Fund bumped their ’18-19 world growth forecast 0.2% to 3.9%. This is higher than our assumption of 3.4% growth. Domestic growth forecasts are also strong. The Federal Reserve Banks of Atlanta and New York see first quarter real U.S. growth at 3.4% and 3.1%, respectively. These are some of the best growth numbers we’ve seen this…
THE WEEK AHEAD Growth story continues to lift equities, but faster growth is beginning to stir concerns over rates and inflation. MACROECONOMIC INSIGHT We have seen constant upward revisions to earnings and growth estimates for the last year, creating the backdrop for good equity market performance. A combination of easy monetary policy, improving growth, and strong sentiment are driving continued upside surprises for growth. Leading economic indicators remain strong, employment trends are solid, business investment is picking up, and order rates for durable goods are surging. Our own WCA Fundamental Conditions Barometer (below) surged through the later part of 2017…
WASHINGTON CROSSING ADVISORS THE WEEK AHEAD A relatively quiet week for economic data, but new records on the Dow and S&P 500 have us thinking again about the “big picture.” MACROECONOMIC INSIGHT With the Dow just surpassing 25,000 and the S&P 500 crossing 2,700 for the first time in history last week, we thought it makes sense to pause and take a step back. As we point out in our Viewpoint 2018, we see the growing economy as the key driver of the market’s record-breaking performance, and there is clear evidence that growth continues. However, we must also point out…
MACROECONOMIC INSIGHT We begin 2018 on a positive note. Last week’s Chicago PMI posted its third straight plus 60 score and is on the best streak for the index in over three years. We expect similar positive results this week from the various manufacturing reports released. The theme of these reports is positive economic growth. After hovering around 2% for 2016 and into last year, GDP has topped 3% each of the last two quarters. We expect that this week’s data on manufacturing will point to an economy still enjoying a cyclical upswing. Macroeconomic Advisers and the Atlanta Fed’s GDPNow…
Our 2018 Viewpoint begins on an optimistic note. Growth continues to pick up by most accounts, businesses are again investing, and asset values are near records. Confidence necessary for risk taking is apparent, and inflation remains at bay. On the other hand, we are now confronted with higher valuations in many asset classes, which we feel should eventually weigh on long-run returns. This annual Viewpoint, along with quarterly updates, provides an organized way of looking at the economy, financial markets, and your portfolio. Full Report Click Here
THE WEEK AHEAD Happy Holidays from all of us at Washington Crossing Advisors and Happy New Year! MACROECONOMIC INSIGHT We first learned about the President’s tax plan a year ago. At that time, we had few details on which to base a forecast. Still, we anticipated that the plan could give a boost to the economy, especially through encouraging investment. The bipartisan Tax Foundation also looked at the early proposal and initially added roughly 0.75% to their baseline growth expectation. We raised our own long-run forecast by 0.25%. With the bill fully fleshed out, the Tax Foundation has come in…
THE WEEK AHEAD A busy week of negotiations and analysis of tax policy this week, ahead of the Christmas holiday. MACROECONOMIC INSIGHT Congress will not be avoiding the Christmas rush this year, and a vote on a compromise bill is expected this week. A cut in the corporate tax to 21 percent from 35 percent is significant, and improves the after-tax earnings outlook. A reduced top individual income-tax rate, to 37 percent from 39.6 percent, should bolster private demand and savings. Progress on the tax front is important given the nearly $5 trillion increase in U.S. market value this…
THE WEEK AHEAD Janet Yellen leads her final Federal Open Market Committee meeting of 2017 and will hold her final Press Conference as Chair on Wednesday. MACROECONOMIC INSIGHT With Jerome Powell set to take the reins of the Federal Reserve (Fed) from Janet Yellen next year, we wanted to analyze Chair Yellen’s economic legacy and give an assessment of the economy that Mr. Powell will inherit. Labor Market Last Friday’s November Employment report showed that 228,000 jobs were added during the month and the unemployment rate, at 4.1%, has fallen to its lowest level since the early…
THE WEEK AHEAD A Thanksgiving holiday-shortened week this week will see reports relating to business investment and minutes from the Federal Reserve Open Market Committee Oct 31-Nov 1 policy meeting. MACROECONOMIC INSIGHT Even though markets are pricing in good outcomes, risk assets can continue to perform well because monetary and fiscal policy remain supportive of growth and data reaffirms our conviction that the economy is on an expansion path. Valuations Full The value of U.S. equities is now over $28 trillion. At 145% of gross domestic product, this would suggest valuations are full. Since 2004, the market value averaged about…
THE WEEK AHEAD Producer, Consumer, Import, and Export prices are in focus this week as we recap third-quarter earnings and look down the road towards future earnings seasons. MACROECONOMIC INSIGHT According to FactSet, for the third quarter, companies have reported earnings growth of 5.9% and sales growth of 5.8%. In addition to these impressive gains, more companies are beating earnings per share and revenue estimates than average. For example: Of the companies that have reported, 74% have reported EPS above the mean EPS estimate. That 74% figure is above both the 1-year (71%) and 5-year average (69%). At the sector…
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