Insight & Commentaries
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…
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.
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…
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…
Published on Mar 16, 2015 Our Market Monitor has a list of stocks to buy that may provide some stability for your portfolio.
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…
Last week’s Chicago Purchasing Manager’s Survey Index (PMI) indicated significant weakness in manufacturing during the month of February. The index plunged from near 60 in January to 45.8 in February. The 14-point fall brought the index to below 50, a level that is generally associated with recession. Investors focus on the Chicago PMI because it is the first in a series of indicators that describe the health of the cyclical manufacturing sector. Today, we will get a look at the much broader Institute for Supply Management’s (ISM) Manufacturing Survey Index. Purchasing managers’ reports are interesting because they are on the…
After a six-month-long period of generally weakening global data, we are watching for signs that those trends are about to turn. Although our fundamental conditions barometer has yet to turn, very recent indications seem to be hinting at the possibility of a pickup in growth. Macro View Having an unbiased method for tracking changes in fundamental conditions helps keep us on our toes and responsive to changes in conditions that have the ability to impact returns. Although equity indices are near highs, a broader look at the data led us to reduce expectations through the back half of 2014 and into the first part…
Macro View A meeting between Euro-area finance ministers, central bankers, and European Commission officials ended abruptly Monday, as a Greek government official said the Euro area’s recommendation to extend bailout conditions was unacceptable. Greece’s current aid package expires February 28, thus necessitating a new round of negotiations between Greece and its creditors. The newly-elected Greek government is seeking a new deal with easier terms. The cost of Greek debt and the cost for bondholders to insure against a Greek default has risen dramatically in recent months, suggesting real concern about the potential for some form of default. Monday’s failed negotiation…
Payroll data suggests the U.S. is still the best alternative for global growth, but global conditions remain weak, and Europe and China continue to face significant challenges. Meanwhile, domestic earnings continue to grow, as first quarter S&P 500 earnings per share (EPS) growth tracks toward 6% excluding energy (3% growth if energy is included). Analysts expect 3.4% growth in S&P 500 operating earnings this year, according to the most recent survey from FactSet. Macro View Last week’s payroll number for January, along with upward revisions to prior months, was far better than expected and strengthens the bull case for the…
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