Insight & Commentaries
Friday’s April employment report was a dud in the eyes of Wall Street, but a closer look reveals positives. The number of jobs created was less than expected (115,000 jobs added versus expectations of 160,000), but the direction, source, and composition of the changes tell a different story.
This report discusses current recommended allocations in light of evolving fundamental conditions. The report also includes an update on the WCA Fundamental Conditions Index along with a longer-term view of the index. Recommended portfolio allocations for different investor types are also detailed.
Until very recently, the thought of a Greek departure from the European Monetary Union (EMU) was seen as remote. Recently, markets have raised concerns about a potential Greek exit from the Euro. Although a Greek exit from the European Monetary Union is far from certain, such an outcome would require a robust and swift policy response. Meanwhile economic and U.S. bank fundamentals remain steady.
The economy is not fixed, but most of the data we monitor is showing improvement. Topics in this issue: WCA Fundamental Barometer rises again; stock valuations appear attractive; borrowing trends set to turn corner; balance sheets getting stronger.
This report discusses current recommended allocations in light of evolving fundamental conditions. We lay out expectations for the economy and various themes that we think will exist over our forecast horizon. The report also includes an update on the WCA Fundamental Conditions Index along with recommended portfolio allocations for different investor types.
Months of slippage in fundamental data have left investors concerned about the outlook. Although Europe’s troubles grabbed the headlines, the process of household balance sheet repair continued in 2011 and remains the single most important thematic as we head into the new year.
Last week’s addition of central bank liquidity has eased financial uncertainty, but this liquidity is temporary in nature. We continue to see better fundamental data trends in the United States evidenced by recent employment and other survey measures of activity. Although valuations seem to favor equities, uncertainty about fundamentals needs to show continued improvement.
Recent crisis in Europe puts the European Union to the test. This commentary explores the issues of union in the context of the crisis. Also, we notice the U.S. economy continues to fair reasonably well. Portfolio posture remains cautious as we await a measurable sign of improvement in fundamental conditions.
Despite the confidence shock from August and September’s market drama, the U.S. economy performed reasonably well, judging by recent data. Risk has been pared back beginning last spring, and model portfolios are tilted more toward bonds within strategic ranges. We are watching for signs of stabilization in fundamental conditions before returning portfolios to a more fully invested “neutral” posture with greater equity exposure.
Healthcare and Consumer Staples offer investors opportunities. A conversation with portfolio manager and market strategist, Kevin Caron.
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