Last week’s economic data and additional monetary easing from the European Central Bank helped push the stock market higher. United States Non Farm Payrolls added 217k jobs in May while the unemployment rate remained unchanged at 6.3%. US Factory orders increased .70% in April over the prior month and the Manufacturing Purchasing Managers Index increased to 56.4 in May from 55.4 in April. Risk assets continued to see inflows following Mario Draghis, President of the European Central Bank, continued monetary stimulus measures by lowering their key refinancing rate from a historic low of .25% to a new low of .15%. Additional measures by the European Central Bank included cutting its deposit rate that it pays banks for parking funds overnight to -.1%.
Category Archives: economy
The Economy
Last
weeks revised first quarter 2014 Gross Domestic Product number confirmed the
U.S. economy contracted at -1.0%, revised from an original reading of
.1%. This was the first time US GDP slipped into negative territory on a
quarterly basis since 2011. Many economists believe the stall occurred
due to the brutally harsh winter. The remainder of the year will dictate
if they were correct. Other releases included US Personal Income which
increased at .30% in April over the prior month and Services Purchasing Managers
Index increased to 58.40 in May from 55 in April. For housing data
releases, Pending Home Sales month-over-month rose .4% and the House Price
Index rose .70%.
The Economy
As
noted in “Heads Up!” article above, Home sales numbers had been lagging in 2014
until last week. New home sales grew 6.4% month-over-month in March while
existing home sales rose 1.3%. The MBA 30-year fixed mortgage rate
dropped to 4.33% during the week ending on May 16th marking a 2014
low, which saw increased demand in mortgage applications by .9%. United
States initial jobless claims rose to 326,000 in the week ending May 17th,
putting it near its one month moving average. U.S. Manufacturing PMI
continues to report strong numbers, increasing to 56.2 in April from 55.4 in
May. This week’s data marked progress for the U.S. economy.
Important data being released this week includes: Consumer Confidence,
Gross Domestic Product 2nd quarter estimate, Pending Home Sales,
Personal Income, and Personal Spending.
Heads Up!
It’s been a while since the last stock
market correction has occurred; the summer of 2011 to be exact. A
technical correction is defined as a price decline of at least 10% to a
security or market index following extensive price increases. Technical
market corrections are not necessarily bad as they help deter “bubble” like
valuations.
We regularly monitor economic
developments and still believe in the economic recovery and slow growth cycle.
We would advise not to be alarmed if a broad stock market correction were to
occur. Accordingly, we have placed great care in the construction of the asset
allocation to reduce the downside in portfolios if a correction were to
occur. The bond sleeve is designed to resist stock market volatility,
while the alternative strategies reduce your downside exposure by employing
various tools to hedge risks. Equities are selected based upon risk
factors that are lower as compared to their peers. It is our belief that,
through appropriate diversification, we can weather a correction while continuing
to achieve your long-term return goals.
The Economy
Last week was a busy week for economic
data. US Building Permits and Housing Starts were up 8% and 13.2%
respectively month-over-month. Initial Jobless claims dropped to 297,000
in May from 345,000 in April. Inflation in the US rose to the acceptable
Federal Reserve level of 2% over the last year. Euro Area Gross Domestic
Product was recorded at .2% in the first quarter of 2014 prompting the European
Central Bank to signal they would continue to support the market place with
monetary stimulus.
The Economy
On
the positive side: last week’s economic
data indicated the jobs market continued to improve, total exports increased,
the trade deficit narrowed, and the non-manufacturing sector showed a big
improvement.
On
the negative: productivity decreased.
My
view: the economy continues to heat up
after the tough winter.
The Economy
Last
week’s economic data was a bit mixed. Forward looking economic indicators
are more promising as compared to the release of first quarter results.
April’s economic data seems to be confirming that first quarter data will be a
blip in a continued growth cycle. The following is a review of economic
data released last week:
- First quarter US Gross Domestic Product stalled
at .1% coming in under consensus, but by no means a shock due to the
consideration of weather related factors. - US Non-Farm Payrolls rose 288k in April as the
unemployment rate fell to 6.30% from 6.70% in March of 2014. - Pending home sales month over month came in at
3.4%, higher than the consensus estimate of 1%.
The Economy
Economic
data last week indicated a significant increase in retail sales – a month over
month rise of 1.14%. Other reports
indicated an improving jobs market and tame inflation. Manufacturing activity is on the rise.
On
the negative report side, home sales were lower than expected (still weather
related?).
The Economy
In a light reporting week, economic data
last week indicated an improving jobs market, an upwardly revised Gross
Domestic Product, personal spending bouncing back, and personal incomes rising
along with durable goods orders.
The upcoming week is very busy with the
all-important jobs report being issued on Friday.
Heads Up!
Real estate values have bounced back providing Americans with more
purchasing power. That is an important
development which supports a stronger economy ahead.
According to the Federal Reserve Bank, the value of Americans’ equity in their real estate peaked at $10.3 trillion as of 12/31/07, fell to
$6.3 trillion by 12/31/11, and
then climbed back to $10.0 trillion
as of 12/31/13.