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Fed Thoughts

Rich Walls - Friday, June 19, 2015

On Wednesday the Federal Reserve announced it was leaving unchanged its 0-.25% Federal Funds target at this time. While noting the improvement in Q2 economic data from the disappointing Q1, interestingly the Fed reduced its 2015 GDP growth forecast from the previous range of 2.3-2.7% to the new projection of 1.8-2.0%. If stronger economic data supports it, the Fed will likely initiate one or two quarter point increases in the Fed Funds rate before year-end. Read More

"Unch'd" Since November

Rich Walls - Friday, May 08, 2015

Prior to today’s spike higher on the back of a better than expected US jobs report, the S&P 500 has traded essentially flat since late November of last year. We have experienced extreme volatility during the past five and a half months, which makes for terrific headlines; however the market has gone nowhere. In late November the S&P 500 was trading around 2070, the same levels seen two days ago. Using 2070 as a benchmark, since 11/24 we have been in a 7% trading range.  Our low was experienced on December 16th at 1972, a 4.7% decline, and our high was set on 4/24 at 2117, a 2.3% increase. This narrow trading range defines a “hurry up and wait” period for US investors.  Read More

Flat Week, ENORMOUS Moves

Rich Walls - Friday, May 01, 2015

Despite a relatively unchanged US equity market, this week was anything but flat for key global data points. We saw a massive move in the FX market as the EUR/US Dollar spiked from 1.08 to 1.12, nearly a 4% rise. West Texas Intermediate (WTI) Crude Oil rose from $56 to $60, over a 7% increase, before settling around $59. The German Bund, mentioned in last week’s blog, has had an even more impressive sell-off this week. The yield on the 10y Bund, which had doubled last week, from 0.07% to 0.15%, has more than doubled again this week, from 0.15% to currently 0.357%. Our own US 10y Bond had a dramatic sell-off as well causing a rise in rates from 1.89% to currently 2.12%, an increase of 12%. These tectonic shifts in asset classes are something we actively monitor. Read More

Markets Grind Higher

Rich Walls - Friday, April 24, 2015

Despite generally lackluster earnings, the S&P 500 index rose more than 1.7% during this past week and closed at an all-time high. The upside move in domestic equities comes on the heels of rising global sovereign bond rates. Most notably, the sell-off in the 10yr German Bund caused the yield to more than double, from under 0.07% earlier in the week to 0.15% presently. This move in sovereign rates may prove significant in the deflation fight taking place in the EU and signal that pro-growth policies, coupled with European Central Bank action, are beginning to spur economic expansion in Europe.  Read More

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