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10 Indicators to Watch for a Spring Slide in

In each of the past three years, the stock market began a slide in the spring that lasted well into the summer months. One year ago, we provided our list of the 10 indicators to watch that seemed to precede the stock market declines in 2010 and 2011 and accurately warned of another spring slide in 2012. We again look to these indicators for signs of a potential spring slide in the stock market this year...

Watch What the Fed Watches

The Unemployment Rate remains well above the Fed’s “Threshold” of 6.5%, but it is only one of many labor market indicators the Fed is watching. The “center of gravity” at the Federal Reserve (Fed) is still not seeing “substantial improvement” in the labor market. And, if the Fed waits too long to remove stimulus, higher inflation and higher interest rates could result.

The Inflation Situation Revisited

We last wrote about the inflation outlook in the September 24, 2012. Since then, while inflation and inflation expectations in the United States have remained in check, the Federal Reserve has begun another round of bond purchases, known as quantitative easing (QE). This decision — along with the recent run-up in consumer gasoline prices and recent comments from some members of the Federal Open Market Committee that the costs of QE may soon begin to outweigh the benefits...

The Market’s March Madness

It has been a sweet sixteen weeks for the S&P 500. The broad stock market index has had only three down weeks out of the past sixteen. While this stretch is tied by the same period a year ago, it is important to note that there has not been a sixteen-week period with fewer weeks of losses in over 20 years - since the period ending September 1, 1989. March has been maddening for investors in the past few years (2010-2012) as the S&P 500 raced higher in March only to reverse...

Dow: The Great and Powerful

The film, Oz: The Great and Powerful, the prequel to The Wizard of Oz, premiered last week. The story of how the wonderful wizard overcame the risks and prevailed worked its magic on moviegoers and proved popular with a strong box office showing. In the same week, the Dow Jones Industrial Average (Dow) proved popular with investors as it powered its way to a new all-time high, as it overcame many risks to reach the fourth anniversary of the start of the current bull market from the low point...

Beige Book Bounce-Back

Despite the post-Sandy bounce, our Beige Book Barometer describes an economy that is growing - but only modestly. When we wrote about the Barometer in early December 2012, indicators generally suggested the economy was stronger during the summer and early fall of 2012, prior to the impact of Superstorm Sandy and uncertainty ahead of the fiscal cliff than it was in early 2011, before the bruising debt ceiling debate...

Growing Gap Between Health of Consumers

Last week’s data highlighted the growing gap between the health of businesses and consumers that is starting to contribute to a widening gap in the performance of consumer and business-driven stocks, as well. The economic reports released last week covering the time period of January and February 2013 for orders of equipment by businesses and manufacturing activity point to strengthening business demand...​

Marching Toward the Pre-Recession Peak

The U.S. economy needs to add another 2.7 million net new jobs to get back to the all-time high set in early 2008 during the early months of the recession. How quickly the economy can create those 2.7 million jobs will in large part determine if, when, and how the Federal Reserve (Fed) begins to scale back its quantitative easing (QE) program...


The Humphrey-Hawkins testimony used to be a rare window of transparency for an otherwise opaque Federal Reserve (Fed), but now it is just one of the many ways the Fed is transparent. In this week’s Humphrey-Hawkins testimony, the market is looking to Federal Reserve Chairman Ben Bernanke to apply more of a quantitative threshold on the pace of quantitative easing....

Gasoline Prices Racing Toward Danger Zone

Do you feel like you are paying too much for gasoline? The national average price has seen double-digit increases two out of the last three weeks and is up 45 cents since the beginning of the year. The race higher in gasoline prices is worth watching closely. In each of the past two years, we have tracked 10 “spring slide” indicators that helped us to predict the stock market pullbacks that took place during the second quarter of each year...

Investing in an Up-and-Down Market

The volatility and classic 5 – 15% pullbacks we have seen in each of the past few years is perfectly normal and very likely to be a recurring pattern in 2013. There are several ways to benefit from market volatility and potentially enhance returns, including....

JOLTS Show Labor Market Still Healing

The nation’s labor market has come a long way since the depths of the Great Recession and its aftermath, but it still has a long way to go to get back to “normal.” We continue to expect modest improvement in the labor market in 2013. How quickly the labor market heals in 2013 will help to determine if, how, and when the Federal Reserve begins to scale back quantitative easing (QE) and eventually begins to raise interest rates...

Investor’s Guide to the State of the Union Address

President Obama’s State of the Union, scheduled for Tuesday, February 12, is unlikely to be a big market mover. However, two major themes that we will be listening for with potential market impacts: the fiscal cliff and energy independence.

Residential Recovery

Over the second half of February 2013, financial markets will begin to digest early 2013 data on the housing market: housing starts, home prices, new and existing home sales, and pending home sales. Housing made a splash in late January 2013, as the gross domestic product (GDP) data for 2012 revealed that housing added to GDP in 2012 for the first time since 2005. Market participants are now asking whether housing can continue to contribute to the economy in 2013 — and beyond.

Seeing Shadows

This Groundhog Day, when looking at the Dow, we are seeing shadows of what took place in each of the past three years as a new milestone was reached. It took the better part of a year for the market to break free of a period of ups and downs after reaching the milestone before beginning to move toward the next one. That pattern may be repeated this year; however...

Less Defense?

If Congress can agree to substantial cuts in defense spending as part of an overall budget deal, defense would likely be a modest 0.1 to 0.2% drag on overall gross domestic product (GDP) growth in 2013 and beyond.Eliminating all “waste, fraud, and abuse” from the defense budget, while a worthwhile endeavor, would only make a small dent in overall spending...

Following the Center of Gravity at the Fed

In recent weeks, markets and the media have been buzzing about this week’s Federal Open Market Committee (FOMC) meeting and, in particular, whether or not the Fed will adopt formal thresholds to monitor the effectiveness of the latest round of quantitative easing. The FOMC has already set thresholds for monitoring its “highly accommodative stance of monetary policy” (fed funds rate target between....​

Still Waiting for the Bonds-to-Stocks Rotation

Stock mutual funds have seen inflows each week so far this year, providing some evidence that investors are finally favoring stocks after years of selling. However, the details of the data reveal that the money is not going to U.S. stock funds and not coming from bonds. A long-term rotation from bonds to stocks is likely to begin sometime this year, but those claiming that it is already underway are premature and may be in for disappointment if they expect the stock market rally to continue...

Same Europe, Different Crisis

This week’s European finance ministers’ meeting is a reminder that each spring for the past three years, U.S. stocks have started a slide of about 10% during thesecond quarter, led by events in Europe. In 2012, the European fear gauge was the rise in southern European bond yields as the financial crisis worsened. In 2013, it is northern European bond yields falling as the economic crisis worsens.

Beige Book Rebounds

Despite elevated levels of uncertainty surrounding the debate over the fiscal cliff, our proprietary “Beige Book Barometer” moved up to +56 in January 2013, rebounding from a Superstorm Sandy-related dip to +30 in November 2012. Still, our Barometer remains well below its recent high of +101, hit in April 2012. The improvement in our barometer between November 2012 and January 2013 was largely the result of...

What Does GDP Say About EPS?

This week the World Bank will release its bi-annual Global Economic Prospects report, which forecasts the economic growth trends in the global economy for 2013 and beyond, and gauges the impact of these trends on developing nations. While the media may pay a great deal of attention to the fourth quarter corporate earnings reports, the markets are likely to look past the earnings reports and focus more on corporate guidance on earnings and revenue for the new year.

Consulting the Crystal Ball

It is inevitable that around this time of year, investors ponder what the year may hold in store for the markets. While we present many drivers in our Outlook 2013 that will combine to define the path of least resistance for the markets to follow in 2013, the interrelationships between economics, fiscal and monetary policy, geopolitics and corporate actions can seem complex. Investors can feel overwhelmed and seek a simple answer.

Checking for Collateral Damage

This week, we will begin to see if any collateral damage from the fiscal cliff battle was done to corporate profits in the fourth quarter as companies begin to release their fourth quarter earnings reports. When the earnings season winds down in February 2013, the fiscal cliff battle part II may emerge as we approach the limit on U.S. borrowing authority, the end of the delay to the spending sequester, and funding of the U.S. government.

Full Speed Recovery?

The current economic recovery is running at about half the speed of recent recoveries, and the speed of a “normal” recovery. Failure to address the debt ceiling may lead to a recession in early 2013, though this is not our Base Path in our Outlook 2013 publication. The current quarter may receive a boost from Superstorm Sandy, but the payroll tax increase may put a dent into consumers’ disposable income.​

Quick Start

2013 will get off to a quick start, as many market participants return from the holidays to face several key economic reports at home and overseas including: China’s Purchasing Managers' Index, the U.S. Institute for Supply Management, U.S. light vehicle sales, Federal Open Market Committee Meeting, and December's employment report.

Standing on the Edge

As the battle rages on in Washington over the tax increases and spending cuts, known as the fiscal cliff, their impact has already been felt in some ways and not in others. Confidence has taken a hit, while activity has not — yet. While a deal has yet to be struck, steps could be taken to blunt the initial tax and spending impacts of temporarily going over the fiscal cliff to minimize the economic and market damage until a deal can be finalized.

Apocalypse Now?

Given all the news coverage and the drama over what is at stake, it can be easy to think of going over the fiscal cliff — as the spending cuts take effect and tax cuts finally expire — as the end of the world. Wary of the consequences of this collision course with destiny, investors have shunned stocks by selling their holdings of U.S. stock mutual funds on a

This Is Mandatory Reading

As Congress and the President work together to avoid the looming fiscal cliff during the lame duck session of Congress, a more intransient problem remains in the background: the United States’ structural budget deficit. In our Weekly Economic Commentaries of October 29, 2012 (Budget Debate), November 19, 2012 (Budget Myths), and November 26, 2012 (Budget Defense), we wrote about how often the budget was mentioned during the campaign season and how the

Washington’s Dilemma

The advance in the S&P 500, boosted by the latest three weeks of consecutive gains, is at risk if negotiations over the tax increases and spending cuts, known as the fiscal cliff, make no progress in the coming weeks. The fiscal cliff negotiations between the two parties in Washington are reminiscent of a prisoners’ dilemma. The “prisoners’ dilemma” is the name of an

Festive Fed FAQ

The Fed may deliver the most important policy announcement of the week, given the ongoing behind-the-scenes fiscal policy debate in Washington. The Fed continues to play a key role in markets and the economy, and that will continue into 2013 and beyond. Although Fed Chairman Ben Bernanke has said that the Fed cannot offset the impact of the fiscal cliff, Fed policymakers are keenly aware that they remain the “only game in town” when it comes to simulative policy.

Shareholders’ “Powerball” Payout

Last week’s record $587 million Powerball jackpot grabbed headlines. But some shareholders may get their own “Powerball” payout in the next few weeks as companies seek to distribute special dividends that may total a record $100 billion to shareholders ahead of the likely expiration of the Bush-era 15% top tax rate on dividends at the end of the year.

Sandy Clouds the Beige Book

Heavily influenced by the impact of Superstorm Sandy and the uncertainty generated by the election and fiscal cliff debate, our proprietary Beige Book Barometer (at +30), is down from a recent high in the April 2012 Beige Book (+101). The Barometer is now back down to the levels seen in the summer and fall of 2011, amid the disruptive debt ceiling debate in the United States and the fiscal and financial worries in Europe.

Does Black Friday Mean Green

Retail sales during Thanksgiving weekend — the traditional start of the holiday shopping season — climbed 13% as more shoppers hit the stores and spent more money, according to the National Retail Federation, wildly exceeding consensus estimates. The news helped to lift stocks on Friday, making for the strongest week for stocks since early June 2012.

Budget Defense

This week’s commentary continues our series on the long-term U.S. budget problems and possible solutions. The defense budget is a sizable portion of the U.S. budget and likely to be part of any long-term fix. As in other large areas of the U.S. budget, there are no easy fixes, and hard choices will have to be made.

Budget Myths

As Congress and the President work together to avoid the looming fiscal cliff during the lame duck session of Congress, a more intransient problem remains in the background: the United States’ structural budget deficit. In our recent Weekly Economic Commentary: Budget Debate (10/29/12), we wrote about how often the budget was mentioned during the campaign season

Global Gridlock

Last week’s post-election press conferences from the President, Senate Majority Leader Reid, and House Speaker Boehner offered some hope of a bipartisan deal to mitigate the budget bombshell of tax increases and spending cuts known as the fiscal cliff, due to hit on January 1, 2013.

Return of Recession Obsession

The results of last week’s presidential and congressional elections in the United States — and the looming fiscal cliff — provide us with another opportunity to revisit the odds of a recession in the United States in the coming quarters. We will provide a full update on our economic forecast for 2013 in our 2013 Outlook publication, due later this month.

How Wall Street Is Voting

The stock market has priced in a close election. As the race has tightened over the past month, the market has slipped lower while Republican-favored industries have outperformed Democrat-favored industries. While much attention has been focused on the White House, the dwindling prospects for Republicans in the Senate may have limited the outperformance by Republicanfavored industries in recent weeks and helped contribute to the modest pullback in the overall market.

Still Slow Growth

The much anticipated October 2012 employment report was released by the U.S. Bureau of Labor Statistics on Friday, November 2, 2012, to great fanfare from both the financial and mainstream media which, appropriately, are hyper-focused on the implications of the report for this Tuesday’s elections.

Post-Election Apprehension

Our view remains that a closely divided and hard-fought election will be followed by more fighting in a divisive and bitter lame duck session in Congress, resulting in higher volatility and a potential pullback for the stock market. As the race continues to tighten, the market shed -3.3% during last seven trading days (October 18 – 26).

Budget Debate?

The LPL Financial Research Department has written extensively this year on the looming fiscal cliff, the potential for the upcoming elections to influence the resolution of the fiscal cliff, and the fiscal cliff’s impact on the economy today and early in 2013. This week, we will discuss to what extent the nation’s longer term budget woes have been part of the campaign, and how the election outcome may help to influence how these longer term issues get addressed.

Gauging Global Growth in 2013

The broadest measure of the health of the U.S. economy is Gross Domestic Product (GDP). This Friday, October 26, 2012, the Bureau of Economic Analysis of the U.S. Department of Commerce will release its initial estimate of GDP for the third quarter of 2012. The consensus is looking for a 1.8%annualized increase in GDP between the second and third quarters, a slight acceleration in growth from the 1.3% pace in the second quarter. We continue to maintain

Battle of the Central Banks

Despite Friday’s sharp drop as companies reported poor earnings results, the S&P 500 Index posted a gain last week. This week, vying for investors’ attention from the flood of generally weak earnings reports will be the Federal Reserve (Fed) meeting on Tuesday and Wednesday. The Fed is highly likely to confirm on

The Five Long Years

This week will mark five long years since the S&P 500 reached its all-time peak on October 9, 2007. As the S&P 500 nears the previous highs for the third time in 15 years, is the market poised to repeat the pattern and soon embark on a third long and deep multi-year slide? We see four key supports that make it unlikely that stocks will follow the pattern of another multiyear trip back to the bottom of the 15-year range: earnings, dividends, valuations, and the economy.

What’s the Fed’s Number?

The September 2012 employment report did little to change our view on the labor market, the overall economy, or on the outlook for the Federal Reserve’s (Fed’s) quantitative easing (QE) program. The Federal Open Market Committee (FOMC) minutes revealed that when discussing the labor market, FOMC members noted that “growth in employment had been disappointing.”

A Fiscal New Year’s Resolution

This week marks Golden Week, a national holiday in China. However, the United States has its own holiday to observe. Today begins a new fiscal year for the U.S. government. Unfortunately, a new year likely brings another trillion in federal debt to add to the mounting total. The proportion of U.S. federal government debt

Are You Better Off?

It was one of the most famous moments in the history of presidential debates. About a week before the 1980 election, Ronald Reagan asked the nation, “…are you better off than you were four years ago?” With the first

Results: 47 Articles found.
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