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The Big Bang Theory: Inflating the Stock Market

It does not take a Ph.D. to see that we may be witnessing a big bang in inflation, but the early stages of accelerating inflation have been historically good for the economy and stock market.

Beige Book: Window on Main Street

Weather was again a key theme in the Beige Book with 103 mentions, down from 119 in March. However, the mentions in April were in a much less negative context than in March. The Affordable Care Act continues to be a key concern for Main Street.

The Weakest Earnings Cycle in 55 Years

This has been the weakest earnings cycle in 55 years. Earnings growth needs to improve to support valuations and drive the stock market higher. Fortunately, growth may be set to improve in the coming quarters.​

Gauging Global Growth in 2014 & 2015

The stabilization in growth forecasts for both 2014 and 2015 is a sign that perhaps the market is more confident now that the global economy is in the middle innings of an expansion. While the forecasts for GDP growth for 2014 and 2015 have generally moved higher for developed economies over the past 18 months, growth estimates for emerging market economies have generally moved lower.

Jobs Looking for People Redux

The JOLTS data continue to tell a familiar story: the labor market is healing, but it still has a long way to go to get back to normal. Looking around the country at open jobs by industry, firm size, and pay, it seems like a good time to be a business and professional services worker in the South looking for work in a small-to-medium sized (50 to 249 employee) business.

Surprise: Cyclicals May Soon Come Back

The very tight relationship between economic surprises and the performance of cyclicals suggests cyclicals may soon make a comeback relative to more defensive sectors.

Is the Party Over?

At any given time, there are always some bubbly valuations among industries and stocks that are hot. But overall, looking at valuations, the party in the stock market may not be just getting started — but it is not yet close to being over.

Labor Market Report Card

Weather will still be a factor in the March employment data & the markets may give the economy another “free pass” for yet another potentially weak jobs report. In our view, the Fed would have to see a sharp slowdown (less than 50,000 jobs per month) or ramp up (over 300,000 jobs per month) to slow down or speed up tapering before fall 2014.

What Is Priced In?

The stock, bond, and commodities markets appear to have priced in a return to a positive environment for investors consisting of stronger economic and job growth accompanied by a return of some mild inflation.​

What’s the Yellen Surprise?

The Fed’s target for the fed funds rate in the long term is lower than in prior rate hike cycles. The market has already priced in Fed rate hikes beginning in mid-2015. Sustained growth in real gross domestic product (GDP) above 3.0% at any time over the next three years could elicit an earlier start to rate hikes by the Fed and/or more rate hikes once they commence. The Fed’s communication with investors and the public remains muddled, at best.

March Madness in the Markets

As the NCAA basketball tournament gets down to its own sweet sixteen while the rest of March plays out, it is a good time to reflect on the sixteen competing drivers of the markets that may make for an exciting showdown in the weeks and months to come. There will likely be some upsets that result in volatility as these factors face off against each other.

Making a Statement

Markets will soon be asking: When will the Fed raise rates? What measures of inflation, employment, and other economic indicators will the Fed be watching most closely? How fast will rates rise once rate hikes begin? We expect the FOMC to revamp its overly complex statement beginning at this week’s FOMC meeting. We continue to expect the FOMC to taper quantitative easing by $10 billion at each FOMC meeting this year.

Europe’s Big Bet

The ECB made a big bet last week that the Eurozone economy is picking up fast enough to avoid the need for any further stimulus. We are not so sure. Until some key catalysts emerge, the risks to stocks in Europe may outweigh the rewards.

Still Growing, With Limited Wage and Price Pressures

In early 2014, harsh winter weather has replaced policy uncertainty as the biggest weight on the economy. Our Beige Book Barometer decreased to +62 in March 2014 from +76 in January 2014, as weather received 119 mentions. The Affordable Care Act continues to be a key concern for Main Street.

Stocks Go From Great to Good as the Bull Turns Five

After five years, the second most powerful bull market in post-WWII history may be getting a second wind...​

Janet Yellen’s Employment Report

The market will be especially interested in the unemployment rate this month, because just a 0.1% drop to 6.5% pushes the rate to the Fed’s threshold of 6.5%. Yellen made it clear last week that the Fed was in no hurry to raise rates when the unemployment rate crosses the 6.5% threshold. In our view, the Fed is not likely to raise rates until late 2015 or even early 2016.

The Real Reason for the Rebound

The idea of a change in Congress to a more business-friendly environment may be a welcome thought for many market participants and a behind-the-scenes reason for the rebound.

Residential Recovery Redux

Almost all of the factors supporting an ongoing recovery in housing remain in place, but the rise in rates will likely slow the pace of the recovery somewhat. Many, if not all, of the other housing indicators we watch also suggest ongoing recovery in the housing market in the quarters and years ahead.​

Lies, More Lies, and Charts

One of the reasons that charts forecasting an imminent stock market “crash” are able to make their way around the internet almost every year is that charts can lie.

The Inflation Conversation: Part 2

When policymakers say there is no inflation, they mean the rate of change in the general price level, or the inflation rate, is moderate. Quality adjustments and definitions are two of many reasons for the apparent disconnect in “the inflation conversation.” For policymakers like the Fed, the low rate of increase in the inflation rate expected by the FOMC this year (1.5%) and next year (1.75%) suggests that inflation is “well contained.”

Add More Bond — James Bond — to Your Portfolio

50 years ago, in the James Bond movie Goldfinger, an alternative to the traditional car helped Bond out of some risky situations. 50 years later, bonds are facing a risky situation — and alternatives to traditional investments may help to capitalize on it.

The Inflation Conversation: Part 1

At her first public appearance as Fed chairwoman tomorrow, Janet Yellen is likely to say that inflation is in more danger of falling below the Fed’s target of 2% than accelerating higher. Market participants’ view of inflation is similar to the Fed’s view that inflation remains well contained.

Turn Down the Volume

It is not unusual to see the market dip 3% in a month; what was unusual about January’s stock market trading was the volume surging to levels not seen since May 2010. Such spikes have historically coincided with losses, but they were not sustained for long.

The Employment Situation: Slow Climb Back

The January 2014 employment report will garner plenty of attention from market participants, the media, and the public as the labor market continues its slow climb back to the pre-recession peak. The Federal Reserve will be watching for key metrics: the participation rate, long-term unemployment, wages, and hiring..

Time to Hit the Pause Button?

This week (January 27 – 31, 2014) the Federal Reserve’s (Fed) policymaking arm, the Federal Open Market Committee (FOMC), holds the first of its eight meetings this year. The meeting is being held against the backdrop of a wave of volatility in global financial markets, as market participants brace for another round of tapering by the FOMC...

Investor’s Guide to the 2014 State of the Union Address

President Obama’s State of the Union (SOTU), scheduled for Tuesday, January 28, is unlikely to be a big market mover. But three areas of the market may see some impact...

FAQ - Federal Open Market

Will the Fed announce tapering at this week’s FOMC meeting? Why is the Fed not likely to taper at this week’s FOMC meeting? How has the economy evolved since the last FOMC meeting in mid-September 2013? Find out answer to these questions and more...

Back to Work

The budget crisis in Washington is over — for now. The 11th hour deal lifts the debt ceiling through February 7, 2014, and funds the government though January 15, 2014, returning furloughed overnment workers to their jobs. The bill passed both the Senate and the House by a wide margin and on bipartisan support. But what about early next year — are we going to have to go through the same fiscal fight again?

The Lowdown on the Shutdown

With the shutdown and debt ceiling debate now in the rear view mirror, the market’s attention — and possibly the Federal Reserve’s (Fed) as well — will likely shift to the performance of the private sector economy here in the fourth quarter of 2013 and in the first quarter of 2014. We continue to expect around 2.0% growth in real Gross Domestic Product (GDP) in 2013, despite the drag from government spending...

The Six Trends to Watch This Earnings Season

The continued wrangling by lawmakers over the government shutdown and debt ceiling may overshadow earnings reports this week in drama, but not in importance. While Washington drives market volatility, the market trend is determined by earnings growth. It is hard to draw conclusions from the handful of results in the...

Gauging Global Growth in 2013 & 2014: Stability

If the U.S. government remains shut down, news from corporate America on the health of the U.S. and global economies may take on even greater significance than usual for market participants and policymakers in the coming weeks. The stabilization in growth forecasts for 2014 is a sign that perhaps the market is much more confident now that the global economy is in the middle innings of an expansion. It’s a healthy sign for global growth prospects that...

What to Watch for a Breakthrough or a Breakdown

Last week stock market investors continued to cling to, if not actually climb, the wall of worry. Stocks were flat for the first week of the government shutdown, but that masks the intraday volatility seen last week as drops were quickly reversed each day. The market moves last week were in part prompted by reports and rumors emanating from Washington, D.C. on the state of the negotiations over funding the federal government and lifting the debt ceiling...

What Demographics Tell Us About Health Care

Demographics, and particularly the aging population, are a very important factor in determining health care costs in the decades ahead. However, this is not the only factor, ore important is how (and when) the federal and state governments — and more critically — households and businesses respond to these rising costs...

The Comeback

The similarities between 1967 and 2013 suggest that if the pattern in the stock market continues to hold, as we believe it may, and lawmakers eventually “kick the can” on the fiscal issues, the concerns that have led to the current pullback may give way to a resolution that powers a comeback later this year, as we saw in 1967...

Health Care Checkup: What We Spend on Health Care

Economy-wide (federal, state, and local governments, corporations, and individuals), Americans spent $2.7 trillion (or roughly 18% of GDP) on health care products, services, and investment in 2011, the latest data available. Consumers spend more out of pocket on health care than they do on automobiles, furniture, or clothing...

The “Kick-the-Can” Pattern Keeps Giving to Investors in September

After kicking the can on Syria, a new Fed chairman, and now tapering, the market is beginning to wonder if the government funding deadline and debt ceiling are the next cans to be kicked by those in Washington. This week, the headlines will focus on the possibility of a government shutdown and the debt ceiling impasse, perhaps setting up another buy-the-dip opportunity ahead of an 11th hour compromise.​

Communication Breakdown?

In our view, Bernanke made a clear case to markets last week that tapering remains data dependent, and he even provided markets with specific metrics the FOMC was watching to gauge progress. Market participants may need to recalibrate how they listen to the Fed, and the Fed may need to rethink how it communicates with the markets and the public. The Fed will need the markets’ trust as it begins to prepare for the unwinding of all the monetary stimulus it has put into the system since 2007.

Dawning of a New Era?

As this publication was being prepared on Monday, September 16, 2013, equity markets around the globe were rallying and bond yields were dropping on the news over the weekend of September 14 – 15, 2013 that Larry Summers — who market participants had pegged as the front-runner to replace Ben Bernanke as Federal Reserve (Fed) Chairman — withdrew his name from consideration...

Emerging Markets and the Fed - What’s Attractive and What to Avoid

While the Federal Reserve (Fed) could surprise investors this week, the Fed has been careful to communicate its intentions to the markets ahead of this week’s meeting. Most market participants expect the Fed to announce a tapering in the monthly pace of its bond-buying program coupled with more guidance on when, in the distant future, it may raise rates...

The One Big Risk

When Lehman Brothers filed for bankruptcy on September 15, 2008, defining the seminal event of the financial crisis, there was one big risk investors were worried about across their portfolios: credit risk — the potential losses arising from the inability of mortgage borrowers, financial institutions, and government enterprises to pay back their debts. As we reach the five-year anniversary of that event this coming weekend, another single big risk has emerged...

Trust

The latest Beige Book and the August employment report likely keep the Federal Reserve (Fed) on track to announce a scaling back of its bond-purchase program (quantitative easing, or QE) at the next Federal Open Market Committee (FOMC) meeting on September 17 – 18, 2013...

Trading Partners

Our exports to our two closest neighbors, Canada and Mexico (27%), are larger than our exports to the Eurozone, Japan, and China combined (25%). Perhaps market participants (ourselves included) should pay more attention to the economic prospects for Canada and Mexico and a bit less time on China, the Eurozone, and Japan...

Stocks Likely to Focus on Domestic Over

The markets were most focused on an impending military strike on Syria last week. While prospects for an imminent strike have faded, the likelihood of military action in the near future remains. Unfortunately, the past offers us many periods of military action. Looking back at these can help us draw parallels and gain perspective on the most likely outcome for the markets...

Deficit Distraction

In the 12 months ending July 2013, the federal government spent $3.4 trillion and took in $2.7 trillion in revenues, making the federal deficit about $725 billion, the smallest deficit recorded since late 2008. At just 3.5%, the deficit as a percent of nominal gross domestic product (GDP) over the past 12 months was also the smallest since late 2008, and stands in sharp contrast...

Two Bears and a Bull

The month of August has not been friendly to investors in any of the major asset classes. Stocks have dipped and bond yields have climbed, pushing bond prices lower. And, with the rise in inflation to 2.0% (as measured by the Consumer Price Index), there is greater purchasing power loss associated with holding cash or money market investments. The stock market is likely in the midst of another temporary pullback in a continuing...

Exporting Good Old American Know-How

The United States has run a trade deficit (importing more goods and services from other countries than it exports) since the mid-1970s. Although the trade deficit narrows during recessions — imports typically fall faster than exports during a recession — the trade gap has increased over time, and currently stands at around 3.5% of gross domestic product (GDP). This large and persistent trade deficit acts as a drag on overall GDP growth...

Markets Entering Area 51

Area 51 has been steeped in mystery and a favorite subject of conspiracy theorists for decades. But CIA documents released late last week officially acknowledge its existence and suggest that its actual function was far less extraordinary or essential than believed by some. Like Area 51, the latest round of quantitative easing has been surrounded by mystery (What is it actually doing? Is it working? When will it end?)...

Measuring Economic Expansion

The U.S. economy is now in the fifth year of the 12th economic recovery (or expansion) since the end of World War II. It is already the sixth-longest expansion and would have to last another year to become the fifth longest, as discussed last week. This week, we will compare the performance of gross domestic product (GDP) and its components...

Change in China and What it Means for Investors

Last week’s economic reports from China for July added fuel to the fiery debate over whether China’s economy is slowing rapidly, possibly forming a sharp “hard landing,” or slowing more gradually and likely forming a more shallow dip or “soft landing,” which could already be stabilizing. This debate focuses primarily on the pace of the decline and all sides assume an eventual rebound. However, the debate misses the point: whatever the landing, there may not be a rebound...

Summer of Love

If the pattern in the stock market mirroring 1967 that has unfolded so far this year holds in the second half, we may see a volatile market with a slower pace of gains — but more record highs ahead. It has been a summer of love for the stock market. As the temperatures heated up, so did the stock market. From June 24 to August 2, 2013, the S&P 500 Index rose 9%, pushing stocks up about 20% for the year...

Revisiting the Recovery

Last week’s data deluge did not change our view (or the markets’) about the economy or the Fed. We still expect modest 2.0% real GDP growth in 2013. We believe the labor market is still growing quickly enough to allow the Fed to begin to taper its bond-buying program known as quantitative easing sometime this fall. The recent high-profile reports on the economy did little...

Under the Surface

Conditions have stopped worsening, and Europe’s economy may be stabilizing after a period of rapid economic deterioration. However, the deep-rooted negatives that lie not far under the surface may disappoint those expecting steady improvement. As we have all year, we continue to believe U.S. stocks will outperform their international peers...

Midsummer Madness

We continue to expect the Fed to begin to slow its bond-buying program (QE) in the fall of 2013. We believe the U.S. economy will continue to grow at about 2% in 2013, supported by housing as well as consumer and business spending, offsetting the government spending drag. The health of the labor market as measured by the monthly job count (around 200,000 jobs per month) has met the Fed’s “real and sustainable” improvement expectations, but other job market measures tell a different story...

Unseasonable Weather Still Weighing on the Economy

The latest edition of the Fed’s Beige Book, released on July 17, 2013, continues to underscore the impact of the unseasonably cool weather on the U.S. economy. Housing and commercial real estate were mentioned as key drivers of growth and, for the first time this year, mortgage rates were mentioned. The number of negative words in the Beige Book has dropped to a seven-year low, reflecting...

Walking Dead Stock Market

Last week revealed the nominations for the 2013 Primetime Emmy Awards. Overall, 10 different dramas scored nominations for the shows or lead actors. But missing from the list was the show that is the number one drama in the coveted 18-to-49-year-old demographic: The Walking Dead. There was no respect for the unstoppable zombie drama from the television academy. Likewise, this unkillable stock market rally seems to get no respect. U.S. stocks have been snubbed by investors this year...

What We Are Watching for This Earnings Season

Four times a year, investors focus on the most fundamental driver of investment performance: earnings. Unfortunately, like the economy, earnings growth remains sluggish. The second quarter of 2013 is likely to mark another quarter of low to mid-single-digit earnings per share growth. We will be watching for key trends that may impact future quarters: fiscal drag, slower global growth, wider profit margins, rising buybacks, and higher interest rates...

Crash Course on Student Loans

In recent months, student loans have been all over the news. Some recent headlines include: ƒƒ“Student loan crisis”; ƒƒ“Student loan rates to double”; ƒƒ“Student loan delinquency skyrocketing”. In our view, the outlook for the student loan situation is much more balanced than recent headlines suggest. Student debt is soaring, but the devil is in the details behind the headlines. The federal government guarantees...

The Right Recipe for Stocks

The summer means cookouts. The recipe for success is usually simple: take a basic ingredient, add some characteristic flavors, and apply some heat. The recipe for stock market investing success may be as simple as taking the S&P 500 and adding the characteristics provided by buybacks as the market heats up in the second half of the year. Some characteristics to consider for a good core U.S. stock portfolio for the second half include...

Real and Sustainable: An Update

The June 2013 employment report revealed that the private sector economy continues to add about 200,000 jobs per month, keeping the Fed on a pace to taper quantitative easing this fall. The labor market is at best a coincident indicator of economic activity, so the uptick in jobs is not likely to signal an uptick in the pace of economic growth.

Mid-Year Outlook

The investment landscape for the first half of 2013 has proven to be a toughone to navigate. And this is likely to continue through the second half of this year. There is a lot of rocky terrain and potentially some surprises ahead that investors need to prepare for...

Revisiting the Residential Recovery

The recent rise in mortgage rates — from just under 3.5% (for a conventional 30-year loan) to just under 4.5% since mid-May 2013 has led to widespread fears the housing recovery would come grinding to a halt. Those fears appear to be overdone, in our view, as almost all of the factors supporting an ongoing recovery in housing remain in place. At this stage of the recovery, satisfying pent up demand for housing rather than mortgage rates is likely to be the bigger driver of housing...

The End Is Near - But That Is Good News

Overview: Market participants heard from the Fed last week that it is ready to soon end the bond-buying program and continue to expand its purchases at a slower pace. It appears the stock market started to move to price in the start of tightening rather than the potential end of stimulus. The knee-jerk reaction of selling across all markets - stocks, bonds, and commodities - may not persist for long and could create opportunities to buy the dip.

What’s It Worth?

What has mattered most to the market in recent years? What has explained the ups and downs and how the market got back to all-time highs? There are a lot of drivers that could be argued as critical components of the markets’ rise, such as the European fiscal issues, the housing rebound, and U.S. fiscal policy developments. But, setting emotion and headlines aside and measuring statistically, there are three things that have really mattered to the markets...

Sizzling Summer Fed FAQ

Find out: What the schedule of events are for the Fed this week; whether the Fed will raise rates at this meeting; whether the Fed is tapering Quantitative Easing (QE) or is tightening the Monetary Policy; whether the Fed will act to calm financial markets; when the Fed will stop QE; whether Congress can make the Fed stop QE; and more.

The Butterfly Effect

The “butterfly effect” is a term from a pioneer of chaos theory, Edward Lorenz; his 1972 presentation Predictability: Does the Flap of a Butterfly’s Wings in Brazil Set Off a Tornado in Texas? describes the idea that a tiny event can start a chain reaction and have large and wide-reaching effects. We know the big changes and events the markets face in the second half of 2013: the potential end of the Federal Reserve’s (Fed) bond-buying program, the need for Congress to...

Unseasonable Weather Weighs on the Economy

At the start of 2013, most market participants expected the economy to struggle under the weight of the fiscal cliff, and later, the sequestration imposed on the federal budget by Congress. Instead, it appears that a colderthan-normal winter and a cooler-than-usual spring is having a more pronounced impact on the economy...

Real and Sustainable

The U.S. Department of Labor’s monthly employment report always generates plenty of attention from the media, Main Street, and the markets - and this week will be no exception. The May 2013 report scheduled for release on Friday, June 7, is expected to show that the economy added a net new 165,000 jobs in May 2013, (the same number of net new jobs created in April 2013) and that the nation’s unemployment rate held steady at 7.5% in May 2013...

Love-Hate Relationship Between Bond Yields and Stock Prices

Stock prices and bond yields have historically had a love-hate relationship that would make the romantic ups and downs of any soap opera seem mild by comparison. But, currently, the relationship between them remains tight and far from crossing the line that would lead to a breakup. With the 10-year Treasury yield rising a half of a percentage point last month, investors are beginning to wonder when rising interest rates may start to negatively affect stock prices...

Summer Rentals

Memorial Day weekend kicks off the summer season in sunny destinations across the country as city dwellers and others seek to escape the heat and enjoy some natural beauty and relaxation. But like unwanted guests crowding a cabin or a cottage, a lot of unwelcome events that impact the markets can really ruin a summer vacation...

What’s Broken in Europe?

The Eurozone is likely to be in a recession throughout 2013, despite the best efforts of the European Central Bank (ECB) and other policymakers. Fixing Europe’s broken financial transmission mechanism should be at the top of European policymakers’ long “to do” list. In the United States, the Federal Reserve’s (Fed) quantitative easing (QE) program is helping to boost bank lending and the overall economy.​

Buyers & Sellers

We devote this commentary each week to assessing the many reasons markets may rise or fall. But at the heart of it, all markets come down to just one thing: buyers and sellers. Taking a look at who is buying and who is selling can tell us something about the durability of the market’s performance and what may lie ahead. Currently, there are six notable trends...

Listening to the Leaders: Leading Indicators Continue to Point to Slow Economic Growth, but no Recession

Based on the Leading Economic Indicators (LEI), the odds of recession over the next 12 months are low but not zero. We expect gross domestic product (GDP) growth of 2.0% for the remainder of 2013, based on our Base Path scenario discussed in our Outlook 2013 publication and additional data.* We expect that the Federal Reserve (Fed) will continue its program of quantitative easing (QE).

The Rally Is Getting Old, but a New Trend May Be Emerging

The overall stock market has only seen a couple of 2 – 3% dips this year, but there have been 5 – 10% pullbacks among cyclical sectors. It may be time to begin to buy some of the laggard cyclicals, especially on any pullback in the overall market...

Clearing Up Confusion on Common Queries

In this week’s commentary we attempt to clear up some of the confusion around some of the most common questions we encounter regularly, including: 1)The Federal Reserve (Fed), its balance sheet, its role in the economy and its impact on inflation; 2) The federal budget deficit; 3) The federal debt outstanding, and the debt-to-GDP ratio; and 4) The trade deficit and a related topic, the US dollar...​

Borrowing for the Future

A recently detected error in a study by Harvard economists Reinhart & Rogoff has garnered much attention in the financial press lately. The study had initially concluded that once a country exceeded a 90% debt-to-gross domestic product (GDP) ratio, the pace of economic growth slowed sharply. The corrected data reveal that growth slows as debt-to-GDP rises, but at a pace not meaningfully different than at other round numbers...

The ABCs of GDP

The U.S. Department of Commerce’s just released first estimate for gross domestic product (GDP) for Q1-13 which shows continued declines in federal spending, including defense spending and state and local spending. There were few, if any signs, in the GDP report for the first quarter of 2013 that the U.S. economy will re-accelerate anytime soon. We continue to expect GDP growth to average around 2.0% over the course of 2013. We examine the various components and drivers of GDP in this...

Soft Spot Arrives on Schedule

There are certain things we have gotten used to counting on each spring: the season changes and the weather warms, baseball games bring fans to the stadiums, the economy weakens, and investors “sell in May and go away.” The old Wall Street adage “sell in May and go away” refers to the seasonal tendency of stocks’ performance to weaken in the spring until the fall. In recent years, this spring slide in the stock market was driven by the arrival of a spring soft spot in the economy...

Is Investor Complacency Finally Ending?

Last week, U.S. stocks suffered their worst drop in over nine months as a terrorist attack and poor economic and earnings data shook investor confidence. Breaking down last week’s market drivers may reveal insights about the likely future direction of the stock market...

Beige Book: Window on Main Street

Our Beige Book Barometer hit an eight-year high in April, despite adverse weather in late February, March, and early April 2013. This suggests that a return to “normal” weather could provide a significant lift to upcoming readings on our Barometer.

#TheWeekInTweets

Each time we publish the Weekly Economic Commentary, we include our calendar on page 3 that details all the key economic and policy events for the week. While we try to keep the Weekly Economic Commentary “relevant” by tying our commentary to one of the events of the week, many times we don’t refer to the calendar at all...

First Quarter Earnings Insights

Four times a year, investors focus on the most fundamental driver of investment performance: earnings. Unfortunately, like the economy, earnings growth remains sluggish. The first quarter of 2013 is likely to mark the fourth quarter in a row of low to mid-single-digit earnings per share growth. The dollar amount of earnings per share for the S&P 500 companies is expected to be lower than in each of the past three quarters and only 1% higher than a year ago...

Searching for Inspiration

The U.S. stock market’s stalling momentum and increasing volatility, combined with other signs evident in the market’s recent behavior, suggest investors may be looking for new inspiration. A flu pandemic or an act of war by North Korea could be a shock that results in a setback to the economy and stock market, while the aggressive stimulus in Japan could be a boost that finally gets stocks to break out of their month-long range...

What’s Fueling Gasoline?

The year-to-date price rise in gasoline prices has been more muted than usual, while a sharp rise in consumer energy prices poses a threat to the economy. U.S. gasoline usage has curtailed with the combined help of a of slower economic growth, a slight increase in fuel economy among the nation’s vehicle fleet, a sharp slowdown in miles travelled, and an aging population. Find out what other answers the emerging consumer reports will reflect on gasoline...

Message From the Markets

Stocks posted a strong first quarter. While shy of last year’s 12% first quarter gain, the S&P 500 Index’s 10% gain seen this year reflects very strong performance. Consistent with the powerful gains for stocks, bond yields and oil prices also rose in the quarter. Given the average-atbest economic readings during the first quarter, the performance of the stock, bond, and commodity markets begs the question: what are the markets saying about where the economy is headed?

Business Capital Spending

On March 28, 2013, the Bureau of Economic Analysis of the U.S. Department of Commerce reported that corporate profits of all U.S.-based corporate entities hit an all-time high in the fourth quarter of 2012. Strong overseas economies, restrained hiring, modest wage gains, low interest rates, solid worker productivity, and an economic cycle that is just three months shy of its fourth birthday have all contributed to the record level of profits. Economy-wide...

 
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