Highlights for this Week’s Update:
- First quarter performance reports are posted online for your viewing under the “Performance” tab when you log into the Liberty online system to view your account(s).
- The markets continue to move back-and-forth depending on the headline or “worry” of the day.
- We are watching the current economic and market data closely but are still cautious as we look forward to the balance of 2014.
- Economic news improves some after the harsh winter months.
Read on for More Details………………………………………………………………………………….
First Quarter Performance Reports Available for Online Viewing:
The first quarter, 2014 performance reports are now posted online for your viewing under the Performance Tab when you log in to the Liberty system to view your account(s). Also, if you have not yet scheduled your personal review this quarter, either in person or by phone, please call today so we can reserve your day/time now.
After anxieties over the tensions in Ukraine and potential first quarter corporate earnings reports pushed the major stock market indices lower the week before last, the Dow was able to gain back about 2.33% last week. The Dow Jones Industrial Average is still down just over 1% for the year as of last week’s close in a shortened trading week due to the Good Friday holiday.
Economic projections are a combination of art and an educated guess at best as economists create complicated computer models to try and predict future trends in the overall economy. Uncertainty always exists for all future outcomes. Case in point, the economy was showing promise last fall, but economists failed to fully take into account the fallout from a very rough winter. Many, but not all economic forecasters, suspected we’d see a spring thaw in economic activity. That is exactly what we are seeing to some degree at this point in time.
Retail sales in March jumped 1.1%, topping expectations (Bloomberg), and February’s number was revised substantially higher (U.S. Commerce Dept). Further, so-called core sales, which excludes the volatile auto category and gasoline stations (helps filter for changes in gasoline prices), rose a healthy 1.0%, the best reading since February 2012 (U.S. Commerce Dept).
Weekly initial jobless claims, which provides a unique look at business confidence (firms don’t typically reduce layoffs if sales are picking up), have recently been holding below the 2007 pre-recession level of 318,000 (Dept of Labor).
|Weekly initial jobless claims
|Dec – Jan average
|Mar – Apr 12th average
Source: Dept of Labor
What’s happening? Just as economic data in December and January disappointed, we’re probably watching an economy that is making up for lost time. We will probably need to wait until May or June before a growth path free of weather-induced distortions surfaces.
Today’s low interest rate policy set in motion by the Federal Reserve has been designed to encourage consumer and business spending as the expense of savers. If growth fails to measurably accelerate and boost job growth, the Fed is likely to keep short-term rates near zero for the foreseeable future, directly affecting returns on super safe, fixed-income investments.
The crystal ball economists use is sometimes muddied. We may see growth settle back down some from the more aggressive pace we’ve seen over the last couple of months, but there is one positive pattern that has emerged. Lending to businesses has accelerated (Federal Reserve data) thanks to increased business demand and looser lending standards (Wall Street Journal). We may finally be seeing an uptick in capital spending, which could support growth in the second half of the year. We will have to wait and see.
We hope you all had a wonderful Easter weekend and were able to spend some extra time with family and friends.
Your TEAM at F.I.G. Financial Advisory Services, Inc.
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1 The Dow Jones Industrials Average is an unmanaged index of 30 major companies which cannot be invested into directly. Past performance does not guarantee future results.
3 The S&P 500 Index is an unmanaged index of 500 larger companies which cannot be invested into directly. Past performance does not guarantee future results.