Yearly Archives: 2012

  • Is Sub-3 Percent Economic Growth the New Norm?

    Just as much of the emphasis of the political discourse in Washington has been on the economy of late, a great deal of our investment decisions is influenced by our views on both the current state of the economy and our forecast for future economic growth. According to the Center on Budget and Policy Priorities, the U.S. economy has grown for twelve consecutive quarters, but the pace of the growth has been slow and below historical economic recovery averages. Evidence of this slow growth can be found in the paltry 1.3% revised Gross Domestic Product (GDP) annualized growth rate for the 2nd quarter of 2012 ... Read More

  • Understanding the Potential Impact of a Fiscal Cliff Compromise

    It seems as though you can’t turn on a news channel these days and not hear some discussion about the impending Fiscal Cliff. These discussions generally involve some type of doomsday scenario where the economy, and stock markets, “fall off of a cliff” as a result of the draconian spending cuts and tax increases that could take place if changes are not made by the end of 2012 as they relate to the expiration of the Bush Tax Cuts and the spending cuts proposed under the Budget Control Act of 2011 ... Read More

  • The Stock Market and the Economy: A Tale of Two Cities

    Since the end of the 4th quarter of 2011, the U.S. economy has been contracting. 2nd Q GDP’s most recent revision came in at 1.3% - a pretty concerning level - with most components revised down from previous estimates. Moody’s Economics Group reported that this third estimate was a downward revision from the 1.5% reported in the advance release and a reduction from 1.7% in the second release. While some of the slowdown came primarily from a decline in farm inventories, due to the drought in the mid-west, consumer service spending, exports and durable goods all declined as well. Barron’s noted that business activity contracted in September, for the first time in 3 years, while durable goods orders declined 13% in August vs. July - the biggest decrease in three years as well. Unfortunately, the most recent news doesn’t appear to be getting any better. As Bespoke Investment Group put it in their September 28, 2012 “Week in Review” article, “It certainly wasn’t a great week on the economic front, as 11 reports came in worse than expected, versus just 6 that came in better than expected,” and, “It’s hard to imagine where this market would be without QE3.” ... Read More

  • Spain Reminds us that the Worst is Yet to Come in Europe

    Spain, which has the 4th largest economy in Europe, is currently struggling with high unemployment (the highest unemployment rate in Europe), increased borrowing costs, a stressed banking system and rising tensions amongst its citizens as it relates to austerity measures being considered by Spanish Prime Minister Mariano Rajoy. Does this sound all too familiar? Take out the word “Spain” and insert the word “Greece” and the first sentence might have been the beginning of one of our market commentaries from several months ago ... Read More

  • The Federal Reserve May Have to Raise Interest Rates Before 2015

    While the headline of this commentary may come as a surprise to many, it was the exact sentiment conveyed by Federal Reserve Bank of Philadelphia President Charles Plosser on Tuesday, September 25. The statement runs afoul of the public comments made by Federal Reserve Chairman Ben Bernanke who recently stated that the Federal Reserve intends to extend its accommodative credit stance (i.e. keep interest rates at historic lows) through the middle of 2015 – at least. In providing the Federal Reserve rationale behind the extension, Bernanke cited a concern with future economic growth without improvements in the labor market. A correlation between job growth and economic growth certainly appears to be evident as economic growth has been sluggish, as have gains in job creations, during this recovery from the “Great Recession.” ... Read More

  • This Presidential Election’s Potential Impact on the Markets

    With the national political party conventions now upon us (Ex. the Republicans are kicking-off their weather delayed national convention in Tampa, FL today), a great deal of media, and investor, attention has turned to following the daily polling trends to try and gain a sense of whom will likely occupy the Oval Office for the next four years. The challenger, Republican Mitt Romney, is running in a virtual dead heat against incumbent, Democrat President Barack Obama at the moment based on a variety of polls that we have observed ... Read More

  • Will this now be a Housing-led Recovery?

    The residential real estate market appears to have been one of the few encouraging areas within the U.S. economy during the 2nd quarter. While we observed many positive reports with respect to existing home sale prices, pending home sales, inventory and initial building permits, we still believe that it will take several years for the housing market to fully recover and work through the entire excess inventory that remains in the system. It is also very likely that pre-recession housing values may indeed prove to be the peak for many areas of the country for years to come. Regardless, the next leg of this economic recovery cycle may very well be led by the housing market ... Read More

  • It’s all Greek to me….. and the Markets

    The Greek people went to the polls this past Sunday, and the winner was the pro-Euro New Democracy party—beating out such political foes as the radical, anti-bailout Syriza party, which campaigned on a platform of rejecting Europe’s austerity-led conditions for bailout assistance, and the pro-bailout, Socialist PASOK party. At first glance, this seemed like good news for Greece, and Europe overall, since an unprecedented exit by Greece from the Euro could have led to further turmoil in the European credit markets over fears that other countries (Ex. Spain and Italy) might follow suit. As a result, most markets gained overseas initially but later cooled once U.S. markets opened and investors had more time to digest the likely short term impact of the election results ... Read More

Get Updates: