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  • Yellen Reiterates Stance Ahead of Holiday Weekend


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    Yellen Reiterates Stance Ahead of Holiday Weekend

    U.S. Markets posted another week of modest, yet positive, returns as traders waited for a speech Friday from Fed Chair Janet Yellen. Speaking at the Providence Chamber of Commerce, the Fed Chair stayed consistent with her message of anticipating an initial rate hike this year while ensuring the markets that the pace of subsequent hikes would be both gradual and data dependent. Specifically, Yellen offered the following perspective, “If conditions develop as my colleagues and I expect, then the FOMC’s objectives of maximum employment and price stability would best be achieved by proceeding cautiously, which I expect would mean that it will be several years before the federal funds rate would be back to its normal, longer-run level (full speech here).” A normal, longer run Fed Funds Rate, according to the latest FOMC projections which were released in March, suggest a range somewhere between 3.5% and 4.0%.

    To reiterate, Yellen’s speech on Friday was very much consistent with her previous comments regarding her assessment of the economy and future interest rate hikes. So, while we believe that monetary policy headlines will continue to influence market performance over the short term, the reality is that the U.S. is in a low interest rate, low growth environment that appears to be sticking around for the foreseeable future. Unfortunately, far too many individuals read into these headlines and make short term decisions while attempting to achieve a longer term goal. Rather than “collect” securities based on the latest headlines, investors should make their strategic portfolio decisions based on their understanding of the environment they are likely to face over the intermediate to long term time horizon.

    Given the current state of the U.S. economy, investors looking for income, growth or a combination of both need to be more creative, in our view, with how they invest their dollars and allocate their existing funds. Certain alternative investment strategies, international markets and specific industries within the U.S. equity market appear poised to deliver risk adjusted return potential. We, at Hennion and Walsh, are incorporating these types of investments into our portfolio construction process in order to provide our clients with a portfolio that is better equipped to weather market volatility while remaining positioned to help achieve longer term growth. If you would like to learn more about our current investment strategies or would like us to review your own current portfolio holdings, please speak with your Hennion and Walsh Financial Advisor a member of the Hennion and Walsh Asset Management team.

    Sources: Equity Market, Fixed Income and REIT returns from JP Morgan as of 5/22/15. Rates and Economic Calendar Data from Bloomberg as of 5/26/15.

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    Disclosures: Past performance does not guarantee future results. We have taken this information from sources that we believe to be reliable and accurate. Hennion and Walsh cannot guarantee the accuracy of said information and cannot be held liable.

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