Update Following Government Shutdown

The situation in Washington is fluid and something we continue to monitor closely. While it is difficult to speculate on the outcome surrounding the US debt ceiling debate, it appears that the lines of communication between Republicans and Democrats are beginning to open.  US Government uncertainty is likely to remain elevated given the “kick-the-can” nature of the budget deal into early next year. This fiscal uncertainty further supports ongoing easy monetary policy, particularly given the dovish leanings of Janet Yellen, the presumptive incoming Fed chairman. In contrast to the United States, Europe has been calm and economies are slowly improving. We remain hopeful that Japan will be successful in stimulating their economy, although policy missteps are quite possible; while China’s growth has acceleration potential in the short term but we continue to have longer-term concerns. Equities pulled back off their highs and then rallied last week, while the US fixed income market has stayed quite calm, although there was some volatility in the short-term T-Bill market. Looking back at the August 2011 debt ceiling fight, both confidence and the economy Read on! →

Update from The Federal Reserve – Wed. September 18, 2013

Wed. September 18, 2013 Due to an uneven economic climate, Federal Reserve officials decided Wednesday to hold off on discontinuing their easy money policy for the time being. Below is an excerpt from the Fed’s Monetary Policy Press Release detailing the reasons behind Wednesday’s decision. To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens. In particular, the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee’s 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored. In determining how long to maintain a highly accommodative stance of Read on! →

Market-View 2nd Quarter 2013

After some hair-raising summers over the past several years, calm, almost boring, trading has settled in on Wall Street – at least for the time being.  2nd Quarter 2013 earnings season has passed its peak and results have largely been better than expected on the bottom line (earnings), while top-line results (revenues) have been less impressive, but good enough for the drifting stock market to maintain an upward bias. Perhaps the best takeaway has been the positive view of the domestic side of the ledger, while international results have largely disappointed. US Economic Outlook Mixed economic data has been good enough to help corporate earnings, yet weak enough to prevent the Fed from acting aggressively.  We have had a domestic bias for some time now, and we believe the US continues to be an attractive place for investors with sustainable slow GDP growth, low interest rates and inflation, and improving unemployment.  Although the gains in equities seen in the first half of the year shouldn’t be expected in the second half, we remain positive on the potential for further upside. Read on! →