The H Group Blog

Investment and Financial Planning news from some of the best in the business.

Weekly Review - December 28, 2015

Guest Post - Monday, December 28, 2015

Summary

  • For a short Holiday week, quite a few economic data points were released, including flattish durable goods orders, mixed housing results but improved consumer sentiment.
  • Equity markets rallied during the week, with help from some improvement in energy prices. Domestic bonds were down on interest rates ticking upward a bit, while commodity prices benefited from oil inventory news and weakness in the dollar.
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Question of the Week - December 21, 2015

Guest Post - Monday, December 21, 2015

2016 (Part 1): How is the economic environment shaping up?

To some degree, more of the same, but perhaps some shifts are likely. Economic conditions continue to demonstrate signs of repair in the long aftermath of the financial crisis, and market valuations have normalized. Finally, the question has turned from when will interest rates start to rise, to how quickly and how dramatically.

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Weekly Review - December 21, 2015

Guest Post - Monday, December 21, 2015

Summary

  • The most significant piece of economic data for the week was the FOMC's decision to raise the fed funds rate for the first time in a decade, as overall conditions appeared stable enough to policymakers to withstand such a policy shift. In other news, several industrial indicators continued to show some weakness, inflation remained tempered and monthly housing stats came in stronger for the prior month.
  • Equity markets began strongly in advance of the FOMC meeting, but gave up gains by week's end. Interest rates ticked slightly higher, which brought down bond returns during the week. A trend of a strong dollar and low oil prices continued, which negatively affected commodity prices.
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Fed Note - December 16, 2015

Guest Post - Wednesday, December 16, 2015

The December meeting was again slated to be 'the one', as in the meeting where interest rate policy changed for the first time in a decade and almost exactly seven years after the fed funds rate was cut to just over zero. And it finally happened. The target fed funds rate has moved from 0.00-0.25% to 0.25-0.50%, so the equivalent of a quarter-percent move.

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Question of the Week - December 14, 2015

Guest Post - Monday, December 14, 2015

What’s going on with the high yield bond market?

The short answer: nothing we haven’t already known, but it’s reminder about how niche markets such as high yield work. For perspective’s sake, the market is just over $1 trillion in size, which is a fraction of the $70 tril. global equity market footprint, so conditions can get stranger here and more quickly.

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Weekly Review - December 14, 2015

Guest Post - Monday, December 14, 2015

Summary

  • Economic data for the week was led by a marginal showing in retail sales, a drop in consumer and business sentiment, as well as continued impacts of disinflationary impulses in import prices and PPI.
  • Global equity markets fell dramatically on the week with continued concern over the impact of falling crude oil prices. Bonds fared well during the week, as interest rates declined.
 Read Entire Article Here

Weekly Review - December 7, 2015

Guest Post - Monday, December 07, 2015

Summary

  • Economic data again showed some mixed results, with manufacturing (and some services results for that matter) coming in weaker than expected, while the monthly employment situation report for November came in strong. The labor report was seen as raising the chances for a Fed interest rate hike in December.
  • U.S. large cap stocks experienced a slightly positive week, while small caps and foreign equities lost ground—even despite a fall-off in the dollar which helped foreign returns. Interest rates ticked upward as chances of Fed action in Dec. remained high, but not dramatically so. Most commodity groups gained a few percent, except for crude oil, which saw declines yet again.
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Weekly Review - November 30, 2015

Guest Post - Monday, November 30, 2015

Summary

  • In a short holiday week, economic data was mixed, with durable goods and housing statistics generally higher, while consumer confidence indicators fell for the month.
  • Markets experienced a typical tame holiday week, with U.S. large-cap stocks coming in flat, small caps doing a bit better, and foreign stocks mixed. Bonds earned small gains with interest rates declining in the middle portion of the yield curve. Commodities were also flattish on net, with oil ending the week close to where it started, but gold continued its recent declines.
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Question of the week - November 30, 2015

Guest Post - Monday, November 30, 2015

Where are we at this stage of the economic recovery?

That is a more difficult question to answer than it first appears. Traditionally, we have thought of the business cycle in a formulaic way. The usual progression is: prior recession ends as negative sentiment troughs at unsustainably low levels; then, as prior imbalances and excesses are worked off, business activity finally picks up from these low/underutilized levels. As growth expands, employment and spending expand as well, in a snowball effect of positive momentum. Eventually, the cycle matures and the easy growth becomes more difficult to come by. At that point, you begin to see firms stretch for growth by adding leverage/debt and engaging in more speculative activities such as synergistic (at first), then less-well-planned M&A activity since there is lessened risk of doing so when the economy is moving in a positive direction. High levels of growth can mask a lot of missteps. But, at some point, these excesses grow too large and overwhelm the system, meaning fragility has expanded to the point where a there are much smaller buffers to defend against smaller and smaller shocks. A tipping point of stress occurs which snowballs in a negative direction, with credit contraction, job losses and slowing growth to the point of recession. This has been the pattern for centuries.

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Weekly Review - November 23, 2015

Guest Post - Monday, November 23, 2015

Summary

  • Economic data last week was generally sub-par, led by below-expected results in manufacturing, housing and industrial data; on the other hand, the index of leading economic indicators turned around with positive results.
  • Equity markets around the globe were sharply higher, with the U.S. leading the way with few specific catalysts but perhaps more Fed policy certainty. Bonds moved slightly higher domestically, while foreign debt results were mixed along with a stronger dollar. Non-oil commodities such as industrial metals and natural gas provided the volatility in that segment for the week, as crude oil traded within a fairly tight range.
 Read Entire Article Here

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