The H Group Blog

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

Weekly Review - August 21, 2017

Guest Post - Monday, August 21, 2017

Summary

Economic data for the week was highlighted by mixed housing results but gains in retail sales, several strong readings from regional manufacturing surveys, and strong results for the index of leading economic indicators and jobless claims.

Global equity markets were mixed last week with U.S. stocks losing ground, and foreign stocks gaining slightly on net. Bonds were little changed along with minimal movement in interest rates, while emerging market bonds fared well. Commodities lost ground slightly with losses more concentrated in agriculture than in energy.

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Is LIBOR going away? By the way, what is it, anyway?

Guest Post - Monday, August 21, 2017

LIBOR stands for the London Interbank Offered Rate, and represents several averages of interest rates that large banks in London charge each other for short-term loans. Although it's referred to in the singular, it's a series of rates for different terms ranging from 1 day to 1 year. In that sense, it's similar in some respects in concept to the fed funds rate used by banks in lending to each other in the U.S., although the fed funds rate is a single rate as opposed to a variety of rates. Due to its long history, particularly 1-month and 3-month LIBOR have been used as 'base rates' for a variety of variable-rate global financial transactions, from floating rate bank loans to commercial debt to even home mortgages. In recent years, up to $350 trillion of global monies have been tied to LIBOR rates, making this significant from a financial industry perspective. Read Entire Article Here

Weekly Review - August 14, 2017

Guest Post - Monday, August 14, 2017

Summary

Economic data was highlighted by weakness in inflation, with the PPI and CPI both coming in lower than expected. On the labor side, the government JOLTs job openings index and claims continued to show strength, while labor cost and productivity growth remained sub-par.

Global equity markets fell last week, in line with most risk assets, due to escalating geopolitical tensions with North Korea. Government bonds, by contrast, in both the U.S. and developed foreign markets fared well that that safe haven-seeking environment, and outperformed corporates and emerging markets. Commodities lost a bit of ground on net as oil prices fell.

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Weekly Review - August 7, 2017

Guest Post - Monday, August 07, 2017

Summary

Economic data for the week was dominated by the employment situation report, which surprised on the upside. The ISM manufacturing and non-manufacturing indexes both declined, but remained solidly expansionary.

Equity markets gained globally, as did bonds to a certain degree with lower interest rates on the longer part of the yield curve. Commodities declined slightly, despite little net change in oil prices during the week. Overall, low volatility conditions in stock and bond markets continue.

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Weekly Review - July 31, 2017

Guest Post - Monday, July 31, 2017

Summary

In a busy week for economic data releases, the Fed meeting resulted in no action and GDP for Q2 came in largely as expected. Durable goods orders and consumer confidence metrics came in more positively than expected, while a variety of housing data came in weaker than expected.

Equity markets were generally flattish in the U.S. last week, while foreign equities continued their string of gains, helped at least in small part by a weaker U.S. dollar. Bonds were mixed but generally lower on the investment-grade side as interest rates rose. Commodities gained along with sharply higher oil prices to end the week.

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Weekly Review - July 24, 2017

Guest Post - Monday, July 24, 2017

Summary

Economic data for the week was mixed, with several regional manufacturing surveys showing weaker yet still expanding metrics, but strong housing starts and monthly index of broad leading indicators.

Equity markets gained globally, with emerging markets outperforming developed markets. Bonds also fared well, with interest rates declining worldwide amidst dovish central bank language and weaker inflation. Commodity indexes fell overall as oil prices declined a bit for the week, offset partially by a rise in gold.

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How is Social Security Doing?

Ron Kelemen - Tuesday, July 18, 2017

Every July the trustees of the Social Security Trust Funds for the Old-Age & Survivors and Disability Insurance (OASDI) release their annual report on the health and long-range outlook of Social Security. The projections are based on numerous actuarial assumptions, which you can find in their 2017 Trustees Report. (The ones in the figure below are their intermediate assumptions.) The good news is that more money is still coming into the funds than going out. Payments to beneficiaries come from these reserves, interest earnings, and payroll taxes. The reserves will be depleted by 2034, the same as projected last year. At that time, benefits can only be paid by incoming payroll taxes, projected to be 77% of what beneficiaries are scheduled to receive. That is if nothing is done between now and then. The report projects that increasing the payroll tax by 2.83% could extend the longevity of the trust fund to 2090 and beyond. But more likely, a combination of fixes could accomplish the same thing. So, ignore the scare rhetoric about Social Security going bankrupt. Beneficiaries will still get full benefits through 2034, then about 23% less after that. In our opinion, It's still a good deal. Read Entire Article Here

Weekly Review - July 17, 2017

Guest Post - Monday, July 17, 2017

Summary

Economic data for the week was highlighted by a decline in retail sales, consumer sentiment, job openings and year-over-year consumer inflation, while industrial production ticked higher. Investors were also reassured by Fed Chair Yellen's comments concerning a continued slow pace of monetary policy tightening.

Equities in the U.S. and many foreign markets experienced gains for the week, as global sentiment improved in a few areas. Bond prices rose upon interest rates falling globally. Commodity indexes rose on the heels of a weaker dollar and rebound in crude oil prices for the week.

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Weekly Review - July 10, 2017

Guest Post - Monday, July 10, 2017

Summary

Economic data for the holiday-abbreviated week was mixed, with stronger ISM and non-ISM index data, while the monthly employment situation report underwhelmed a bit in some respects.

Equity markets were mixed with the U.S. edging slightly higher, while foreign equities lagged across the board for the most part. Bonds lost ground in most sectors as interest rates again edged higher, with U.S. debt outperforming foreign. Commodities lost ground again due to continued weakness in energy prices.

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Weekly Review - July 3, 2017

Guest Post - Monday, July 03, 2017

Summary

Economic data for the week was led by weaker durable goods orders, pending home sales and jobless claims, while several consumer sentiment measures strengthened.

Equities were mixed for the week, with declines in the U.S. and foreign developed markets, while other groups were little changed. Investment-grade bonds suffered due to interest rates creeping higher. Commodities gained due to a rebound in the price of crude oil for the first time in weeks.

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