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january 2016 monthly outlook
"2015 has come to a close and the U.S. economy seems to have delivered 2% growth for another year, give or take a few tenths of a percent. The labor market continues to exhibit strength with monthly payrolls in the 200,000-plus range. Additionally, equity prices are near all-time highs, while Treasury yields are close to multi-decade lows. So, why are investors so dour about the future?"
December 2015 Monthly Outlook
"With a robust 200,000-plus payroll gain and upward revisions to October readings, the November payroll numbers solidify the Federal Reserve’s precondition for “liftoff”. Unlike late summer, when the currency, credit, interest rate and equity markets had violent and negative market reactions leading up to the Fed’s September rate decision (which resulted in no change), the well-telegraphed December rate meeting (likely a rate increase) has seen markets rally on the prospect of a hike."
NOVEMBER 2015 MONTHLY OUTLOOK
Recent data from the Institute for Supply Management’s (ISM’s) manufacturing and nonmanufacturing indexes show that the two indexes are moving in opposite directions. This indicates that the U.S. economy’s service sector is in good shape. The trade-sensitive manufacturing index is weighed down by a stronger U.S. dollar, weak exports and soft markets. The nonmanufacturing index,
measuring service-related business activities (generally performed domestically), reflects strength.
OCTOBER 2015 MONTHLY OUTLOOK
"The domestic side of the U.S. economy seems quite firm when one looks at new car and truck sales, and new and existing home sales. Both measures reached cycle highs last month, but housing market data shows a sales rate still more than 50% below the 2007 market peak. The international trade side of the equation is another matter, with the trade-weighted U.S. dollar having increased more than 20% over the past three years. Regrettably, most of the increase occurred over the past 15 months. Export orders are down year over year, and manufacturing purchasing manager indexes are near negative territory."
SEPTEMBER 2015 MONTHLY OUTLOOK
"The U.S. labor market continues to improve at its most basic level, but less so from a more comprehensive view. The U3 unemployment rate, the official number reported by the U.S. Bureau of Labor Statistics, was 5.1% in August, down from 5.3% in July. It hit a high of about 10% during the worst part of the financial crisis."
August 2015 Monthly Outlook
The Bureau of Economic Analysis (BEA) recently updated its seasonal adjustment factors and historical economic data as it relates to gross domestic product (GDP). The department felt it was not capturing proper seasonal inputs over the winter months, as the past two years reflected negative GDP on the first release. This resulted in first quarter 2015 GDP being revised from a 0.2% decline to a positive 0.6%. However, economic activity that is added to one quarter must be taken back from other quarters, all else being equal.
July 2015 Monthly Outlook
The U.S. economy’s poor first-quarter initial gross domestic product reading of -0.7% was revised upward to -0.2% (on its third revision) as personal consumption expenditures and private domestic investments exceeded initial readings. Estimates for second-quarter GDP rose on this news and are within the 2% to 3% range, which would be a nice bump from a first quarter dragged down by bad weather and a port strike. The Federal Reserve forecasts approximately 3.0% growth for the economy during the second half of 2015.
June 2015 MOnthly OUtlook
"Whether the U.S. economy: bouncing back strongly after a weather- and port-stoppage-induced first-quarter contraction, or plodding forward at a more measured pace. Two factors suggest a more subdued second-quarter economic response compared with last year: 1) the plunge in oil prices and the massive hit to energy-related investment, and 2) a much stronger U.S. dollar versus our major trading partners. These two developments will likely restrain the forcefulness of the widely anticipated second quarter economic rebound."
may 2015 monthly outlook
"The economy was forecast to grow nearly 3% annually over the past few years, but it came up nearly 1% short each time. 2015 will be no different. In fact, just when the Fed is on the cusp of raising short-term interest rates, the economic surprise index (a measure of net positive and negative economic surprises) is close to its lowest level since the 2009 economic bottom."
APRIL 2015 MONTHLY OUTLOOK
"The recently released March payroll report fell short of economists’ expectations. Not only was the monthly increase in jobs well below expectations and the lowest since December 2013, but there were significant downward revisions to the previous two months. Market participants and economists will watch closely to determine whether the softness was a one-month aberration or whether it foreshadows a more substantial slowing in the labor market."
March 2015 monthly outlook
"Currency wars are a zero sum game: one party wins at the expense of another. However, the free movement of foreign exchange rates serves a useful economic purpose when done for the right reasons. Many investors in America are well versed in current stock-index-related trading levels and have a pretty good grip on available yields from Treasury obligations. Dollar/yen, euro/yen or dollar/ruble trading levels are slightly more esoteric. Here in the U.S., we use the world’s reserve currency, and that circumstance lessens the need for a more vigorous understanding."
FEBRUARY 2015 MONTHLY OUTLOOK
"Quantitative easing, negative deposit rates and currency debasement are all the rage in today’s financial markets. When an economy needs additional stimulus and a nation’s short-term interest rates are already at zero, new tools are needed to achieve policy directives."
JANUARY 2015 MONTHLY OUTLOOK
"One’s view of the U.S. economy differs significantly depending upon the amount of weight given to purely domestic versus global market inputs. Consistent payroll growth, unemployment below 6.0%, manufacturing and service industry surveys near business cycle highs and a halving of oil prices are decidedly positive for American consumers and business owners. On the other hand, recessions in Russia, Venezuela, Nigeria, Brazil, Italy, Japan and the Middle East, and possibly other major European countries, is an absolute headwind."
December 2014 Monthly Outlook
"2014 began with expectations for higher yields, better growth and decent stock market performance. It ends with lower yields, weak growth and higher stock prices. One out of three isn’t too bad. Again, some of the major market convictions heading into a new year have been dumped into the trash heap of well-intentioned, but incorrect, outcomes. Who would have thought that the price of oil would fall more than $40 per barrel given the unrest in the Middle East? Or guessed that Spanish 10-year government bond yields would plunge 2.30%, to yield about 1.88%? Not us."
november 2014 monthly outlook
"One man’s trash is another man’s treasure. That could be a euphemism for dueling central bank monetary policy initiatives that have occurred very recently."
October 2014 monthly outlook
"Almost six years of 0% interest rates are beginning to awaken the economic giant known as the United States — resulting in good and bad news. Unemployment is falling, financial markets are buoyant, consumer confidence is improving and GDP growth is steady. The downside is less accommodation from the nation’s central bank, some excesses in select asset classes and the fact that most of the world’s other economies are headed in the opposite direction."
september 2014 monthly outlook
"By many measures, the economy continued to improve in August, despite geopolitical and economic turmoil in many places around the globe. As a whole, the data increases our confidence that the second quarter’s strength was not just make-up for weather-induced weakness in the first quarter, but rather an indication that the economy may have finally attained enough momentum to enable it to grow more steadily, albeit still modestly."
August 2014 monthly outlook
"After contracting 2.1% during the first quarter of the year, the belief that the economy clearly improved in the second was confirmed by the recent Bureau of Economic Analysis release detailing a strong 4.0% expansion of the U.S. economy. A question remains whether this strong growth is a harbinger of future growth or just a rebound from weather-induced winter weakness."
July 2014 monthly outlook
"Federal Reserve Chairperson Janet Yellen may be the most dovish central banker in the post-World War II era. She hasn’t been at her post for six months yet, but signs point to a progressive approach to easy monetary policy. When a Fed chair dismisses creeping inflation data as “noise” and raises concerns about pockets of credit excess due to an extended zero interest rate policy and looks the other way, things can get tricky. A recent example of this behavior is the much-debated topic of economic instability generated by market stability."
June 2014 Monthly Outlook
"Money for Nothing” by the British rock band Dire Straits was a popular song back in 1985. That title and band name pretty much sum up the recent European Central Bank (ECB) monetary policy moves under President Mario Draghi. Charging banks a negative deposit rate of -0.10% for the luxury of holding excess reserves at the ECB is unprecedented in major developed economies. By doing so, the ECB has clearly shown the dire straits it faces in fighting deflation in Europe and herding the political cats who refuse to implement needed structural reforms within the European Union."
mAY 2014 MONTHLY OUTLOOK
APRIL 2014 MONTHLY OUTLOOK
March 2014 Monthly Outlook
"The first revision of growth domestic product (GDP) for the fourth quarter of 2013 showed the economy grew at a slower annual rate of 2.4% versus the originally reported 3.2%. Contributing factors were consumers not spending as much, weaker overseas demand, and a negative impact from the bad winter weather."
February 2014 monthly outlook
"The economy experienced its strongest second-half growth since 2003, as real GDP rose in the fourth quarter at a 3.2% annual rate, which brought its growth for the six months to 3.7%. Stronger spending by consumers and businesses, as well as improved exports, were the positives in the quarter. These positives helped offset declines tied to housing and the federal government."
JANUARY 2014 MONTHLY OUTLOOK
"The final revision for third-quarter GDP showed improved consumer spending as growth was revised to a 4.1% annual rate. Economic figures released during the fourth quarter continued to be more positive and showed an economy working through many challenges and concerns."
december 2013 monthly outlook
"Driven by increased inventory investment and capital expenditure spending, the economy grew at a revised 3.8% annual rate in the third quarter, up from the original estimate of 2.8%. The negative factor: little change in final demand."
November 2013 Monthly Outlook
"...Perhaps most important, especially heading into the holiday selling season, was the shutdown’s impact on consumer confidence. In October, the Conference Board’s Consumer Confidence Index experienced its greatest decline since August 2011. Given that there was no final agreement on the budget or the debt ceiling, we may have to go through the same scenario early next year and hear all of the rhetoric on such between now and then."
OCTOBER 2013 MONTHLY OUTLOOK
"The economy showed signs of slowing during the latter part of the third quarter. The headwinds of a slower labor market, combined with rhetoric surrounding the debt ceiling crisis and the potential, and then realized, government shutdown, appear to have affected the consumer."
September 2013 Monthly Outlook
"...The economy remains in a positive growth mode, but the level of growth appears to have slowed a bit as consumers pull back in reaction to a slowing labor market and concern about the situation in the Middle East. The recent increase in interest rates may also have a dampening effect on the economy. Any slowdown now should lead to more positives as we approach the new year."
AUGUST 2013 MONTHLY OUTLOOK
"Although growth in consumer spending slowed in the quarter, there was a strong increase in exports, and state and local government spending also increased. Consumers appeared to hold back on some spending at the end of the quarter and may still feel the impact of higher taxes and continued weak wage growth."
July 2013 Monthly outlook
June 2013 Monthly Outlook
"The economy continues to show positive signs, as well as signs that growth is struggling. The first revision of annualized GDP growth for the first quarter was 2.4%, down slightly from the originally reported 2.5%. Further weakness in government spending offset the additional positives in consumer and consumer-related areas."
MAY 2013 MONTHLY OUTLOOK
April 2013 Monthly Outlook
"The U.S. economy continued to grow in the first quarter, but it appeared to have slowed in March after a good start in January and February. Although the ISM manufacturing and non-manufacturing indexes remain above the magical 50 level, indicating growth, they both declined in March. The non-manufacturing index, the more important of the two because it represents more than 80% of the economy, fell to its slowest pace in seven months."
MARCH 2013 MONTHLY OUTLOOK
"The two biggest negatives for the quarter were a reduction in inventories and the decline in spending at all levels of government. The consumer, also expected to be a drag on growth due to the long-anticipated “fiscal cliff” and potential tax increases, actually spent more in the quarter than in the previous quarter."
FEBRUARY 2013 MONTHLY OUTLOOK
"A big part of the decline [in gross domestic product] can be traced to a sharp drop in government spending prior to the election and in the face of the “fiscal cliff.”
january 2013 monthly outlook
"The economy begins 2013 having moved past the “fiscal cliff” and is in relatively good shape. The final reading for third-quarter gross domestic product showed the economy did better than thought, as growth was revised higher to 3.1%. The fourth quarter most likely was a bit slower due in large part to the problems in Washington and their impact on confidence."
december 2012 monthly outlook
NOVEMBER 2012 MONTHLY OUTLOOK
"The consumer appears to be feeling better about the economy and where things are headed, even though the rhetoric from the presidential campaigns paints a very conflicting picture."
OCTOBER 2012 MONTHLY OUTLOOK
"The economy started to show some signs of life in September, as there were positives reported in corporate America and with the consumer. The Institute for Supply Management (ISM) factory index rose above the important 50 level following three months of contractionary readings. This was a welcome reading as it contrasts with weakness in other parts of the world."
SEPTEMBER 2012 MONTHLY OUTLOOK
"Employment gains in early August that beat forecasts ushered in a sharp rally in equity prices, and the market held the gains for the rest of the month. On a price-only basis, the S&P 500 was up 1.98% for the month, but the real action was in the “riskier” areas of the market."
August 2012 monthly outlook
"The pace of economic growth slowed further in the second quarter as real gross domestic product grew at an annual rate of only 1.5%...The decline in sales has a lot to do with the consumer and consumer confidence, which have been weak in large part as a result of the continued weakness in the labor market."
July 2012 monthly outlook
"The economy has shown further signs of slowing as it continues to face headwinds, both domestic and foreign."
JUNE 2012 MONTHLY OUTLOOK
"The U.S. economy continues to grow, but there are more signs that growth is slowing. Real gross domestic product for the first quarter was revised slightly lower to 1.9% as a result of a negative revision to inventories and an increase in imports."
May 2012 monthly outlook
"Economic growth slowed slightly in the first quarter as real gross domestic product rose at an annual rate of 2.2%, down from the fourth quarter's 3.0%. A big part of the weakness was another decline in government spending. Consumer spending, which accounts for around 70% of economic activity, rose 2.9% in the first quarter - the fastest pace in more than a year."
april 2012 monthly outlook
"Economic growth continued during the first quarter, but there were signs late in the quarter that growth was slowing."
March 2012 monthly outlook
"In yet another sign that the worst of the economy may be behind us, at least in the near term, real gross domestic product for the fourth quarter of 2011 was revised up slightly to an annual growth rate of 3.0%. Continued declines in federal, state and local government expenditures during the quarter were offset by spending increases in commercial construction, services and by consumers."
february 2012 monthly outlook
"The economy expanded at a 2.8% annual rate in the fourth quarter, a bit slower than expected, but still the fastest rate of growth since the second quarter of 2010. The majority of the growth was attributed to an increase in inventories, which could be a negative for future quarters. The manufacturing sector continues to be a positive for the economy as evidenced by another slight rise in January's Institute for Supply Management manufacturing index."
Read more of CapitalMark's Monthly Outlook as of February 2012 (PDF document).
january 2012 monthly outlook
"The U.S. economy continues to show signs of growth and recovery, though figures don't indicate that economic growth is picking up substantially. Both the Institute for Supply Management (ISM) manufacturing and non-manufacturing indexes have risen slightly in recent months and are above the milestone 50 level that separates growth from contraction."
Read more of CapitalMark's Monthly Outlook as of January 2012 (PDF document).
December 2011 monthly outlook
"The first revision for real gross domestic product growth in the third quarter of 2011 shows growth slowed slightly from the original 2.5% estimate to 2.0%. The principal reason for the reduction was a higher-than-estimated decline in inventories."
Read more of CapitalMark's Monthly Outlook as of December 2011 (PDF document).
NOVEMBER 2011 MONTHLY OUTLOOK
"The economy grew at a 2.5% annual rate in the third quarter, a relatively strong improvement in growth over the first two quarters as consumers and businesses boosted spending."
Read more of CapitalMark's Monthly Outlook as of November 2011 (PDF document).
OCTOBER 2011 MONTHLY OUTLOOK
"The U.S. economy continues to struggle to find some positives in a period of high unemployment, a weak housing market and additional financial issues with various countries in Europe. The impact on overall sentiment of these concerns has perhaps become the biggest impediment to sustained economic improvement."
Read more of CapitalMark's Monthly Outlook as of October 2011 (PDF document).
September 2011 monthly outlook
"The economy has been exhibiting signs of further slowing following the second quarter's revised growth rate of only 1.0%. The labor market remains in a tough place as additional government jobs are lost and the private sector has little or no incentive to hire new workers."
Read more of CapitalMark's Monthly Outlook as of September 2011 (PDF document).
August 2011 Monthly Outlook
"There is a concern that slower growth is leading the economy into another recession. We do not see that risk as likely at this point for three reasons..."
Read more of CapitalMark's Monthly Outlook as of August 2011 (PDF document).
July 2011 Monthly Outlook
"Economic growth has suffered recently by factors that appear to be temporary in nature. These factors include higher energy and food prices and supply disruptions caused by the disasters in Japan. Manufacturing has been affected, but the more significant issue is the effect of higher prices on consumer spending. Although consumers do not appear to be panicked as prices have risen, spending on discretionary items has been reduced."
Read more of CapitalMark's Monthly Outlook as of July 2011 (PDF document).
June 2011 monthly outlook
"The economy is showing additional signs of slowing down as the pressures of elevated energy and food prices impact various segments. The consumer seems to be the hardest hit as higher costs, combined with low wage growth and soft housing values, have reduced the ability to spend on other items. As the consumer reduces discretionary spending, the manufacturing side of the economy is starting to feel the impact."
Read more of CapitalMark's Monthly Outlook as of June 2011 (PDF document).
May 2011 Monthly Outlook
"The economy grew at a reduced rate of 1.8% in the first quarter of 2011 compared with the fourth quarter's growth of 3.1%. The slower growth was partly the result of defense spending cuts and harsh winter weather."
Read more of CapitalMark's Monthly Outlook as of May 2011 (PDF document).
April 2011 Monthly Outlook
“The economy continues to experience some ups and downs, though there seem to be more positives than negatives.”
Read more of CapitalMark’s Monthly Outlook as of April 2011 (PDF document).