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 Investment Review/Outlook  Market Highlights Current Investment Outlook Stock Highlights
Investment Review/Outlook

Market Highlights

Economic

  • March consumer confidence fell to 127.7, after reaching an 18-year high of 130 in February
  • Retail sales rose 0.6% in March and auto sales dropped to 17.4 million units, above estimates
  • Non-farm payrolls in March were 102,000, below estimates of 188,000
  • Unemployment remained at 4.1%, with underemployment dropping to 8.0%
  • U.S. industrial production rose 0.5% in March, following a rise of 1.1% in February
  • Housing prices are up 5.8% on a year-over-year basis, with a decrease in supply to 3.6 months
  • New home construction numbers were 1.3 million in March, versus 1.29 million in February
  • Existing home sales rose to an annual rate of 5.5 million in February from 5.4 million in January
  • U.S. manufacturing fell, with March ISM at 59.3, below estimates
  • Personal income was up 0.4% and consumer spending was up 0.2% in February
  • GDP for Q4 was up 2.9%, above estimates of 2.5%, and is estimated to finish the year up 2.7%

Inflation

  • March core inflation was 2.1% for CPI and 2.7% for PPI on a year-over-year basis
  • Crude oil jumped above $60, due to seasonality, cold weather, and geopolitical risk
  • Deflation has been the worry for some time, but long term inflation remains concerning

Monetary Policy

  • The Fed has raised the Fed Funds rate to 1.75% with the Discount rate at 2.25%
  • The Fed is expected to raise rates four times in 2018 and three times in 2019
  • World Central Banks are still adding liquidity as the Fed begins quantitative tightening
  • The Federal Reserve is reducing its balance sheet by $30 billion a month

International

  • North Korea meets with Pompeo over Easter and President Trumps sets meeting for June
  • Worldwide debt has grown to $233 trillion, adding $68 trillion since 2008
  • The top seven Central Banks are starting to change course on monetary policy
  • President Trump bombs Syria with help from Britain and France

Interest Rates

  • Ten-year Treasury yields rose from a low of 2.46% to a recent 2.88%, with rate hikes to come
  • Libor, the inter-bank lending standard, is 2.35% and is set to be phased out by 2020
  • Mortgage rates rise again as the 30-year fixed rate jumps from 3.8% to 4.3%

Earnings

  • Reported corporate earnings are beating estimates 64% of the time and revenues are beating 62%
  • First quarter results are up 16% from a year ago as tax cuts and deregulation boost growth
  • Tax reform, the repatriation of $2 trillion, and regulatory reform will lift expectations for 2018

Market Outlook

  • S&P 500 and the Dow made new highs in January, before a correction of 10% hit markets
  • Market volatility increased during the first quarter, as wage inflation rose in February
  • Technology, Consumer Discretionary, and Financials were the best performing groups
  • The S&P 500 is trading at 16.3 times forward earnings, above its 25-year average

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