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

Market Highlights

Economic

  • June consumer confidence rose to 127.3, as the economy reopening takes hold
  • Retail sales rose 1.1% in June, with auto sales up to 15.3 million units, below estimates
  • Non-farm payrolls in June increased 850,000 better than an expected 720,000
  • Unemployment rose to 5.9%, with underemployment falling to 9.8%
  • U.S. industrial production fell 0.4%, following a rise of 0.8% in May
  • Housing prices rose 14% on a year-over-year basis, with an increase in supply to 6 months
  • New home construction numbers were 1.64 million in June, down slightly
  • Existing home sales were strong at 5.86 million in June, as demand continues to grow
  • U.S. manufacturing expansion is picking up, with June ISM at 60, below estimates
  • Personal income was down -2% and consumer spending was flat in May
  • GDP was up 6.4% in Q1, with demand high, and should grow 7% in 2021

Inflation

  • June core inflation was 5.4% for CPI and 7.3% for PPI on a year-over-year basis
  • Crude oil rose to $71.73, with demand coming back as the economy recovers
  • Inflation is moving higher and may prove to be more than transitory

Monetary Policy

  • The Fed cut the Fed Funds rate to 0.0% and kept the Discount rate at 0.25%
  • The Fed changed its inflation target to an average of 2% to avoid deflation
  • ECB has changed its inflation target to an average rate similar to the Fed
  • The Fed may be forced to taper its $120 billion in bond purchases as inflation rises

International

  • The Coronavirus has killed more than 4 million people with 200 million infected
  • Worldwide debt has grown to some $281 trillion, according to the Institute of International Finance
  • The Tokyo 2020 Olympics began with no fans and some outbreaks of COVID
  • President Biden keeps international travel restrictions in place as Delta variant accelerates

Interest Rates

  • Ten-year Treasury yields fell from 1.73% to 1.18% and now stand at 1.23%
  • Libor, the inter-bank lending standard, is 0.12%, and is set to be phased out in 2021
  • Mortgage rates rose slightly, as the 30-year fixed rate increased to 2.85%
  • Yields on $18 trillion of worldwide debt is negative, with Swiss 10yr -0.39%, German 10yr -0.42%

Earnings

  • Reported corporate earnings are beating estimates 86% of the time and revenues are beating 88%
  • Second quarter results are up 56% from a year ago, making it the highest growth rate since 2010
  • Markets are projecting positive year-over-year growth in 2021 and beyond

Market Outlook

  • S&P 500 rose 15.2%, setting new records, and we believe the secular Bull Market will continue
  • Market volatility continues with equities shifting back and forth form growth to value
  • Real Estate, Technology and Energy were the best performing groups as the markets grind higher
  • The S&P 500 is trading at 21.5 times forward earnings, above its 25-year average

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