April 11, 2016
Dear Friends, Falling oil prices, trouble in China and fears of a global recession hit markets hard at the beginning of the year. We also saw a significant selloff in both domestic and foreign stocks in January. Since then, anxiety has waned and markets have mostly recovered, ending the quarter relatively flat. What's ahead for the markets? Economists and strategists we follow believe we are still in the midst of a long, shallow economic recovery and do not see a recession on the near-term horizon. However, return expectations are muted versus what we experienced in the years immediately following the great recession. We also expect even more volatility as we move closer to the peaks of the business and credit cycles and as the Federal Reserve attempts to normalize monetary policy. There are potential bright spots for investors. The American consumer appears healthy. Unemployment is low, residential real estate is good and lower gas prices puts more money in the pockets of consumers. Please be assured that we will continue to monitor the markets and our portfolios for investment opportunities across all geographies and all asset classes. Please let us know if you have any questions or if we can help you in any way. Matt & Andrew
Key Dates/Data Releases
4/1: Employment situation, ISM Manufacturing Index
4/5: International trade
4/8: Treasury budget
4/13: Retail sales, Producer Price Index
4/14: Consumer Price Index
4/15: Industrial production
4/19: Housing starts
4/20: Existing home sales
4/25: New home sales
4/26: Durable goods orders GDP
4/27: International trade in goods, FOMC meeting
4/29: Personal income and outlays
Quarterly Market Review: January-March 2016
The first quarter of 2016 started with a whimper as equities suffered several weeks of losses. However, as March came to a close, several of the indexes listed here recovered enough to finish the quarter in positive territory. The Dow picked up 260 points to close 1.49% ahead of its fourth-quarter closing value. The S&P 500 also finished the first quarter slightly better than it ended the previous quarter. However, the NASDAQ, Russell 2000, and Global Dow each ended the quarter behind their respective December 2015 closing values. March proved to be a good month for equities, as each of the indexes listed here yielded positive returns, led by the Dow and the Russell 2000, each of which gained more than 7.0% over February.
The debt side of the ledger also produced a mixed bag of revolving returns as 10-year Treasury yields fell to their lowest end-of-quarter levels since the fourth quarter of 2012. Yields on long-term Treasuries opened the quarter at around 2.25%, but ended it at 1.79% as money moved in, driving prices higher and yields lower.
Gold was a winner in the first quarter, moving from $1,060 at the beginning of the quarter to over $1,233 by March 31--a gain of over 16% for the quarter. Crude oil (WTI), on the other hand, began the quarter selling at around $37 per barrel, then fell to under $30 per barrel by mid-January, only to rise to close to $40 per barrel by mid-March, ultimately closing the quarter at $37.49 per barrel as of the 31st.
As of March 31
Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.
Economic trends may be more evident as information provided in April will shed more light on the economy and markets. Also, the FOMC meets again in April. when it will once again consider whether economic conditions warrant raising interest rates for the first time in 2016.
Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.
The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. The U.S. Dollar Index is a geometrically weighted index of the value of the U.S. dollar relative to six foreign currencies. Market indices listed are unmanaged and are not available for direct investment.
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Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2016.
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