Monthly Economic Update April 2015
April was a tough month for those following last yearâ€™s winners and popularly held market bets of 2015. Expectations for lower interest rates, a stronger dollar, and weaker oil prices were mistaken. Specifically, the 10 year U.S. Treasury yield rose over 20 basis points from the early April low, the dollar gave up two months of gains, and oil prices rose 16% in April, adding to gains in the latter half of March. Rounding out what could only be surprises for many, commodities and emerging markets, both previously left for dead, rose by mid single digits and real estate, heretofore a market darling, tanked. Investors that adhered to a broadly diversified global portfolio were rewarded.
As for economic data, softness in the U.S. was surprisingly widespread. First quarter GDP growth flat-lined, manufacturing growth slowed in March for the fifth month in a row, and capacity utilization is now down to the lowest level in over a year. Moreover, payroll gains were weak in March and a rapid falloff in consumer confidence has been showing up in tepid retail sales this year. First quarter weakness, a recurring theme in recent years, has proven short-lived in the past. This year may be no different considering West Coast port disruptions and harsh winter weather likely account for much of the weakness observed. The Federal Reserve acknowledged as much in their recent meeting, suggesting transitory factors were responsible for the cooling in economic activity.
Aprilâ€™s Economic Releases
This commentary was written by Robert W. Lamberti, CFA, Vice President of Investments and a Principal of Summit Financial Resources, Inc. Source of performance: MorningstarÂ®. Indices are unmanaged and cannot be invested into directly. The investment and market data contained in this newsletter is not an offer to sell or purchase any security or commodity. Standard & Poorâ€™s 500 Index (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The MSCI EAFE and Emerging Markets Indexes were created by Morgan Stanley Capital International (MSCI) and designed to measure equity market performance in global developed and emerging markets, respectively. The Barclays Aggregate Bond Index is a market capitalization-weighted index comprised of government securities, mortgage-backed securities, asset-backed securities, corporate securities, and a small number of foreign bonds traded in the U.S. It is used to represent the universe of bonds in the domestic market. REITs, Real Estate Investment Trusts, are securities that invest in real estate directly, either through properties or mortgages. REITs receive special tax considerations and typically offer investors high yields, however, may have liquidity constraints. Past performance does not guarantee future results. Information throughout this Newsletter, whether stock quotes, charts, articles, or any other statement or statements regarding markets or other financial information, are obtained from sources which we, and our suppliers believe to be reliable, but we do not warrant or guarantee the timeliness or accuracy of this information. Neither we nor our information providers shall be liable for any errors or inaccuracies, regardless of cause, or the lack of timeliness of, or for any delay or interruption in the transmission thereof to the reader. To unsubscribe from this investment newsletter please reply to this email with â€œunsubscribeâ€ in the subject. Opinions expressed are subject to change without notice and are not intended as investment advice or a guarantee of future performance. Consult your financial professional before making any investment decision. Securities and Investment Advisory Services offered through Summit Equities, Inc. Member FINRA/SIPC, and Financial Planning Services offered through Summit Equities, Inc.â€™s affiliate Summit Financial Resources, Inc. 4 Campus Drive, Parsippany, NJ 07054. Tel. 973-285-3600, Fax: 973-285-3666.