Monthly Economic Update July 2015


July Summary
Challenges in Puerto Rico, Greece, and China remained contained in July, and capital markets delivered reasonable returns. The exceptions were emerging markets and commodities. Both categories were off materially on fears of slower growth in China. Dollar strength, most particularly against emerging market currencies, also weighed on commodities and emerging market returns.

Domestic economic releases ranged from benign to positive in July. The labor market continued to improve, with the unemployment rate hitting a new post-crisis low. Payroll growth was also favorable and weekly jobless claims hit the lowest level since 1973. Considering today’s labor force is 80% larger than that of the early 70s, this low is quite an achievement. The housing market continued to improve, with existing home sales reaching an eight year high. Year-over-year price gains have also been stable in the 4 – 5% range for about a year now.

Despite a reasonably positive backdrop, two areas bear watching. First, consumer confidence has tailed off since hitting a high in January, and retail sales growth has been choppy in recent months. Accounting for 68% of total GDP, the consumer is critical to the U.S. economy, and these trends are a concern. Second, capacity utilization has dropped rather dramatically in recent quarters. Such a decline is unusual at this point in the economic cycle and certainly not ideal as the Federal Reserve edges closer to an interest rate hike. On that note, most continue to believe the Fed will move in September.

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July’s Economic Releases

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Market Returns

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Disclaimers
This commentary was written by Robert W. Lamberti, CFA, Vice President of Investments and a Principal of Summit Financial Resources, Inc. Source of performance: Morningstar®. 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 & Poor’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 “unsubscribe” 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.’s affiliate Summit Financial Resources, Inc. 4 Campus Drive, Parsippany, NJ 07054. Tel. 973-285-3600, Fax: 973-285-3666.

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