As with every new year, we approach 2014 assessing whether it will be a green year for stocks (less volatile with a -1 standard deviation or better) or a red year for stocks (more volatile with a -2 or -3 standard deviation event). For 2014, although we will likely see the end of Quantitative Easing (monthly Fed bond buying) in the U.S., the global economic and policy environment will remain conducive for further gains in stock prices. For the first time since the Great Recession of 2008, the global economy should show signs of synchronized growth among the U.S., China, Japan, and Europe. This economic expansion should strengthen as the year progresses and prove to be sustainable. Therefore, we believe 2014 will be another green year for most risk-based assets.
Fourth Quarter 2013 Financial Market Commentary
The Beginning of a Return to Normalcy
During the fourth quarter U.S. stock-market indices continued their move into record territory with the S&P 500 Index capping its best yearly gain since 1997 while the yield of the 10 year U.S. Treasury Note reached a two year high of 3.03%. U.S. stocks underwent the broadest rally ever as the economy showed signs of gradual improvement while the rising tide of Federal Reserve (Fed) bond buying lifted all ships.
In a year full of apparent headwinds...
The Federal Budget Deficit and Continuing To Kick the Can Down the Road
October 21, 2013
Just after midnight on October 17th, President Obama signed into law a measure to extend the nation’s
borrowing authority into early 2014 and end the government shutdown. The deal, which avoided a
default of the world’s biggest economy and means that furloughed federal workers can return to their
jobs for the first time since September 30th, funds the government at Republican-backed spending
levels through Jan. 15, 2014, and suspends the debt limit through Feb. 7. This deal appears to be
nothing more than an exercise...
Third Quarter 2013 Financial Market Commentary
All eyes are on Washington D.C.
During the third quarter U.S. stock-market indices continued their move into record territory after rebounding from
an August sell-off sparked by worries about the outlook for Federal Reserve (Fed) policy. The S&P 500 stock index gained 4.7%. Despite weakening in the final days of September amid political bickering in Washington D.C. over the federal budget and debt ceiling, the S&P 500 finished just 2% below its all-time high reached on September 18th. The index is up only 0.7% from where it stood on May 21st, the day before Fed Chairman Ben Bernanke warned that...