Call us today!

Phone: (512) 498-PLAN (7526)
info@planningworks.biz

Weekly Vantage Point | 9.28.15

 
Fed Policy Confusion Sent Stocks Lower

September 28, 2015 — Stocks fell last week, as investors expressed concerns about the pace of world growth and uncertainty surrounding the Federal Reserve's plans on raising interest rates. The Fed sparked the debate over whether the U.S. economy is strong enough to withstand a rate hike. Fed Chair Janet Yellen said in her press conference following the September 17th "no-change" rate decision that policymakers' primary concerns were downside economic risks on China and emerging markets. The S&P 500 declined each day last week except on Monday, when a handful of Fed members spoke out in favor of a rate hike. Partial clarity came on Thursday when Yellen confirmed in a speech that a rate hike is still appropriate this year, adding however that "economic surprises" could change that plan.

In key economic data last week, existing home sales declined 4.8% in August from July's eight-year high, while the 6.2% year-over-year sales figure has decelerated to the slowest pace since February. Turning to new home sales data, a different picture emerges. Newly-built home sales last month shifted into a higher gear, rising to a 552,000 annualized pace, the highest since February 2008. The most pleasing data release last week was an upward revision for the final reading of second quarter GDP. The Friday report showed the U.S. economy expanded by 3.9%, up from a prior estimate of 3.7%.

An additional overhang to performance was a major selloff in biotech stocks, triggered by a tweet message from presidential candidate Hillary Clinton, suggesting there is "price gouging" in the market for prescription drugs. The NASDAQ Biotech Index tumbled 13% during the week. For the week, the S&P 500 fell 1.35%, the Dow Industrials slipped 0.43%, and the NASDAQ Composite sank 2.91%. Seven of the ten major sector groups declined with Healthcare (-5.75%), Materials (-4.01%) and Industrials (-1.97%) down the most last week. Utilities (+1.27%), Consumer Staples (+0.74%) and Financials (+0.53%) advanced. Treasures prices edged lower, lifting the yield on 10-year Treasury notes by 2.9 basis points to end the week at 2.163%.

quote icon
Words of Wisdom
 

"If the world were perfect, it wouldn't be."

"I'd give my right arm to be ambidextrous."

"It's tough to make predictions, especially about the future."

— Yogi Berra

world icon
Market Watch
Stocks 1-Wk MTD 3-Month YTD 1-Year
DOW -0.43% -1.29% -8.81% -8.46% -3.73%
S&P 500 -1.35% -1.94% -7.65% -4.77% 0.28%
NASDAQ -2.91% -1.83% -8.06% -0.21% 6.15%
Russell 3000 -1.72% -2.12% -8.22% -4.68% 0.54%
MSCI EAFE -3.09% -4.29% -12.67% -4.49% -8.79%
MSCI Emerging Markets -4.87% -3.39% -19.38% -15.80% -21.18%
Bonds 1-Week MTD 3-Month YTD 1-Year
Barclays Agg Bond -0.24% 0.32% 1.11% 0.77% 2.49%
Barclays Municipal 0.25% 0.45% 1.52% 1.49% 2.98%
Barclays US Corp High Yield -1.45% -1.39% -4.23% -1.24% -2.49%
Commodities 1-Week MTD 3-Month YTD 1-Year
Bloomberg Commodity 0.87% -2.68% -12.28% -15.16% -25.68%
S&P GSCI Crude Oil 1.51% -7.11% -23.45% -14.21% -50.63%
S&P GSCI Gold 0.69% 1.16% -2.24% -3.25% -6.25%
Source: MorningStar
Implications of European Central Bank (ECB) Stimulus Options
chart
View larger image »
 
A Quantitative Easing (QE) Extension is Most Likely

We think that an ECB announcement in October will be more impactful than in December, as it will come as a surprise to the market. However, given the recent comments by ECB council members, expectations for October are increasing. Exhibit 11 above summarizes the most likely policy innovations as well as market reactions if the ECB acts/ guides the market in October. We expect any new ECB action to be broadly bullish for rates. An additional possibility is for the ECB to include other assets (e.g., buying corporate bonds), while increasing monthly purchases.

newspaper icon
Week's Economic Calendar
 

Monday, September 28: Personal Incomes & Outlays, Pending Home Sales, Dallas Fed Mfg Survey;

Tuesday, September 29: S&P/Case-Shiller Home Prices, Consumer Confidence;

Wednesday, September 30: ADP Private Jobs, Chicago PMI;

Thursday, October 1: Weekly Jobless Claims, PMI Mfg Index, ISM Mfg Index, Construction Spending;

Friday, October 2: September Non-farm Payrolls, Factory Orders.

question icon
Weekly Trivia
 

Today: What animal can go without water for longer than a camel?

Last Week: What is the only grain native to North America?

Answer: Wild Rice (and it is actually classified in the grass family).

Copyright © 2015 Cetera Financial Group, Inc., RCS Capital Corporation's (NYSE:RCAP) retail investment advice platform.
All rights reserved.
200 N. Sepulveda Blvd, Ste 1200, El Segundo, CA 90245
Privacy Policy - Contact Us

This message is compiled by Tower Square Investment Management

No independent analysis has been performed and the material should not be construed as investment advice. Investment decisions should not be based on this material since the information contained here is a singular update, and prudent investment decisions require the analysis of a much broader collection of facts and context. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The opinions expressed are as of the date published and may change without notice. Any forward-looking statements are based on assumptions, may not materialize, and are subject to revision.

All economic and performance information is historical and not indicative of future results. The market indices discussed are unmanaged. Investors cannot directly invest in unmanaged indices. Please consult your financial advisor for more information.

The return and principal value of bonds fluctuate with changes in market conditions. If bonds are not held to maturity, they may be worth more or less than their original value. The yield on high yield bonds is due, in part, to the volatility and risk of the high securities market. High yield bonds are also known as "junk bonds".

Additional risks are associated with international investing, such as currency fluctuations, political and economic instability, and differences in accounting standards.

Affiliates and subsidiaries and/or officers and employees of Cetera Financial Group or Cetera firms may from time to time acquire, hold or sell a position in the securities mentioned herein.

While diversification may help reduce volatility and risk, it does not guarantee future performance.

DJIA is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the Nasdaq.

The S&P 500 is an index of 500 stocks chosen for market size, liquidity and industry grouping (among other factors) designed to be a leading indicator of U.S. equities and is meant to reflect the risk/return characteristics of the large cap universe.

The MSCI EAFE Index (Europe, Australasia, Far East) is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the US & Canada.

The Barclays US Aggregate bond index is an unmanaged index composed of Barclays Credit government bond index, mortgage backed securities index, and asset backed securities index and is generally representative of the US Bond market.

CRB Index: A pricing index that measures changes in the price of 22 commodities that are believed to be among the first to react to changes in economic conditions.

The S&P GSCI Gold Index, a sub-index of the S&P GSCI, provides investors with a reliable and publicly available benchmark tracking the COMEX gold future.

The S&P GSCI Crude Oil Index is a sub-index of the S&P GSCI and provides investors with a publicly available benchmark for investment performance in the crude oil market.

The Caixin Flash China General Manufacturing Purchasing Managers' Index™ (PMI™) is published on a monthly basis ahead of final PMI data, making the Caixin PMI the earliest available indicator of manufacturing sector operating conditions in China. The estimate is typically based on approximately 85%–90% of total PMI survey responses each month and is designed to provide an accurate indication of the final PMI data.

Tower Square Investment Management is part of Cetera Financial Group, Inc. Cetera Financial Group, Inc. has a network of independent broker-dealers, investment advisers registered with the SEC, and general insurance agencies.

Tower Square Investment Management is wholly owned by Cetera Financial Group, Inc., which is wholly owned by Cetera Financial Holdings, Inc. Cetera Financial Holdings, Inc. is principally owned by RCS Capital Corporation (RCAP). For a more detailed description of RCS Capital, please visit www.rcscapital.com.

Tower Square Investment Management provides investment management and advisory services to a number of programs sponsored by affiliated and non-affiliated registered investment advisers. Please ask your investment adviser representative for the Form ADV Part 2A/Appendix 1 they are authorized to offer you.

Nothing in these materials should be construed as offering or disseminating specific investment, tax, or legal advice to any individual without the benefit of direct and specific consultation with an investment adviser representative authorized to offer Tower Square Investment Management services. Information contained herein shall not constitute an offer or a solicitation of any services.

Life and Business Strategies...Start the Journey

CONTACT US: 2700 Via Fortuna Suite 100 • Austin, TX 78746 • (512) 498-7526
Fax (512) 684-8519 • info@planningworks.biz

Investment Advisory services offered through, Waterloo Capital, L.P. a SEC Registered Investment Advisor. Securities offered through Calton & Associates, Inc. Member FINRA/SIPC OSJ 2701 N. Rocky Point Dr., Suite 1000, Tampa, FL 33607 (813) 605-0918 Waterloo Capital, L.P., PlanningWorks, Inc. and Calton & Associates, Inc. are separate entities.

A Registered Representative may only transact business in states where they are registered, or exempt from registration. Currently we have Representatives registered in CA, CO, FL, GA, IL, MN, MO, NE, NM, OH, PA, SC, and TX. If your resident state is not listed, please contact us at info@planningworks.biz. Under normal circumstances, securities licensing procedures for additional states may take 24-72 hours. We will not effect or attempt to effect securities transactions, or provide personalized investment advice to, or communicate directly with residents in a state in which a Representative is not registered.

finra_BrokerCheck_logo.png

Website Design For Financial Services Professionals | Copyright 2019 AdvisorWebsites.com. All rights reserved