Call us today!

Phone: (512) 498-PLAN (7526)

Weekly Vantage Point | Week of 4.4.2016

Fed Rate Caution Sends Stocks Higher

April 4, 2016 – The S&P 500 advanced last week, completing its sixth weekly gain in the past seven weeks and finishing at its highest closing level of the year. The week was defined by a market-friendly speech delivered by Federal Reserve Chair Janet Yellen on Tuesday to the New York Economic Club, where she said she is in no rush to raise rates amid a sluggish global economy. Her stance that the Fed must "proceed cautiously" quashed rate hike expectations stirred by comments from several Fed district presidents that a rate hike could come as soon as April. The dovish stance helped equities conclude their largest quarterly turnarounds since the Great Depression.

In other key economic data last week, Commerce Department officials said personal incomes rose 0.2% in February, down from a larger increase the month prior, but higher than forecast, while spending rose 0.1% for a third month. Home prices continue to trend higher and the Conference Board's reading of consumer confidence increased for March. All three U.S. automakers posted March sales gains, although they missed analysts' estimates, with the overall annualized sales pace slowing to the lowest level in 13 months. The week culminated with continued gains in employment, with payrolls increasing by 215,000 in March, down slightly from an upwardly revised increase in February. Hourly earnings climbed more than expected, while the headline unemployment rate edged higher to 5% from 4.9% the month prior.

For the week, the S&P 500 rose 1.84%, the Dow Industrials gained 1.58% and the NASDAQ Composite surged 2.97%. Nine of the ten major sector groups advanced, led by Technology (+2.73%), Consumer Staples (+2.65%) and Consumer Discretionary (+2.52%). Energy (-1.26%) lagged after a Saudi Arabia official said the nation would only agree to an oil production freeze if Iran joined the agreement. WTI crude oil futures retreated by over 6.7% last week, ending at $36.79/barrel. Treasuries rallied over the week, with the yield on 10-year Treasury notes declining by 13 basis points to end at 1.771%.

newspaper icon
Week’s Economic Calendar

Monday, April 4: Factory Orders;

Tuesday, April 5: U.S. Trade Deficit, JOLTS, ISM Non-Mfg Index;

Wednesday, April 6: MBA Mortgage Applications, FOMC Meeting Minutes;

Thursday, April 7: Jobless Claims;

Friday, April 8: Wholesale Trade.

world icon
Market Watch
Stocks 1-Wk MTD 3-Month YTD 1-Year
Dow Jones 1.58% 0.61% 2.11% 2.11% 6.88%
S&P 500 1.84% 0.63% 1.99% 1.99% 2.82%
NASDAQ 2.97% 0.92% -1.53% -1.53% 1.90%
Russell 3000 2.05% 0.59% 1.56% 1.56% 0.61%
MSCI EAFE -0.21% -2.14% -5.08% -5.08% -10.34%
MSCI Emerging Markets 1.74% -1.26% 4.47% 4.38% -13.05%
Bonds 1-Week MTD 3-Month YTD 1-Year
Barclays Agg Bond 0.58% -0.04% 2.99% 2.99% 1.60%
Barclays Municipal 0.50% 0.06% 1.73% 1.73% 3.95%
Barclays US Corp High Yield 0.33% -0.01% 3.34% 3.34% -3.72%
Commodities 1-Week MTD 3-Month YTD 1-Year
Bloomberg Commodity -1.65% -1.12% -0.71% -0.71% -21.84%
S&P GSCI Crude Oil -6.77% -4.04% -0.67% -0.67% -26.51%
S&P GSCI Gold 0.00% -0.98% 15.40% 15.40% 1.26%
Source: MorningStar
Chart of the Week: The Consumer Spending Conundrum; Incomes Rise, Spending Slows
View larger image »

The chart above shows real consumer spending increased at a moderate 0.2% seasonally-adjusted monthly rate in February, but the January figure was revised lower to unchanged from 0.4%. This in turn reduced the tracking estimate of 1Q 2016 real consumer spending growth from 2.9% to just 1.7% (seasonally-adjusted annual rate, SAAR). January real spending on goods was revised down to minus 0.3% (from +0.7%) and spending on services was revised down to +0.1% (from +0.3%).

On the other hand, real disposable income, through the first two months of the quarter, was up a solid 3.4% (SAAR), so the slowdown in spending reflects an abrupt increase in the saving rate, from a 5% average in 4Q 2015 to 5.4% in February. Unfortunately, there is no obvious reason for the spending slump, although the sharp decline in equity prices early in the year may have discouraged spending. If this is the case, then we would expect a rebound in spending relatively soon. However, data on Friday showed unit auto sales were tracking at 16.6 million for March, down from 17.4 million the month before and the weakest pace since February 2015. Confounding matters further, auto makers spent an average of $3,110 on sales incentives per vehicle sold last month, 14% more than a year earlier and up slightly from February, according to Autodata Solutions.

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 report is created by Tower Square Investment Management LLC

About Tower Square Investment Management

Tower Square Investment Management LLC is an SEC registered investment adviser owned by Cetera Financial Group®. It provides investment research, portfolio and model management, and investment advice to its affiliated broker-dealers, dually-registered broker-dealers and registered investment advisers.

About Cetera Financial Group

Cetera Financial Group is a leading network of independent retail broker-dealers empowering the delivery of objective financial advice to investors across the country through trusted financial advisors and financial institutions. The network is comprised of ten firms - four legacy Cetera-branded firms (Cetera Advisors, Cetera Advisor Networks, Cetera Investment Services, marketed as Cetera Financial Institutions, and Cetera Financial Specialists) along with First Allied Securities, Investors Capital, Legend Equities Corporation, Summit Brokerage, VSR Financial Services and Girard Securities.

Cetera Financial Group is the second largest independent financial advisor network in the nation by number of advisors, as well as a leading provider of retail services to the investment programs of banks and credit unions. Cetera Financial Group delivers award-winning wealth management and advisory platforms, comprehensive broker-dealer and registered investment adviser services, and innovative technology to approximately 9,500 independent financial professionals and over 500 financial institutions nationwide. Through its distinct firms, Cetera Financial Group offers the benefits of a large, established broker-dealer and registered investment adviser, while serving independent and institutions-based financial advisors in a way that is customized to their needs and aspirations. Cetera Financial Group is committed to helping advisors grow their businesses and strengthen their relationships with clients. For more information, visit WWW.CETERAFINANCIALGROUP.COM.


The material contained in this document was authored by and is the property of Tower Square Investment Management LLC. Tower Square Investment Management provides investment management and advisory services to a number of programs sponsored by affiliated and non-affiliated registered investment advisers. Your registered representative or investment adviser representative is not registered with Tower Square Investment Management and did not take part in the creation of this material. He or she may not be able to offer Tower Square Investment Management portfolio management services.

Nothing in this presentation 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. Past performance is not a guarantee of future results.

For more information about Tower Square Investment Management strategies and available advisory programs, please reference the Tower Square Investment Management LLC Form ADV disclosure brochure and the disclosure brochure for the registered investment adviser your adviser is registered with. Please consult with your adviser for his or her specific firm registrations and programs available.

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.

The Barclays U.S. 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.

The Barclays U.S. Corporate High Yield Index measures the market of USD-denominated, non-investment grade, fixed-rate, taxable corporate bonds. Securities are classified as high yield if the middle rating of Moody's, Fitch, and S&P is Ba1/BB+/BB+ or below, excluding emerging market debt.

The Barclays U.S. Municipal Bond Index is an unmanaged, market-value-weighted index of investment-grade municipal bonds with maturities of one year or more.

The Bloomberg Commodity Index is a broadly diversified index that allows investors to track commodity futures through a single, simple measure. It is composed of futures contracts on physical commodities and is designed to minimize concentration in any one commodity or sector. It currently includes 19 commodity futures in five groups. No one commodity can comprise less than 2% or more than 15% of the index, and no group can represent more than 33% of the index (as of the annual reweightings of the components).

The CBOE Volatility Index (VIX) is a key measure of market expectations of near-term volatility conveyed by S&P 500 stock index option prices. Since its introduction in 1993, VIX has been considered by many to be the world's premier barometer of investor sentiment and market volatility.

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 Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.

The Dow Jones Industrial Average (DJIA) is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the Nasdaq.

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.

MSCI Emerging Markets is designed to measure equity market performance in global emerging markets. It is a float-adjusted market capitalization index.

The NASDAQ Composite Index includes all domestic and international based common type stocks listed on The NASDAQ Stock Market. The NASDAQ Composite Index is a broad based index.

The Russell 1000 Index comprises the 1,000 largest companies in the U.S. equity market, and is a subset of the Russell 3000 Index. The Russell 1000 is a market capitalization-weighted index, meaning that the largest companies constitute the largest percentages in the index, affecting performance more than the smallest index members. The inception date for the Russell 1000 and 3000 indices was January 1, 1984.

The Russell 3000 Index measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market.

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 S&P Composite 1500® combines three leading indices, the S&P 500®, the S&P MidCap 400®, and the S&P SmallCap 600® to cover approximately 90% of the U.S. market capitalization. It is designed for investors seeking to replicate the performance of the U.S. equity market or benchmark against a representative universe of tradable stocks.

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 S&P MidCap 400® provides investors with a benchmark for mid-sized companies. The index, which is distinct from the large-cap S&P 500®, measures the performance of 400 mid-sized companies, representing more than 7% of available market cap.

The S&P SmallCap 600® measures the small-cap segment of the U.S. equity market. Introduced in 1994, the index is designed to track the performance of 600 small-size companies in the U.S, reflecting this market segment’s distinctive risk and return characteristics. The index measures a segment of the market that is typically known for less liquidity and potentially less financial stability than large-caps, the index was constructed to be an efficient benchmark composed of small-cap companies that meet investability and financial viability criteria.

West Texas Intermediate (WTI) is a crude oil stream produced in Texas and southern Oklahoma which serves as a reference or "marker" for pricing a number of other crude streams. WTI is the underlying commodity of the New York Mercantile Exchange's oil futures contracts.

Life and Business Strategies...Start the Journey

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

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 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.


Website Design For Financial Services Professionals | Copyright 2020 All rights reserved