Another mixed, but not bad week for economic news.<\/p>\n
The first of several estimates for first quarter 2012 GDP<\/strong> came out at +2.2%, which was slightly weaker than the +2.5% growth rate expected by consensus.\u00a0 The composition of the report was not especially robust, as inventory buildup contributed more to the growth number than expected, as compared to final sales, and business fixed investments and government expenditures (mostly defense spending) declined.\u00a0 However, consumer spending as a component of the report was solid and was much better than first thought, and residential investment increased dramatically.\u00a0 What does this mean?\u00a0 Not a lot yet.\u00a0 These numbers are early estimates, and subject to revision, but, at the same time, demonstrate that the economy is still in fragile footing but just plugging along fast enough to avoid the +2% \u2018stall speed.\u2019\u00a0 The 2.0-3.0% is a wide but anticipated range for GDP for most of 2012 and we seem to be right within that band.<\/p>\n The Federal Reserve Open Market Committee<\/strong> meeting, which finished up on Wednesday, resulted in no changes to current policy or dramatic adjustments in language.\u00a0 The FOMC is committed to keeping the Fed Funds target rate \u2018exceptionally low\u2019 through late 2014, and continuing \u2018operation twist,\u2019 which is the open market strategic purchases\/sales of Treasury securities designed to adjust various rates along the yield curve (i.e. keeping long rates low and stimulative for as long as possible, since they can\u2019t push short rates lower than zero for \u2018conventional\u2019 easing).\u00a0 Their assessment of the economy alluded to a bit more strength, though, by subtle changes in wording here and there.\u00a0 They appear to remain cautious, but a bit more optimistic.\u00a0 However, the overhangs of housing and unemployment remain difficult to put any type of positive spin on.<\/p>\n Durable goods<\/strong> orders were mixed for March, as the total orders figure fell -4.2% month-over-month (compared to an expected -1.7% number).\u00a0 This was largely led by weakness in aircraft orders, which is an extremely volatile component anyway.\u00a0 Removing transports completely from the equation resulted in a -1.1% drop.\u00a0 This was similar to the full core durable goods number of -0.8% (which is nondefense capital goods ex-aircraft)\u2014still lower than expectations but not as dramatic considering February\u2019s figures were revised higher.\u00a0 Core durable goods shipments were higher, though, which was a positive takeaway.\u00a0 In other more closely-followed but volatile Fed manufacturing surveys<\/strong>, the release from Richmond was dramatically higher, while the Empire State and Philadelphia versions were a bit weaker.<\/p>\n The Case-Shiller<\/strong> home price results for February came out this week and things were moderately positive, though still mixed on a regional basis.\u00a0 The index rose +0.15% on a seasonally-adjusted basis (first gain in a year), although some earlier months were revised downward\u2014tempering the good news somewhat.\u00a0 The year-over-year number continued to lag, at -3.5% nationwide.\u00a0 From a regional standpoint, Phoenix, Miami and Minneapolis were up 1-2%, while Atlanta suffered again with a -2.0% loss on the month.\u00a0 Increases occurred in 12 of the 20 cities during the month.<\/p>\n New home sales<\/strong> for March were volatile again on the surface, but were affected by some revisions and unique regional differences.\u00a0 The month-over-month number for March was down -7.1%\u2014below consensus estimates that called for a slight gain, but the level of sales was affected by an upward revision the prior month.\u00a0 Net-net, a wash to some extent.\u00a0 The Western part of the U.S. caused a bulk of the monthly volatility.\u00a0 The supply of new homes on the market remained in the 5 \u00bd months territory.<\/p>\n Pending home sales<\/strong> were up by +4.1% for March, which was much more than the +1.0% increase expected by analysts.\u00a0 Additionally, a small February decline was revised upward.\u00a0 Of course, the \u2018pending\u2019 part of pending sales reflects the \u2018in process\u2019 nature of this measure, so it leads existing home sales by a few months.\u00a0 Most of the gains were in the South and West, while Midwest and Northeast dropped.<\/p>\n Consumer confidence<\/strong> for April declined a bit from 69.5 to 69.2, mostly from a drop in\u00a0 the \u2018expectations\u2019 component… however, the \u2018present\u2019 conditions assessment improved.\u00a0 Additionally, the \u2018employment\u2019 portion of the survey improved as respondents implied some improvement in labor conditions.\u00a0 By contrast, the University of Michigan index of consumer sentiment <\/strong>moved upward for April from 75.7 to 76.4, again, mostly due to a more optimistic assessment of current conditions.\u00a0 Inflation and \u2018future\u2019 conditions expectations were generally flat.<\/p>\n On the employment front, initial jobless claims<\/strong> came in at 388k for the April 21 week, which was above expectations for the fifth week in a row.\u00a0 Some softening is happening here, and it will be telling in coming weeks to see how meaningful this is from a longer-term recovery standpoint.\u00a0 Continuing claims<\/strong>, at 3,315k were also a bit higher than forecast, but not by a statistically meaningful amount.<\/p>\n Market Notes <\/em><\/strong><\/p>\n 1 Week (%)<\/strong><\/p>\n<\/td>\n YTD (%)<\/strong><\/p>\n<\/td>\n<\/tr>\n 1.56<\/p>\n<\/td>\n 9.13<\/p>\n<\/td>\n<\/tr>\n 1.82<\/p>\n<\/td>\n 12.31<\/p>\n<\/td>\n<\/tr>\n 2.69<\/p>\n<\/td>\n 11.86<\/p>\n<\/td>\n<\/tr>\n 0.85<\/p>\n<\/td>\n 8.99<\/p>\n<\/td>\n<\/tr>\n -0.20<\/p>\n<\/td>\n 11.25<\/p>\n<\/td>\n<\/tr>\n 0.13<\/p>\n<\/td>\n 1.33<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n 3 Mo.<\/strong><\/p>\n<\/td>\n 2 Yr.<\/strong><\/p>\n<\/td>\n 5 Yr.<\/strong><\/p>\n<\/td>\n 10 Yr.<\/strong><\/p>\n<\/td>\n 30 Yr.<\/strong><\/p>\n<\/td>\n<\/tr>\n 0.02<\/p>\n<\/td>\n 0.25<\/p>\n<\/td>\n 0.83<\/p>\n<\/td>\n 1.89<\/p>\n<\/td>\n 2.89<\/p>\n<\/td>\n<\/tr>\n 0.08<\/p>\n<\/td>\n 0.29<\/p>\n<\/td>\n 0.86<\/p>\n<\/td>\n 1.99<\/p>\n<\/td>\n 3.12<\/p>\n<\/td>\n<\/tr>\n 0.09<\/p>\n<\/td>\n 0.26<\/p>\n<\/td>\n 0.82<\/p>\n<\/td>\n 1.96<\/p>\n<\/td>\n 3.12<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Stocks gained some ground back this week as Europe was a bit quieter from a news standpoint and U.S. earnings results continued to surprise to the upside and surpass expectations (which were low going into this quarter).\u00a0 In fact, almost 80% of companies in the S&P reporting so far have beaten estimates and total earnings are up over 7% year-over-year.<\/p>\n From a sector perspective, consumer discretionary and energy stocks led on the week while more defensive consumer staples and healthcare lagged.\u00a0 Small-cap outperformed large-cap and domestic outgained foreign.\u00a0 Developed markets in Europe led by France, Italy and Spain carried EAFE returns higher (despite the news that several economies have now officially fallen into recession), while emerging markets underperformed due poor weeks from all four of the BRICs\u2014Brazil, Russia, India and China.\u00a0 The French election should make things interesting on the European front.<\/p>\n Bonds were slightly up with lower rates, and credit, such as high yield, outperformed governments.\u00a0 Foreign government bonds performed a bit better than U.S. debt, despite the foreign bond market being highlighted by Spain\u2019s S&P downgrade of two notches down to BBB+, with a negative outlook.\u00a0 Rating agencies have been notoriously late to the party in terms of adjusting bond ratings to current conditions (most fixed income managers we speak to have either their own rating systems and\/or anticipate metrics that might affect an agency rating well in advance of it actually happening).<\/p>\n Commodities were generally positive on the week overall, with biggest gains in the agricultural and industrial metals groups.<\/p>\n Have a good week.<\/p>\n Karl Schroeder, RFC, CSA, AACEP<\/p>\n Investment Advisor Representative<\/p>\n Schroeder Financial Services, Inc.<\/p>\n 480-895-0611<\/p>\n Sources:\u00a0 FocusPoint Solutions, Barclays Capital, Bloomberg, Deutsche Bank, Goldman Sachs, JPMorgan Asset Management, Morgan Stanley, MSCI, Morningstar, Northern Trust, Oppenheimer Funds, Payden & Rygel, PIMCO, Reuters, Schroder\u2019s, Standard & Poor\u2019s, U.S. Federal Reserve, Wells Capital Management, Yahoo!, Zacks Investment Research.\u00a0 Index performance is shown as total return, which includes dividends, with the exception of MSCI-EM, which is quoted as price return\/excluding dividends.\u00a0 Performance for the MSCI-EAFE and MSCI-EM indexes is quoted in U.S. Dollar investor terms.<\/p>\n The information above has been obtained from sources considered reliable, but no representation is made as to its completeness, accuracy or timeliness.\u00a0 All information and opinions expressed are subject to change without notice.\u00a0 Information provided in this report is not intended to be, and should not be construed as, investment, legal or tax advice; and does not constitute an offer, or a solicitation of any offer, to buy or sell any security, investment or other product.\u00a0 Schroeder Financial Services, Inc. is a registered investment advisor.<\/p>\n","protected":false},"excerpt":{"rendered":" Another mixed, but not bad week for economic news. The first of several estimates for first quarter 2012 GDP came out at +2.2%, which was slightly weaker than the +2.5% growth rate expected by consensus.\u00a0 The composition of the report was not especially robust, as inventory buildup contributed more to the growth number than expected,Read more<\/a><\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[],"class_list":["post-827","post","type-post","status-publish","format-standard","hentry","category-finance"],"_links":{"self":[{"href":"https:\/\/dev.sunlakesofarizona.com\/blog\/wp-json\/wp\/v2\/posts\/827","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dev.sunlakesofarizona.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dev.sunlakesofarizona.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dev.sunlakesofarizona.com\/blog\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/dev.sunlakesofarizona.com\/blog\/wp-json\/wp\/v2\/comments?post=827"}],"version-history":[{"count":1,"href":"https:\/\/dev.sunlakesofarizona.com\/blog\/wp-json\/wp\/v2\/posts\/827\/revisions"}],"predecessor-version":[{"id":828,"href":"https:\/\/dev.sunlakesofarizona.com\/blog\/wp-json\/wp\/v2\/posts\/827\/revisions\/828"}],"wp:attachment":[{"href":"https:\/\/dev.sunlakesofarizona.com\/blog\/wp-json\/wp\/v2\/media?parent=827"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dev.sunlakesofarizona.com\/blog\/wp-json\/wp\/v2\/categories?post=827"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dev.sunlakesofarizona.com\/blog\/wp-json\/wp\/v2\/tags?post=827"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n\n
\n Period ending 4\/27\/2012<\/strong><\/td>\n \n \n \n DJIA<\/td>\n \n \n \n S&P 500<\/td>\n \n \n \n Russell 2000<\/td>\n \n \n \n MSCI-EAFE<\/td>\n \n \n \n MSCI-EM<\/td>\n \n \n \n BarCap U.S. Aggregate<\/td>\n \n \n \n\n
\n U.S. Treasury Yields<\/strong><\/td>\n \n \n \n \n \n \n 12\/31\/2011<\/td>\n \n \n \n \n \n \n 4\/20\/2012<\/td>\n \n \n \n \n \n \n 4\/27\/2012<\/td>\n \n \n \n \n \n