Message from Jon
Last week was an interesting one, especially Wednesday when the Fed "reversed" their approach of raising interest rates through 2016 on the view of a slowing economic recovery and concerns globally. Not 15 minutes into her talk, the markets took off and shot almost straight up. This pattern continued the remainder of the week as well giving "hope" to those investors not savvy enough to see what was really happening.
The markets like to feel confident in their knowledge of the "now" and pretty confident in what they perceive the near term future to look like. Whenever these conditions change (even the slightest), we tend to see instability and uncertainty by way of volatility re-emerge. Since the dispersion of information is near instantaneous now, the re-emergence looks and feels like an avalanche or a flash-flood rather than a migratory move.
This move upward is dependent upon a known condition that is the Fed's rate decision. This is artificially created and thus creates a market condition that could seem to be better than what it really is at the moment.
Long-term...not any worries.
Short-term, careful and cautious is the mood of the moment.
We have indexes rising higher but we have an overwhelming amount of underlying stocks still in a bearish trend and loosing value, 47% of the NYSE and 50% of the NASDAQ at the present moment according to Lowry research.
What does this mean?
It means we could have this rally continue for a few days, weeks or even months before weakening enough to reverse and begin to fail again causing heartache to those caught unaware. This does not mean we are not fishing while the fish are biting, it just means we are not beating our grocery budget on bait thinking that we will catch all the fish we can eat and then some....(analogy for my fishing buddies) Experience is the best teacher and having gone through this numerous times, our best approach is the same we have been taking...caution. Optimistic but cautious.
Till we speak again...enjoy the spring time weather!
BTW: I will be out of the office tomorrow on business with limited accessibility to return emails and calls but will return Thursday, bright and early.
sources: lowryondemand, money.cnn.com/2016/03/16/news/economy/federal-reserve-march-meeting/index.html
Dow and S&P 500 Green for 2016
WEEKLY UPDATE - MARCH 21, 2016
After a historically rough start to the year, stocks finally rallied enough to put the S&P 500 and Dow in the green for the year. Extended weakness in the dollar-which investors hope could boost economic growth and corporate profits-contributed to the gains. For the week, the S&P 500 rose 1.35%, the Dow added 2.26%, and the NASDAQ grew 0.99%.
The last two weeks have been important in terms of global monetary policy. The European Central Bank, Bank of Japan, and Federal Reserve all met to determine next steps for their respective economic spheres of influence. Currently, there is a divide between the Fed, which is moving away from low rates while supporting economy growth, and the ECB and BOJ, which are fighting slowing economic growth with negative rates and quantitative easing. However, the latest Fed meeting suggests that the divide may not be as great as it was before.
The Fed voted last week to hold rates steady, not being ready to commit to further increases at the moment. However, the central bank's official statement indicated that we can expect two interest rate hikes this year, instead of the four projected in December. The statement makes it clear that the Fed is adjusting its expectations to a slow-growth, slow-inflation world, which brings it more in line with the concerns of other central banks.
The Bank of Japan also voted to hold rates steady at the current negative 0.1% level last week; however, official notes from the January meeting showed that central bankers also debated expanding asset purchases to further stoke growth. The move into negative interest rates by the ECB and BOJ-essentially charging depositors for the privilege of holding cash-is worrying to some. Some economists fear competition between central banks to lower rates (potentially triggering a currency devaluation war) as well as the effect of negative rates on bank profits.
One big question on everyone's mind is this: Does the Fed have enough bullets left to respond to an economic slowdown?
After seven years of ultra-low rates, the Fed can't push rates much lower without going into negative territory. Though Fed chair Janet Yellen has stated that negative rates aren't off the table in the event of a slowdown, it's clear that the Fed isn't keen on the idea.
Former chair of the Federal Reserve Ben Bernanke waded into the fray last week with a blog post supporting a "balanced monetary-fiscal response" to a potential downturn. In his ideal scenario, the best response to an economic slowdown would combine further quantitative easing and interest rate decreases with fiscal policies like increased government spending.
Bernanke's support for accommodative fiscal policy isn't new; in the past, he has rebuked Congress for not doing enough (in his opinion) to stoke economic growth. Leaving the politics of government spending firmly aside, here's what we can take from Bernanke's remarks: The Fed is taking threats of a slowdown seriously and may still have enough tools in the toolbox to fight a downturn if it comes.
Is a downturn likely? We can't say. Predicting a recession is always difficult, and the probabilities of a recession this year are all over the place. A Wall Street Journal poll of economists has the current probability at 20%, down from 21% last month. The Federal Reserve Bank of Atlanta sees the risk as much lower-just 10%. Yet another prediction has the odds at just 4.06 Basically, no one knows for sure.
In the week ahead, investors will be watching currency prices to see if the dollar continues its downward trajectory. If investors believe the dollar has peaked in value, it could give markets enough confidence to extend the rally further.
Monday: Existing Home Sales
Tuesday: PMI Manufacturing Index Flash
Wednesday: New Home Sales, EIA Petroleum Status Report
Thursday: Durable Goods Orders, Jobless Claims
Retail sales revised downward in January. Retail sales slumped in February as expected; however, a sharp downward revision in January sales- from a 0.2% increase to a 0.4% decrease- could be a sign of trouble.
Housing starts rebound in February. Groundbreaking on new home construction surged more than expected last month as U.S. homebuilders invested heavily in single-family homes. The rise is a strong sign of confidence in the economy.
Consumer sentiment dips in March. A measure of optimism about the economy among Americans fell slightly this month as consumers felt the effects of rising gasoline prices and worried more about the economy.
Job openings rise in January. Job openings rose to 5.5 million in January, up from 5.28 million in December, though the hiring rate dipped slightly. Increased openings are a positive sign for the economy and show that the labor market is in stable territory.
Don't Forget to Make Your 2015 IRA Contribution
If you haven't yet contributed to an Individual Retirement Account for 2015, there's still time to act before the April filing deadline. Here are a few things you need to know:
To contribute, you must be earning taxable compensation from wages, salary, tips, bonuses, alimony, or self-employment income. You must be under age 70-1/2 to contribute to a Traditional IRA. There is no age limit to contribute to a Roth IRA.
When making your contribution, be sure to choose the correct tax year.
For most people, the most you can contribute to an IRA for 2015 is the smaller of your taxable compensation or $5,500. If you were age 50 or older by the end of 2015, you can increase your contribution to $6,500.
For more information about contributing to your IRA, contact a qualified financial or tax expert.
Tip courtesy of IRS.gov 
Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
Diversification does not guarantee profit nor is it guaranteed to protect assets.
The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ. The DJIA was invented by Charles Dow back in 1896.
The Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of stocks of technology companies and growth companies.
The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indexes from Europe, Australia and Southeast Asia.
The S&P U.S. Investment Grade Corporate Bond Index contains U.S.- and foreign-issued investment-grade corporate bonds denominated in U.S. dollars.
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