June 22, 2015

A common theme since the 2009 stock market bottom has been our “Goldilocks economy” – it’s not too hot and not too cold.  This specifically refers to investors’ sense of the U.S. economy and interest rate levels.  Translation: GDP growth is mediocre, thus the Fed is reluctant to raise interest rates. We still have not seen the long-promised first rate increase.  Moreover, even when it does occur, subsequent rate increases will be gradual.  U.S. and foreign stock markets like this scenario.

Currently, the S&P 500 index is up about 3% YTD, which is a reflection of the uncertainty about where the economy and interest rates are heading.  Economic growth is emerging from its winter slumber and corporate earnings should pick up for the balance of the year.  Job growth is improving gradually, and the number of initial unemployment claims has fallen quite nicely.  Meanwhile current inflation numbers are still relatively benign – result: the “Goldilocks economy”.

Jobless claims


The strongest markets this year have been international, with the MSCI EAFE up 8.13%.  In the US, the NASDAQ is up 8.63%, sparked by health care and select tech names.  With uncertainty still extant, the markets seem comfortable with the current overall picture.

“The only place success comes before work is in the dictionary.”  –  Vince Lombardi