Comment (0) Read More...

The pace of global economic activity continues to slow with recessions in several European countries dampening demand for goods and services from other countries around the world. However, this past week, several central banks stepped up efforts to support global economic growth. These foreign policy changes are likely to help the U.S. economy maintain modest economic growth.

Comment (0) Read More...

The past two weeks have been better for stocks, with the major indexes up in consecutive weeks for the first time in more than a month. However, investors have had to endure a seesaw of ups and downs as markets try to anticipate the next phase of sentiment. The down-market sentiment has been triggered mainly by concerns about the European financial crisis and the contagion from country to country, with the effects most visible in fixed income markets, government debt and bank stocks. Episodes of up-market sentiment reflect growing confidence that policymakers are ready to act and will do so soon.

Comment (0) Read More...

Following a significant slide the week before, stocks bounced back last week, primarily due to a growing sense that policymakers in Europe and the United States may be ready to engage in further easing measures. The increasing stress in Europe has put additional pressure on the European Central Bank (ECB) and on other policymakers to take stronger action, and, indeed, over the weekend European finance ministers announced a new plan to recapitalize the Spanish banking sector. In the United States, the recent trend of weaker economic data has also caused some to believe that the Federal Reserve would engage in additional easing measures.

The news over the weekend regarding the aid package for Spanish banks was sketchy on details and much still needs to be debated and decided, but the formation of the package is clearly a positive step in that it shows that European policymakers remain committed to combatting the debt crisis.

Comment (0) Read More...

For some time, we have been suggesting that the US economy had been holding up relatively well compared to the rest of the world. While we are not changing that view, last week's data (particularly May's employment report) provided a negative jolt and pushed stock prices down sharply.

Our summary view of the US economy is that while the United States appears to have entered another slowdown phase with the data growing more disappointing in recent weeks, the case for a renewed recession still looks flimsy. The highlight (or, rather, lowlight) last week was the monthly employment report. The data showed that far-fewer-than-expected 69,000 new jobs were created in May and that the unemployment rate ticked higher for the first time in many months, moving up to 8.2%. The data also pointed to some notable downward revisions in prior months.

Comment (0) Read More...

The market decline that has occurred over the last couple of months has largely been attributed to escalating concerns over the European debt crisis and we believe that Europe remains the chief variable in determining the future direction of the global economy. If Europe's debt crisis remains reasonably well contained, the world should continue to grow at a modest pace with the United States doing relatively well; if debt contagion becomes chaotic and uncontrollable, it would be an entirely different story. Our view continues to be that the former scenario is the more likely one.

In addition to ongoing issues in Europe, investors are also remaining focused on the state of the US economy. The data has been mixed in recent months, but continues to point to a modest recovery. The business sector remains a source of strength, consumer uncertainty appears to be fading somewhat and we are also seeing some improvements in the housing market. Additionally, liquidity and credit conditions continue to improve in the United States, with bank loans increasing in recent weeks.

Comment (0) Read More...

Although US economic data was generally good last week, stocks sank sharply as investor fears over Europe's debt problems intensified.

Currently - the focus of the European debt crisis is on Greece, particularly on next month's elections. The upcoming elections look to be turning into a referendum on whether or not Greece will remain part of the eurozone. Should the more extreme parties in Greece gain popularity, the greater the likelihood that the country exits the eurozone. The more traditional Greek political parties, as well as the powers that be in Europe as a whole, are pushing for Greece to remain part of the euro, but the outcome is far from clear and the uncertainty has rattled global financial markets.

Comment (0) Read More...

Last week was a difficult one for the markets with stocks sinking yet again. The primary culprit appeared to be an escalation of Europe's debt woes.

Although markets have been troubled in recent weeks, we do not believe investors should confuse the current situation with an ending to the bull market that has been in force since early 2009. Historically, sustained declines in equity prices tend to be associated with either economic downturns or earnings recessions, neither of which appears to be in the cards.

Comment (0) Read More...

Stocks struggled last week in the face of some weaker economic data (most notably, a disappointing April payrolls report). For the week, the Dow Jones Industrial Average dropped 1.4% to 13,038, the S&P 500 Index fell 2.4% to 1,369 and the Nasdaq Composite declined 3.7% to 2,956. These losses roughly corresponded to the gains that stocks had made in the previous week and, as a result, stocks are now at the lower end of the trading range that has been in effect for the last three months or so.

Recent data does appear to confirm that economic growth has softened a bit. The April labor market report was disappointing, as jobs grew a less-than-anticipated 115,000 (although the data also showed upward revisions for February and March). The unemployment rate fell slightly to 8.1%, but even that data was interpreted negatively as it suggests that some are giving up on finding employment and are dropping out of the workforce.

Comment (0) Read More...

Over the past month, stocks have traded in a somewhat volatile pattern as investors have been weighing both the positives and negatives. Last week, despite some renewed flare-ups in terms of the ongoing European debt crisis, investors focused on the continued string of positive corporate earnings reports.

At this point in the first-quarter earnings season, nearly half of the S&P 500 companies have reported and between 70% and 80% have surpassed expectations. While this alone points to strong results, the magnitude of the positive surprises has been even more impressive. The long-term average of positive surprises is close to 3% over expectations and this quarter the average has been above 6%. The one caveat to all of this is that while earnings growth remains strong, the pace of growth compared to recent years is slower.

Comment (0) Read More...