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The Blog

Equities and Headwinds

Posted by RAA on May 6, 2016 9:25:00 AM


The equity rally, now at 2065 on the S&P as of April 29th, is meeting some resistance just above this level. This does not mean that the S&P 500 can’t go above its all-time high of 2133, but it does mean that it will require significant buying to power it through this all-time high.

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Topics: Investment Updates

More Sideways Movement or a Breakout?

Posted by RAA on Apr 6, 2016 10:30:00 AM


One of the many decisions that our Investment Policy Committee must make is not just which fund managers to hire, but how much stock and bond market exposure we should have for the portfolios.

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Topics: Investment Updates

Oil: An Oversupply Problem

Posted by Jeremy Merchant on Apr 1, 2016 5:02:36 PM


Equity markets experienced a positive month in March but growth expectations continue to be limited on the upside. Two factors were instrumental in the equity market rebound since mid-February: a rebound in oil prices and a weaker U.S. dollar.

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Topics: Investment Updates

Stay Cautious, For Now

Posted by RAA on Mar 4, 2016 3:05:00 PM


The widening gap between markets and the Fed over the appropriate stance of monetary policy warrants a cautious investment approach. Last December, as they finally started the re-normalization process of raising the Fed funds rate by 25 basis points, the Fed remarked that the markets could expect four more rate increases in the Fed funds rate in 2016. 

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Topics: Investment Updates

Economic Update

Posted by Jeremy Merchant on Mar 1, 2016 5:18:03 PM

During the final week of February we learned that Q4-2015 GDP was a modest 1%. This modest growth was slightly stronger than consensus estimates because of a technical alteration in how inventories were calculated.

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Topics: Investment Updates

2016: The Year of Volatility?

Posted by RAA on Feb 7, 2016 12:00:00 PM


Financial markets are sending a message to policymakers (read, the FOMC members) that U.S. interest rates, the Chinese currency and the OPEC oil decisions are fraught with deflationary risks. Markets are sending a cautionary message to policymakers that they need to stop with the rhetoric about eight Fed rate hikes in the next two years, especially since the rest of the world is tilting towards a deflationary environment.

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Topics: Investment Updates

Corporate Earnings Recession

Posted by Jeremy Merchant on Feb 1, 2016 4:00:00 PM


The definition of a "corporate earnings recession" is two consecutive quarters of negative earnings-per-share (EPS) growth.  Since 1990, the S&P 500 Index has experienced seven periods in which corporate EPS were negative. In recent time periods, the bursting of the tech bubble created negative EPS in 2001. In 2008 & 2009, corporations posted a string of eight negative EPS quarters.

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Topics: Investment Updates

What Does the Future Hold?

Posted by RAA on Jan 6, 2016 2:00:00 PM


There is widespread understanding that recoveries are typically weak after a balance sheet recession, like we had in 2008-2009, and the current cycle’s sluggish pace of global growth clearly fits this pattern. This is assumed to be a temporary phase, followed by an eventual return to a more normal recovery, but this has not happened yet. This begs the question…is the current situation more economically structural (longer-term) than economically cyclical (shorter-term)?

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Topics: Investment Updates

Portfolio Adjustments

Posted by Jeremy Merchant on Jan 4, 2016 5:27:37 PM


Equity markets were down today following this morning's poor manufacturing reading out of China. The rout in China pressured markets globally and increased volatility. The abrupt termination of relations between Saudi Arabia and Iran added to volatility today. As volatility started to increase in mid-2015, portfolio adjustments to account for these dynamics also increased.

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Topics: Investment Updates

Dollar Rise Warrants Caution

Posted by RAA on Dec 7, 2015 2:30:01 PM


The dollar’s strength over the last 16 months has increased the risk associated with the already narrow equity rally. The world’s most important central bank (the Federal Reserve) wants to start raising interest rates at a time when the rest of the world is having trouble growing.

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Topics: Investment Updates