Use the Guide
Browse the Guide
Portfolio Discussions
Dr. Kelly's Review
Use the Guide
Guide to Retirement
Client Presentation
Employment & the Fed
Navigating fiscal uncertainty
European Markets
U.S. Recovery
Employment & the Fed
Navigating fiscal uncertainty
European Markets
U.S. Recovery
Featured Topics
Fixed Income
Income Opportunities
U.S. Equities
Global Growth
Looking for other topics? Visit the Library
Choose a Shortcut
Home Insights Headlines


Weekly Insights

Week of July 27th, 2015

Weekly Market Recap
Start the week off right with this one-page snapshot of headlines and market performance.
Weekly Market Podcast
Start every week by listening to our market strategists' commentary.
Updated as of: 07/27/15
Weekly Economic Update
Stay current on the economic landscape and note changes from week-to-week.  
After a weak first quarter, it appears economic activity in the U.S. has picked up in 2Q 2015, though maybe not as much as initially thought. A weaker than expected retail sales report in June cast some doubt on consumption estimates, though May personal outlays showed the strongest consumer spending growth since August 2009. Housing data remains the biggest star of this quarter, as starts, permits and sales continue to climb, which all indicate the residential investment component of GDP will get a bump. Overall, despite a few remaining areas of weakness, we see the U.S. economy continuing to expand.
June's employment report showed the labor market continuing to tighten, while also highlighting the structural problems in the U.S. labor force. The unemployment rate fell to 5.3%, although this drop was due to a decline in labor force participation, rather than a bump in payrolls. That being said, payrolls still increased by 223,000, in line with the 3-month average. However, wage growth has yet to materialize, as average hourly earnings only rose 2.0% from a year earlier.
In the third week of 2Q2015 earnings season, the S&P 500 looks on track for earnings per share to fall 3.2% y/y. This is an improvement over the initial numbers and financials are leading the index after many of the big names reported strong earnings, followed by tech and healthcare after several significant surprises in earnings. As we get further in to earnings season, the dual macro headwinds of low oil prices and a strong U.S. dollar will come into play.
Headline consumer prices rose 0.3% between May and June (0.0% y/y), while core CPI inflation firmed slightly to 1.8% y/y. The headline month-to-month increase was driven higher by increasing energy prices, as the gasoline price index increased 3.4% m/m. Excluding volatile food and energy prices, core prices rose 0.2%, largely due to increases in medical care prices and owners' equivalent rent - a sign of the strengthening housing market.
The Fed remained on message when Chair Yellen testified before Congress. She continued to emphasize the data dependent nature of policy actions and that the Fed does expect to hike rates this year. Despite international volatility and a weak first quarter, the Fed is looking through the near term headlines. In the longer term, the Fed revised its projections for growth in 2016 and 2017 up at its June meeting, but showed dovishness in pulling its estimates of medium-term Federal funds rate downward, signaling a slow climb upward for rates. Even so, the initial hike is a round the corner as soon as the committee sees further improvement in the labor market and has "reasonable confidence" inflation will hit 2% in the medium term.
  • Volatility caused by the timing and communication of Fed tightening.
  • Political risk caused by a potential Greek default and/or exit from the single currency area.
  • Deflation worries in other developed economies outside of the U.S.
  • Volatility caused by sharp swings in commodity prices and exchange rates.
  • A slow upward trend in earnings (despite the temporary drag from cheap oil and a high dollar), coupled with low interest rates, still make stocks look attractive in relative terms.
  • Cyclical and small cap stocks are generally favored in a rising interest rate environment.
  • High yield bonds look more attractive than Treasuries, but a diversified approach to fixed income investing seems appropriate given likely Fed tightening in 2015.
  • Despite disappointing returns due to a stronger dollar in 2014, international exposure is still warranted given growth prospects abroad.

Guide to the Markets

Guide to the Markets

June 30, 2015 | TOOL

Our popular Guide to the Markets illustrates a comprehensive array of market and economic trends and statistics through clear, compelling charts you can share with your clients.

Use the Guide

Recent Insights

Jul 27, 2015 | DOCUMENT

Weekly Market Podcast

Jul 17, 2015 | DOCUMENT

Bench module: Long-term care

Jul 02, 2015 | DOCUMENT

GTM 3Q2015-Europe

Jul 02, 2015 | DOCUMENT

GTM 3Q2015-UK

Jul 02, 2015 | DOCUMENT

GTM 3Q2015-Asia

Jul 01, 2015 | DOCUMENT

Bench module: Spending

Jul 01, 2015 | DOCUMENT

Quarterly Perspectives

Jul 01, 2015 | DOCUMENT

Bench module: Health care

Jul 01, 2015 | DOCUMENT

Bench module: Longevity

Jun 30, 2015 | DOCUMENT

Guide to the Markets

Jun 30, 2015 | DOCUMENT

GTM 3Q2015-U.S. (Spanish)

Jun 30, 2015 | DOCUMENT

Portfolio Discussion: Bear Markets

Jun 30, 2015 | DOCUMENT

GTM 3Q2015-Brazil

Jun 30, 2015 | DOCUMENT

Portfolio Discussion: Equities

Jun 30, 2015 | DOCUMENT

On the Bench

Jun 26, 2015 | DOCUMENT

Health care costs in retirement

Jun 23, 2015 | DOCUMENT

Long-term care

Jun 11, 2015 | DOCUMENT

Asset Allocation Views

May 29, 2015 | DOCUMENT

Balancing acts

May 21, 2015 | DOCUMENT

WorldView 2Q 2015

May 14, 2015 | DOCUMENT

SmartRetirement funds brochure

May 07, 2015 | DOCUMENT

Women & Retirement

May 01, 2015 | DOCUMENT

Global Allocation Sales Aid

Apr 30, 2015 | DOCUMENT

The growth of one dollar

Apr 24, 2015 | DOCUMENT

Myth vs. reality

Apr 24, 2015 | DOCUMENT

Control issues

Mar 13, 2015 | DOCUMENT

Off Balance Executive Summary

Feb 26, 2015 | DOCUMENT

Guide to Retirement

Feb 13, 2015 | DOCUMENT

WorldView 1Q 2015

Feb 09, 2015 | DOCUMENT

Beware the retirement tax cliff

Jan 14, 2015 | DOCUMENT

GMAG Strategy Summit Views

Jan 02, 2015 | DOCUMENT

Did You Know?, Journey magazine

Jan 02, 2015 | DOCUMENT

Journey magazine Fall 2014

Dec 01, 2014 | DOCUMENT

Understanding your fiduciary role

Nov 21, 2014 | DOCUMENT

WorldView 4Q 2014

Nov 10, 2014 | DOCUMENT

Q3 2014 Mutual Fund Commentary

Nov 10, 2014 | DOCUMENT

Q3 2014 Commingled Fund Commentary

Nov 10, 2014 | DOCUMENT

Q3 2014 Commingled Fund Views

Nov 10, 2014 | DOCUMENT

The case for concentration

Nov 05, 2014 | DOCUMENT

Fixed Income Solutions brochure

Oct 07, 2014 | DOCUMENT

Social Security: The big picture

Sep 24, 2014 | DOCUMENT

The future of Social Security

Sep 12, 2014 | DOCUMENT

The path to a stronger Europe

Aug 19, 2014 | DOCUMENT

Retirement Bulletin

Jul 22, 2014 | DOCUMENT

Skate to where the puck is going

Jul 14, 2014 | DOCUMENT

Target Date Compass Questionnaire

Jul 11, 2014 | DOCUMENT

Understanding Re-enrollment

Jul 09, 2014 | DOCUMENT

Did You Know?, Journey magazine

Jul 09, 2014 | DOCUMENT

Journey magazine Summer 2014

Apr 07, 2014 | DOCUMENT

Retiring in the 21st Century

Mar 28, 2014 | DOCUMENT

Retirement Bulletin

Mar 14, 2014 | DOCUMENT

Spotlight on: 130/30 strategies

Feb 14, 2014 | DOCUMENT

Breaking the 4% Rule

Feb 04, 2014 | DOCUMENT

The lifecycle of spending

Feb 01, 2014 | DOCUMENT

Decoding target date fund design

Dec 16, 2013 | DOCUMENT

Journey for Fall/Winter 2013

Dec 16, 2013 | DOCUMENT

A Word, Journey magazine

Dec 16, 2013 | DOCUMENT

Stat Life

Dec 16, 2013 | DOCUMENT

Speaking Investments

Dec 16, 2013 | DOCUMENT

Did You Know?, Journey magazine

Aug 31, 2013 | DOCUMENT

Ready! Fire! Aim? 2012

Jun 05, 2013 | DOCUMENT

Journey Magazine - Summer 2013

May 22, 2013 | DOCUMENT

Social Security Q and A

Jan 01, 2012 | DOCUMENT

The retirement inflation threat

Sep 01, 2011 | DOCUMENT

Penny wise, pound foolish

Insights Finder

Looking for a specific insights?

Start your search here

Select a Topic

Select a Media Type

Select a Featured Thought Leader

Search Library Visit Library

Featured Video

Simplify the complex with the Guide to Retirement 

Mar 03, 2015 | VIDEO