Use the Guide
Browse the Guide
Portfolio Discussions
Dr. Kelly's Review
Use the Guide
Guide to Retirement
Discussions
Client Presentation
Headlines
Employment & the Fed
Navigating fiscal uncertainty
European Markets
U.S. Recovery
Headlines
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

Headlines

Weekly Insights

Week of May 25th, 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: 05/26/15
Weekly Economic Update
Stay current on the economic landscape and note changes from week-to-week.  
Updated
Lower than expected numbers on international trade, manufacturing and wholesale inventories, and retail sales likely will push the second estimate of 1Q 2015 real GDP into negative territory, from a first estimate of 0.2% q/q saar. Alternative measures of economic growth estimate that the economy is still expanding above 2.0%, especially after tax collection data reflected the major increase in employment over the past year, with income taxes being up 6.0% y/y. Despite some measured weakness this quarter, we see the expansion continuing at its moderate pace supported by strong housing numbers in April.
The April employment report met expectations for job growth, while further data about the March employment situation confirmed a still tightening labor market. April nonfarm payrolls rose by 223,000, and the unemployment rate moved slightly lower to 5.4%. Wage growth was again mild, but the March quits rate rose to 2.0%, suggesting workers are feeling confident enough to leave in search of another job, potentially signaling a coming increase in worker bargaining power. Overall, the labor market appears healthy, despite some indications of a growing skills gap in the labor force.
S&P 500 1Q 2015 earnings season is coming to a close, with about 92% of the S&P 500 market capitalization reporting through last week. Estimates were reduced over the quarter due to continued U.S. dollar strength and low oil prices, leaving room for companies to surprise to the upside. While we are estimating S&P 500 earnings growth to be -5.0%, S&P 500 earnings excluding the energy sector are projected to grow at 9.1%.
Headline consumer prices rose 0.1% between March and April (-0.2% y/y), while core CPI inflation firmed slightly to 1.8% y/y. High month-to-month increases in medical and education costs pushed overall costs up, while evidence that the housing market is tightening can be seen in shelter costs rising at their fastest pace over the past four months since before the housing bubble popped. Despite oil prices edging upwards, energy costs did not move much in the April CPI report and are still down 19.4% y/y.
There were no policy changes in the FOMC's April statement, but it was noted that weakness in U.S. economic data in 1Q is "transitory." However, minutes from the meeting signaled less willingness to begin policy normalization in the first half of the year. The Fed stressed a rate increase would only come after further improvement in the labor market and when the Committee had "reasonable confidence" inflation would hit 2% in the medium term. In March, the Fed lowered its forecasts for both the long-run unemployment rate and near-term economic growth, signaling the Fed sees more slack in the economy than previously thought.
  • Volatility caused by the timing and communication of Fed tightening.
  • Political risk potentially caused by Middle East turmoil and lower oil prices.
  • 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 special factors depressing 4Q 2014 numbers), 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

April 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

May 26, 2015 | DOCUMENT

Weekly Market Podcast

May 21, 2015 | DOCUMENT

WorldView 2Q 2015

May 14, 2015 | DOCUMENT

SmartRetirement funds brochure

May 11, 2015 | DOCUMENT

Asset Allocation Views

May 07, 2015 | DOCUMENT

Women & Retirement

May 01, 2015 | DOCUMENT

Global Allocation Sales Aid

Apr 30, 2015 | DOCUMENT

The growth of one dollar

Apr 30, 2015 | DOCUMENT

Health care costs in retirement

Apr 24, 2015 | DOCUMENT

Myth vs. reality

Apr 24, 2015 | DOCUMENT

Control issues

Apr 20, 2015 | DOCUMENT

GTM 2Q2015-U.S. (Spanish)

Apr 13, 2015 | DOCUMENT

Guide to Retirement

Apr 02, 2015 | DOCUMENT

Portfolio Discussion: Bear Markets

Apr 02, 2015 | DOCUMENT

Portfolio Discussion: Equities

Apr 02, 2015 | DOCUMENT

On the Bench

Mar 31, 2015 | DOCUMENT

Guide to the Markets

Mar 31, 2015 | DOCUMENT

GTM 2Q2015-Europe

Mar 31, 2015 | DOCUMENT

GTM 2Q2015-UK

Mar 31, 2015 | DOCUMENT

Quarterly Perspectives

Mar 31, 2015 | DOCUMENT

GTM 2Q2015-Asia

Mar 31, 2015 | DOCUMENT

GTM 2Q2015-Brazil

Mar 13, 2015 | DOCUMENT

Off Balance Executive Summary

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

May 29, 2014 | DOCUMENT

Options 101: The Building Blocks

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

The Importance of Being Earnest

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