Review Of Economy Of The U.s. Economic And Stock Market

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Review of the economy of the U.S. ECONOMIC AND STOCK MARKET COMMENTARY Consumers are stepping up to the plate, with retail sales climbing by 0.6% in August, the fastest pace in four months. Such an uptick, plus an upward revision in July’s spending, boosts prospects for the economy in the months ahead. Behind this better retail showing, most likely, were declining layoffs, an improving stock market, and lower prices at the gas pump. Breaking the survey down, we saw gains at auto dealers, furniture outlets, building materials stores, and sporting goods retailers. All told, the consumer appears to be engaged as we head into the year’s home stretch. That said, there was some cause for concern in the latest data. To wit, the report also noted…show more content…
On point, at its recent FOMC meeting, it reiterated that it would hold short-term interest rates near zero for a “considerable time.” This suggests to us that the Fed will first start raising rates by mid-2015, and even then will proceed slowly, so as not to disrupt the progress being made by the economy, overall. Also, with inflation staying below the Fed’s targets, the lead bank retains plenty of latitude on policy. Meanwhile . . . The bulls are hanging in there, but they are being tested. Not only are they having to deal with pending interest-rate adjustments, but they are up against even more challenging headwinds internationally, any one of which could destabilize our markets. Conclusion: For now, though, we are upbeat on equities, sensing that stocks can rise further assuming the economy and the Fed are supportive. Please refer to the inside back cover of Selection & Opinion for our statistically-based Asset Allocation Model’s current reading. Model Portfolios: Recent Developments PORTFOLIO I Portfolio I has held on to the uptick in market support it received as the month of August drew to a close. In addition, as of this writing, it has been able to move forward modestly in September, in contrast to most market benchmarks, which have largely treaded water. Accordingly, the portfolio looks to be in a position to post a good return for the third quarter. That said, the September period is not yet complete, so our group’s fortunes could change. A
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