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Lindsey Report – May


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The domestic equity markets (as measured by the S&P 500) ended the month of April minimally higher. As you know, equity values took a tumble to begin 2016, falling more than 10% through early February (AP).

Fortunately, the pattern did not continue and equities regained most of their losses through the end of March. That rally continued into mid-April with the S&P 500 turning positive for the year and once again eclipsing the 2100 level. Unfortunately, the market has had a difficult time maintaining that level (AP).

The all-time-high on the S&P 500 is 2130, but that level was hit back in May of 2015. The markets then meandered around the 2100 level for several months, but have struggled with that level ever since. It has thrice retaken 2100 (Nov ’15, Dec ’15 and April ’16), but each time has only managed to hold it for a few days. This most recent time was no exception, as we were only there for a day in April. At this point, the S&P is basically flat for the year (AP).

On the other hand, the fixed income space has had a nice start to the year. The Barclays U.S. Aggregate Index, which is a broad measure of both government and investment grade corporate debt, is up over 3% thus far in ’16 (barcap.com). Moreover, after having been beaten up over the last year and a half, high yield bonds have staged a rally this year (as measured by the Barclays U.S. Corporate High Yield Index).

As for the domestic economy, in Q1 it expanded at the slowest pace in two years, growing by an anemic .5%. We remain in a slow or in this case, very slow, growth environment. This sounds like a broken record, as we have yet to see any “robust” growth periods during this “recovery”. Nonetheless, the Federal Reserve continues to forecast economic growth between 2.1% – 2.3% this year. Hopefully, the Fed is correct; however, we will need to average better than 2.6% in the coming quarters. Based upon the growth rates we have seen during this expansion, that would seem a rather tall order (Reuters).

 

 

The opinions voiced are for informational purposes only and are not intended to provide specific advice to any individual. To determine which investments are appropriate for you, consult myself prior to investing. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly.  The economic forecasts set forth in this commentary may not develop as predicted and there can be no guarantees that strategies promoted will be successful.

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