Saturday, August 15, 2015

Newsletter 8/14/15

Note: Click on graphs to enlarge for easier reading.

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The Economy

The US economy is improving at a moderate pace. The GDP growth is at 2.3% for Q2 of 2015. 
From The Bureau Of Economic Analysis

The unemployment rate is the lowest it has been since 2009 at 5.3%.
From The Bureau Of Labor Statistics

 The latest Inflation data shows inflation is tame at less than 1.0%.

The consumer sentiment index is still above 90.

The Federal Reserve board (Fed) is contemplating raising interest rates in its September meeting and stated that it will be data driven in its decision. Overseas economies are mixed. Europe is coming out of a recession while China may be in a recession. Greece remains a risk to Europe by not being able to meet its debt obligation and the other debtor European countries following Greece if it exits from the EU. The European Central Bank is accommodative by moving interest rates lower and the Chinese government recently devalued their currency and made short selling illegal to ease the recession and stop the market selloff respectively. Brazil and Russia are in a recession. In my opinion, the Fed will not raise rates in September as the dual mandate to keep inflation and employment in check is met and raising rates will further make the situation worse in emerging markets. Also, it is best to invest in the US as the economy is growing and the market is less volatile than other places around the world.


Markets around the world performed year to date according to the following chart. 
From Yahoo Finance

The ranking is in the enlarged lower right corner as follows.
Note that Europe in terms of US dollars was not the winner. NASDAQ was the winner. The US dollar strengthened against the Euro making the return less than it would be in Euro terms. How does your portfolio compare?  


Stocks were mixed. Some were winners like Netflix and some were losers like Micron Technologies. See the chart below for notable stocks performance year to date.
From Yahoo Finance

The ranking is in the enlarged lower right corner as follows.
Mike Katto
Registered Investment Advisory Representative