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First Quarter 2017 Economic & Market Review Now Available

by The Gould Asset Management Team

Note: This post is an excerpt from Gould Asset Management’s Economic and Market Review for the First Quarter of 2017. The excerpt is posted here for the benefit of our blog subscribers.

US Enters 2017 on Positive Note
Overall, the US produced encouraging results throughout the first quarter, indicative of an economy that has made great strides since the depths of the recession. Yet some cautionary readings also appeared, reflecting the need for vigilance in the months ahead.

Multiple measures indicate the US is nearing full employment. The jobless rate fell to 4.5% in March, its lowest figure in almost a decade. The number of discouraged and underemployed jobseekers has dropped to post-recession lows as well, indicating many Americans are finding it easier to land full-time work.

Average hourly earnings rose 2.7% over the past year, part of a slow but building growth in wages. A tightening labor market has made it tougher for employers to secure qualified workers. This trend, in turn, could create upward pressure on salaries, as organizations look for incentives to entice strong applicants.

GDP expanded by a healthy 2.1% in the final quarter of 2016, according to the latest estimates. However, current projections place Q1 expansion at just 0.9%, and the figure is unlikely to top 1.5%, even following upward revisions.

Consumer confidence spiked to a 16-year high, part of a surge in overall sentiment following November’s election. Yet puzzlingly, household spending declined over the past two quarters. With consumption fueling nearly 70% of GDP, any persistent weakness here could create headwinds for the economy as a whole.

Trump took steps toward realizing his reformist vision on trade, ordering officials to scrutinize existing trade deals in an effort to reduce the trade deficit. However, talk of an all-out trade war with nations like China may be premature. President Trump currently seems hesitant to carry out some of his more aggressive campaign promises, like his pledge to impose a 45% tariff on Chinese imports.

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Fourth Quarter 2016 Economic & Market Review Now Available

by Scott Smith, CFA

Note: This post is an excerpt from Gould Asset Management’s Economic and Market Review for the Fourth Quarter of 2016. The excerpt is posted here for the benefit of our blog subscribers.

US Stocks Jump as Markets Digest Trump’s Surprise Presidential Victory 

US stock markets finished 2016 on a strong note, rising 3.8% for the quarter and 12.0% for the year, as measured by the S&P 500 stock index. Donald Trump’s surprise win proved to be the defining event of the quarter. Markets surged on the prospect of increased infrastructure spending, lower personal and corporate tax rates, and relaxed regulatory requirements. Investors are saying that taken together, these measures will accelerate US economic growth.

Financial stocks surged on the quarter, rising 21.1% as measured by the S&P Financial Select Sector index, amid rising interest rates and expectations of a friendlier regulatory environment. Banks’ lending profits stand to benefit should the yield curve continue to normalize.

Mid and small cap stocks capped a remarkable year that saw the Wilshire 4500 index rise 6.5% on the quarter and 18.5% for the year. The strong performance comes on the heels of two consecutive years (2014-2015) in which large-cap stocks soundly outperformed mid and small caps, illustrating the benefits of broad diversification across all sectors and capitalizations of the US stock market.

Market volatility was modestly higher in the fourth quarter, with the VIX volatility index reaching a high of 23 just prior to the November elections, before falling back to more subdued levels (low teens) at year-end.

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Three Weeks After the Election—Taking Stock

by The Gould Asset Management Team

The US election was about three weeks ago and financial markets have wasted no time adjusting, making dramatic moves and confounding many along the way. While it will take at least several months to get a firmer handle on the investment implications of this election, we thought this would be a good moment for taking stock.

We will begin by reviewing the “early returns” in various financial markets—what markets have actually done from the market close on November 8 through November 30. Next we will consider the probable causes of the market’s recent movements. Finally, we will offer some cautionary thoughts—not to discourage anyone, but simply to keep ourselves well grounded as we look forward.

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Post-Election Investment Counsel

by The Gould Asset Management Team

Stock markets worldwide plunged overnight in the wake of the surprise election of Donald Trump. Just as quickly, markets have snapped back this morning and as this is written, the US stock market is well above yesterday’s closing level.

Without question, Mr. Trump’s election introduces uncertainty across a broad swath of economic affairs, arguably widening the range of potential outcomes investors must consider. Nobody, including us, can say with authority what a Trump administration will mean for the economy and financial markets.

Faced with this, some investors might wonder whether to move to the sidelines and take a wait-and-see approach. We would caution against this. History teaches us that a long-term investment plan, carefully designed and consistently implemented, is the surest port in the storm.
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