With so much economic news coming at investors from so many sources, we often get asked which headlines can be trusted and which cannot? Currently one of the big discussions is about Greece leaving the European Union. Our response is, “So what? Who cares?” Greece is going to make good economic news headlines for mainstream media but in the end, it might not impact Europe at all.
Economic news worth following
Emerging markets have seen the largest capital outflow since the beginning of the crisis. This is because people are starting to put money back into safer places instead of taking higher investment risks to regain losses from 2008. While this is good for U.S. investors in the short-term, in the longterm it could be bad because when markets in these smaller countries turn over, governments can topple. This is a headline worth following but investors should still be cautious as there may still be market volatility based on news hype, like Greece, and not actual economic news.
Last week’s market recovery
Last week we saw the market recover some of it’s losses with moderate gains. The price of oil increased and new home sales rose. Manufacturing and personal income also increased however, we are seeing the American consumer save their money more than spend it. Many economists have been surprised at this but our research is telling us that it could take up to 10 years for people to get debt back under control after a financial crisis. We might not see good consumer spending until 2018. This is one factor that has really held our economy back.
Weak markets and interest rates
In other economic news, the Jobs Report was lower than expected last week which is being contributed partially to bad weather. The silver lining in this is that it will keep the Fed from raising interest rates. The news media will make a big deal out of the Jobs Report and the market can react whether the news spins it as good or bad.
Mid March is historically a weak period for the markets because of Easter and financial industry trends (more in the video). Sometimes this leads to a good April so we could see the market turn around.
The strong dollar
Another silver lining, like the weak Jobs Report, is the fact that even though the dollar has dropped about 2% recently, this actually helps U.S. companies that are in multinational sales. The energy industry also benefits from a weaker dollar and it is starting to show signs of recovery.
Keeping up with the details
We are watching a lot of these market details right now for the domestic and global economy. We will keep you update here on economic news you can trust as well as through our market outlook letters and on social media.
Please send us your comments and questions
Greg Powell, CIMA
Email Greg Powell here
fi-Plan Partners is an independent investment firm in Birmingham, AL, serving clients across the nation through financial planning, wealth management and business consulting. fi-Plan Partners creates strategies in the best interest of their clients using both fee based investing and transactional investing.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
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