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Published byAnnabella Kennedy Modified over 9 years ago
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303 Broadway Suite 1200 Cincinnati, OH 45202 (888) 244.8167 (513) 361.7600 fax (513) 361.7605 FortWashington.com 2014 Midyear Update Nick Sargen Chief Economist
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Introducing the Stanford Colts!
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Investment Results (annual total returns in %) *Includes dividends except for Emerging Markets, which is price change Source: Bloomberg 2013 2014 1 st Half Equities* S&P 50032.4 7.1 EAFE ($) 22.8 4.8 EM($)-2.6 6.1 Bonds Treasuries-2.8 2.7 Corporates-2.0 5.7 High Yield7.4 5.6 EMBI ($)-5.2 8.7 For Internal Use Only 3
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What was Priced into Markets? 4 ♦ 2014: A Breakout Year for U.S. ♦ Improved Performances (Diminished Risks) Abroad ♦ Fed ends QE, but refrains from tightening
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5 Source: Barron’s
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Treasury Yield Curve 6 Source: Bloomberg
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Federal Funds Futures Expectations 7 Source: Bloomberg
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The Fed’s Twin Objective: Inflation and Unemployment Source: BLS, BEA % 8
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Inflation Expectations Source: Bloomberg 9
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Two Views of the Economy: Real GDP Growth vs. Nonfarm Payrolls Growth 10 Source: BEA
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Read GDP Growth and Fiscal Drag 11 Source: BEA
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Business Surveys Have Improved Recently Source: ISM, Bloomberg For Internal Use Only 12
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Global Surveys Point to Moderate Economic Growth 13 Source: JP Morgan, Bloomberg %
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Tensions in the Euro-zone have Lessened…. 14 Source: Bloomberg % Government Yields
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Oil Prices Have Been Steady Despite Increased Tensions Source: Bloomberg For Internal Use Only 15
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Has China Mortgaged its Future? 16 ♦ China withstood the Great Recession remarkably well ♦ But it deployed a tidal wave of credit ♦ Economic growth of 7% - 8% is likely to slow over time ♦ China’s leaders are embarking on a new set of policy reforms ♦ But internal political tensions are increasing For Internal Use Only
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Where are we in the Economic Cycle? RecessionRecovery Late Cycle (inflation) PBPB PBPB PSPS PSPS 17
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Share of Labor Income vs. Corporate Profits 18 Source: Bureau of Economic Analysis
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Portfolio Positioning 19 ♦ Maintain a tilt in favor of stocks over bonds ♦ Stocks are no longer cheap; however, the market is not frothy ♦ Stronger growth would bring the Fed into play sooner ♦ Weaker growth would imply earnings disappointment
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