The Intelligent Investor Newsletter – July 29, 2016

Consultiva

A bi-weekly publication from Consultiva Internacional, Inc. (Registered Investment Adviser)

Donald Trump painted a very dark picture of the U.S. in his acceptance speech at the Republican convention. He reinforced some of the often repeated topics; crime, immigration, and the trade and budget deficits. “Fear mongering”, as some might call this form of communication, is a tactic used by many contenders, but at a time when stocks are at a record high, it seems hard to give his words much weight, at least from an economic perspective. The U.S. economy is obviously in better shape than Trump suggests. Ultra-easy monetary policies in the U.S. and abroad have greatly benefited stocks, pushing up valuation multiples. Investors seem to be focused on positive signs in the economy, such as U.S. consumer spending (see Graph I below). The Atlanta Fed’s GDPNow model, last updated on July 19, suggests that real personal consumption expenditures expanded in Q2 by an annualized 4.5%. US consumers buying houses (see Graph II below). Existing home sales increased 1.1% during June, the highest since February 2007, and the share of first-time buyers hit 33% in June, its highest level since July 2012. Lastly, U.S. real household income is at record highs, as data from the Bureau of Economic Analysis shows that on an annualized and a per-household basis, real personal income, real disposable income, and real personal consumption are up since the start of 2000 by $23,600 (24%), $22,100 (26%), and $18,500 (24%).

The U.S. economy has also passed various stress tests during the current expansion, starting with the Greek crisis in 2010, the downgrading of U.S. government debt by S&P in 2011, the plunge in oil prices in 2014, China’s devaluation of the Yen in 2015, and Brexit in 2016. Capital markets have shown the U.S. economy bounce back from each one of these events. As experienced marketers know, fear is a double edged sword. It can be effective with naive groups, but when the proof shows a different story, the crowds start to head in the opposite direction.

 

Intelligent Investor July 29, 2016

Intelligent Investor July 29, 2016

by Myrna Rivera, CIMA®
Founder & Chief Executive Officer

FURTHER READING AT CONSULTIVA INTERNATIONAL INC.

 

DISCLAIMER:

Consultiva is a Registered Investment Adviser. The registration with the Securities and Exchange Commission does not imply a certain level of skill or training. Consultiva has compiled the information for this report from sources Consultiva believes to be reliable. Sources include: investment manager(s); mutual fund(s); exchange traded fund(s); third party data vendors and other outside sources. Consultiva assumes no responsibility for the accuracy, reliability, completeness or timeliness of the information provided, or methodologies employed, by any information providers external to Consultiva. Conclusions reflect the judgement of Consultiva Investment Strategy Committee at this time and is subject to change without prior notice. There also can be no guarantee that using this information will lead to any particular result. Past performance results are not necessarily indicative of future performance. Diversification does not guarantee a profit or protection against loss. This document is for informational purposes only and is not intended to be an offer, solicitation, recommendation with respect to the purchase or sale of any financial investment/ security or a recommendation of the services supplied by any money management organization neither an investment advice or legal opinion. Investment advice can be provided only after the delivery of Consultiva’s Brochure and Brochure Supplement (ADV Part 2A and 2B) once a properly executed investment advisory agreement has been entered into by a client and Consultiva. This is not a solicitation to become a client of Consultiva. There are risks involved with investing including the possible loss of principal. All investments are subject to risk. Investors should make investment decisions based on their specific investment objectives, risk tolerance and financial circumstances. Global and international investments may carry additional risks that are generally not associated with U.S. investments, such as currency fluctuations, political instability, economic conditions and varying accounting standards. Annual, cumulative, and annualized total returns are calculated assuming reinvestment of dividends and income plus capital appreciation.

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