The Intelligent Investor Newsletter – September 8, 2016

Consultiva

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

Federal Reserve Chair Janet Yellen seemed to join the chorus of officials pointing to another hike in interest rates. At her August 26th speech at the Jackson Hole summer meeting, Yellen remarked that “in light of the continued solid performance of the labor market and our outlook for economic activity and inflation, I believe the case for an increase in the federal funds rate has strengthened in recent months.” While this statement transmits considerable certainty of future action, Yellen also provided fellow Reserve members with the chart below (Graph I). It shows a line tracing the median path for the federal funds rate through the end of 2018 based on the economic projections the Reserve published in June. The shaded region on either side of the line portrays a 70% probability that the rate will be between zero and 3.25% by the end of next year and between zero and 4.5% by the end of 2018. This is a very wide-ranging forecast!

Yellen provided the following explanation for the outlook: “The reason for the wide range is that the economy is frequently buffeted by shocks and thus rarely evolves as predicted. When shocks occur and the economic outlook changes, monetary policy needs to adjust. What we do know, however, is that we want a policy toolkit that will allow us to respond to a wide range of possible conditions.” In other words, investors are on their own and each has to procure his or her own too.

by Myrna Rivera, CIMA®
Founder & Chief Executive Officer

Graph I

 

 

FURTHER READING AT CONSULTIVA INTERNATIONAL INC.

 

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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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