The Family Firm Blog

4th Quarter of 2017 in Review

Posted by Nate Gendelman on 1/16/18 6:01 PM

Stock markets continued their remarkable rise during the fourth quarter. Stocks rose every month, and, in fact, have risen for 14 straight months through year-end. Volatility remains eerily low. Virtually every sector and geographic region had positive results. Bonds gained value in December and ended the period with a small positive return. The global economic recovery gained strength and the Fed raised short-term rates again. A large corporate tax cut was signed in late December, and this provided further impetus to the stock market rally.

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Global Economic Growth

Posted by Stephen Daly on 1/11/18 1:05 PM

For the first time since the onset of the Great Recession, all 45 countries tracked by the Organization for Economic Co-operation and Development (OECD) showed positive annual GDP growth in 2017. 

This synchronized global growth is certainly good news for the global economy but will it be good for equity returns?  Economic growth doesn't always result in good stock market returns, but over longer periods of time the two are positively correlated. 

You can read more about the OECD's report by clicking here.

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US Factory Growth Highest Since 2015

Posted by Stephen Daly on 1/4/18 2:50 PM

The output of US manufacturers increased at a substantial pace in December of 2017 with growth reaching an 11 month high.

Manufacturers attributed the increased demand to both new and existing domestic customoers with realtively flat demand on export sales.

US based manufactures also noted that the cost of their inputs had increased and that they had been adding to their firm's payrolls.

It is still to early to see if this is part of a longer term trend and if the increased cost of inputs and additional staff finally lead to a pick up in the overall llevel of inflation.
  

 

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German Manufacturing

Posted by Nate Gendelman on 12/6/17 2:37 PM

Germany still remains the key to European economic progress. Manufacturing in that nation continues to impress. A measure of manufacturing strength is at heights last seen over 6 years ago.

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The Family Firm Co-Sponsors Taste of Bethesda

Posted by Stephen Daly on 10/17/17 12:38 PM

The Family Firm co-sponsored the 2017 Taste of Bethesda festival which drew over 30,000 attendees to Woodmont Triangle in Bethesda.

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Small Increase in Social Security Cola for 2018

Posted by Nate Gendelman on 10/14/17 4:36 PM

The 1 in 5 Americans receiving benefits from Social Security will see a 2% boost in their payments next year.

Whether this is viewed as good news or bad is a matter of perspective and playing with numbers. Viewed as glass half full: 2% is better than the miniscule increase for 2017, which in itself was better than the 0% raise for 2016.

Glass half empty: 2% is far below historical levels and is reflective of the lack of inflation in the overall economy. For instance, the average increase in the 80s and 90s was over 4%.

Anyone tempted to pop the cork on their Dom Perignon in celebration should also remember that, just as inflation has worked to increase the SS benefit, that same inflation will work to increase the Medicare Part B premium. Sigh

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Quality, Quantity and Performance of IPOs

Posted by Nate Gendelman on 10/13/17 4:34 PM

One way to measure the strength of the stock market is the vitality of Initial Public Offerings (IPOs). Quality, quantity, performance.

Quantity: although the 3rd quarter was a quiet one, 2017 overall has seen more action than 2016. Several big names such as Spotify and Dropbox may go public later this year, which would give the IPO market a lift.

Quality/Performance: the average IPO in the 3rd quarter of 2017 gained 36%. This was entirely due to strong results from biotechs.

Overall, the IPO market will never be like it was twenty years ago. The markets have changed and companies have other routes for funding than the heavily regulated public markets.

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Strong Industrial Production Across Europe

Posted by Nate Gendelman on 10/13/17 10:30 AM

Strong industrial production across Europe confirms the robust expansion taking hold across the region.

Particularly strong production results were recorded in Germany, Italy and Spain.

Should we be expecting more strength from the euro?

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Virtually all markets rose during the third quarter

Posted by Nate Gendelman on 10/9/17 9:57 AM

Virtually all markets rose during the third quarter. Emerging markets, energy, and technology stocks were particular standouts. Volatility remains eerily low. Bonds had a decent quarter despite another rate increase from the Fed.

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Odds of Another Rate Hike in 2017 Have Risen

Posted by Nate Gendelman on 9/27/17 3:59 PM

Odds of another rate hike in 2017 have risen following recent utterings from Yellen and other Fed movers and shakers.  They continue to expect an emergence of inflation. Perhaps they are even more alarmed by the extremely large (and unnecessary) tax cut that is in the pipeline.

In response, the dollar is up and bonds are down. 

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