Broker Check

February 2016 Month In Review

Many-a-time, when we look at our statements, they tell short, succinct, and somewhat misleading stories. We see point A, and we see point B. What happened in between gets lost by a straight line connecting the two dots. For instance, if you were to look at the S&P 500 and the Russell 3000 for the month of February, and were to draw a line from the beginning value to the ending value, you’d basically see a straight, horizontal line. Never-mind the near symmetrical 6% fall it took through the first half of the month, and conversely back up on the latter half. How the value got to the end of the month was all but the way a crow flies. While we are all interested in the ending value, knowing what it took to get there could change your perspective on what your money is doing.

Many of you will log in to your 401k or get your investment statements in the mail and on that information alone say, “Oh, the markets were flat this month,” which (as most of you know) couldn’t be further from the truth. It is a function of the fact that the beginning and ending values of a statement only tell part of the story.

The markets ended the month basically flat in equities. The Russell 3000 (a measure of the total U.S. equity market) ended slightly down -0.03% while the S&P 500 imitated the same, down -0.13%. The U.S. bond market measured by the Barclays Aggregate Bond index ended slightly higher at 0.89%1, most likely a correlation to the dollar slightly weakening in February.

I cannot begin to believe all the things we could talk about as it pertains to the equity markets and the economies. Between the central bank in China decreasing their reserve requirement, to the talks of a Brexit in Europe, to the wonderful stability of oil prices, to a weakening dollar, to good job’s reports, to Trump’s “yuuuge” lead in the GOP primaries…there seems to be an endless amount of conversations to be had. Thankfully, I will not go into depth on all of them, however I thought it would be nice to switch up my format; so instead of taking time in each (as I have done in most all those subjects in the past) I will create one-sentence (potentially run-on sentences) bullet points that get the message to you, intentionally keeping with our theme of stories that are succinct and to the point.

China --> The central bank in China infused over $130 billion of money into the financial markets via reserve requirement easing, continuing to try and stabilize the new, slower-growth economy.

Brexit --> The United Kingdom has issues with the EU’s immigration policies, economic governance of the financial banks, business regulation, and sovereign integration that will all play into the referendum vote in June this year, the cause of which would potentially slow the UK’s economic growth and create trade complications with non-EU countries3.

Oil Prices --> The International Energy Agency (IEA) estimates that production will go down this year and demand will go up, hopefully bringing more stability to oil prices.

Weakening Dollar --> Otherwise put, a weaker strengthening dollar. With the dollar already showing signs of stability, corporate revenue and earnings reports should benefit from a stable dollar for the remainder of the year.

Job’s Report --> The ADP jobs report released on March 2nd, shows positive signs for the job’s market. March 4th’s actual employment report continued to show labor market improvement.

Trump --> After winning a majority of the state delegates on Super Tuesday, Trump opponents face an uphill battle to overcome his large lead, creating important decisions to exit the race before the “winner-take-all” states voting gets underway.

All in all, we see February as another important sign that the U.S. economy is most likely not going to be in a recession this year, creating more jobs, better earnings reports, and a return to fairer values.

As always, we are here for you with any questions concerning your own investment portfolio and outlook.

Best Regards,




1Morningstar Office


3LPL Weekly Economic Commentary, February 16th 2016

The economic forecasts set forth in the article may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

Investing involves risk, including the loss of principal.

The Standard & Poor’s 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

The Barclays Aggregate Bond Index represents securities that are SEC-registered, taxable, and dollar denominated. The index covers the U.S. investment-grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities.

The Russell 3000 Index measures the performance of the 3,000 largest U.S. companies based on total market capitalization, which represents approximately 98% of the investable U.S. equity market. As of the latest reconstitution, the average market capitalization was approximately $4 billion; the median market capitalization was approximately $700 million.

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 indices are unmanaged and cannot be invested into directly.  Unmanaged index returns do not reflect fees, expenses, or sales charges.  Index performance is not indicative of the performance of any investment.  Past performance is no guarantee of future results.