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Charting the course 2016
SUMMARY
In this issue, we “Chart the Course” by looking at key charts regarding the US economy and Investor
Sentiment. We find that the data in many of the following charts currenty implies overall positive economic
outlook for the near term. We hope you enjoy these, and will publish our traditional Macro Musings at the
end of September.
Charting the course: the economy
Economic models confirm. The respected Conference Board Leading Economic Index shows economic
growth at business cycle highs (data from Doug Short).
August 29, 2016
MACRO MUSINGS
Rush Zarrabian, CFA Portfolio Manager
Europe has struggled. Both European stock markets and economy have lagged the United States in the
last five years. The above chart captures the stark difference in production since 2011.
Retail Sales hit an all-time high. Retail Sales often flatten before the onset of a recession. They just
made an all-time high last month (data from The Fat Pitch blog).
Charting the course. INVESTOR SENTIMENT
Confidence improves among the middle class. One of the fascinating developments since the Great
Recession was the difference in consumer confidence between those who make over $50,000 versus
those who make less. The gap is finally closing (data from Bespoke Investment Group).
People are still pulling money out of equity funds. Despite the market rebound, money continues to
flow out of equity mutual funds and exchange-traded funds. This is not the typical behavior you would
see during market tops.
Charting the course: THE PRESIDENTIAL Election
The market usually ignores the election. Despite the wild presidential contest, the market has
historically shrugged. Most election years end with gains (data from Michael Batnick).
The best market returns have come under Republican presidents. So have the worst. The table
illustrates that you should never predict markets based on which party occupies the White House. The
president simply does not have the influence on the markets and economy that many think they do.
Charting the course. FUN STUFF
Asset class & Sector review. Both Cyclical and defensive areas of the
market are working
The Illusion of Choice. This busy chart shows that fourteen companies own many of the brands you
know and love (from Visualizing Economics)
Inflation varies substantially depending on the product. Many items are much cheaper than they were
20 years ago. However, crucial needs such as education, child care, and healthcare are much costlier.
Though growth has not been rapid, it has remained positive with a supportive backdrop. Focusing on the
US economy as a whole, coloring in context with various data, suggests a low probability of
recessionary pressure in the near term.
The chart(s)/graph(s) shown is(are) for informational purposes only and should not be considered as a suggestion of any
investment recommendation, investment strategy, or as an offer of advice to buy, sell, or exchange any investment product or
investment vehicle. Past performance may not be indicative of future results. While the sources of information, including any
forward-looking statements and estimates, included in this (these) chart(s)/graph(s) was deemed reliable, Corbett Road
Wealth Management, Spire Wealth Management LLC, Spire Securities LLC and its affiliates do not guarantee its accuracy.
The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinions of Spire
Wealth Management LLC, Spire Securities LLC or its affiliates.
All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or
completeness. MacroCastTM is a proprietary index used by Corbett Road Wealth Management to help assist in the investment
decision-making process. Neither the information provided by MacroCastTM nor any opinion expressed herein constitutes a
solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. The phrase “the
market” refers to the S&P 500 Total Return Index unless otherwise stated. The phrase “risk assets” refers to equities, REITs,
high yield bonds, and other high volatility securities. Past performance is no guarantee of future results.
Spire Wealth Management, LLC is a Federally Registered Investment Advisory Firm. Securities offered through an affiliated
company, Spire Securities, LLC, a Registered Broker/Dealer and member FINRA/SIPC