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Tuesday, July 11, 2017
Wide variations in sector returns have generally been the norm; this year information technology and healthcare are the leaders; energy and telecommunications are the laggards.

This week marks the start of Q2 earnings season. Expectations for earnings growth are positive but not as enthusiastic as the Q1 growth of 13.9%. Currently, the consensus forecast for the S&P 500 is for 6.2% growth led by the tech sector. The tech sector continues to deliver top and bottom line growth and, as a result, is at the top of the leader board with 18% YTD performance. Surprisingly, the consumer discretionary sector is expecting negative growth in Q2. The automobile and traditional retailer subsectors are the main contributors to the dour predictions, but the pessimistic outlook regarding the consumer is generally misguided. In fact, this week’s economic data releases show that consumer credit in May expanded by 5.8%, its fastest rate in seven months as consumers took on more revolving and non-revolving debt and the number of job openings in May fell from it second highest level ever as company new hires surged. With 409,000 consumers with new jobs and $18.4 in additional consumer credit outstanding, earnings expectations will likely be crushed. Buckle up and stay tuned. Please read page 17 of the Global Perspectives™ Book.

Friday, July 7, 2017
U.S. Leading Indicators have been consistently positive — in fact, for 17 of the last 24 months.

Boom. The June non-farms payroll report was a firecracker. There were 222k jobs created last month and the two prior months were revised upward refuting speculation that the jobs market is softening. The gains were broad based, with even the beleaguered retail sector managing to add jobs for the first time in five months. The unemployment rate ticked up to 4.4% as more workers entered the work force encouraged by the increases in opportunities. However, wage gains were on the low side, barely inching up .2%. The tepid wage gains are being blamed on everything from structural issues to low productivity to global influences, but this strong employment report will keep the Fed on track to normalization despite the lack of wage inflation. If you are still worried about recession, please study leading indicators on page 67 of the Global Perspectives™ Book.

Thursday, July 6, 2017
Total payrolls, including all non-farm employment, have inched steadily upward with private job creation leading the way.

The ISM non-manufacturing index surprised on the upside with an acceleration in June and a reading of 57.4%. This index represents the services sector of the economy, by far the largest portion. The manufacturing index also showed acceleration in June. However, the ADP payroll report was a slight disappointment revealing that only 158,000 jobs were added last month versus a consensus of about 180K. Given the low unemployment rate, a slowing in the number of jobs added to the economy should not be a big surprise. The economy is moving forward and signs of a recession remain extremely low. Please refer to the payrolls report on page 62 of the Global Perspectives™ Book.

Wednesday, July 5, 2017
The U.S. manufacturing report has rebounded after a month of contraction; the latest euro zone and emerging markets reports also indicate expansion.

The June PMI report for the US indicates a continued background for growth-with-modest inflationary pressures. Manufacturing jumped to 57.8, well beyond expectations and holding at a three-year high. Importantly, new orders jumped back to 63.5 from 57.5. ISM employment jumped to 57.2 from 53.5. On the price side of the ledger, prices paid continued ebbing from 70.5 in March to 55 in June. Indeed, the full run of PMI data are showing the continuation of a synchronized global recovery, led by the US and Eurozone (especially Germany). Also atop of the leader board are large developed countries like Australia, France and the UK – big engines to keep the global economy chugging along. Important emerging market countries like Brazil, Russia and Korea have finally moved above the 50 mark, adding depth to the global recovery. No countries are below 50 and most are holding above their 12-month moving averages. Layer in that global central banks are driving inflation lower, and we have a good scenario for risk assets. For more on global manufacturing, please see page 8 of the Global Perspectives™ Book.- Special Guest Blogger: Tim Kearney

Friday, June 30, 2017
World markets have posted very uneven returns based on geopolitical and slow growth concerns.

Today is the last day of the quarter and those bears predicting a market collapse can’t seem to catch a break. Across the board in both equities and fixed income it was a positive quarter for investors. Overseas markets in particular, continued to pile on the gains with returns of more than double the S&P 500’s returns in Q2. Sure there is plenty of reasons for concern – the Trump agenda delay, central bank tightening talk, higher valuations, lower oil prices, trade war speculation, etc. But the hard and soft economic data and most importantly corporate earnings continue to prod the bull forward. So this weekend, as we celebrate the birth of this great country and the freedom we enjoy every day, try to ignore the latest fireworks in Washington and enjoy the fireworks in the sky. Please follow global returns on page 42 of the Voya Global Perspectives™ Book.

Thursday, June 29, 2017
Over the past 20 years the average asset allocation investor has significantly underperformed stock and bond markets and barely kept pace with inflation.

M&A activity is ticking up and that is good news. Merger deals, IPO’s, acquisitions and money in motion are indicative of business confidence and desire to broaden investment. The final U.S. GDP reading for Q1 was revised up to 1.4% with personal consumption contributing more than initially reported. Consumption is the driver of the U.S. economy accounting for about 70% of GDP but it is really the investment portion of the GDP calculation that is the precursor to consumption. Private investment creates jobs and opportunities which enable spending and consumption. So in effect, the consumer engine is really the caboose and while consumers have been holding their own, the lack of private investment has been one of the reasons for below trend GDP. More good news – non-residential fixed investment was the biggest contributor to the otherwise lackluster 1.4% change in GDP for Q1. Please see page 70 of the Voya Global Perspectives™ Book for the components of GDP.

Wednesday, June 28, 2017
The major central banks will continue accommodative monetary policies, and even the European Central Bank has now embarked on a quantitative easing program.

The era of synchronous unprecedented accommodative monetary policy may finally be coming to an end. The Federal Reserve was first to move interest rates higher by 0.25% in December of 2015 and has since then hiked three more times, while the other major central banks have continued to maintain a combination of zero interest rates and asset purchase programs. Over the last week, the tone of comments out of the European Central Bank and Bank of England changed, possibly signaling a move at the margin towards normalizing policy. Bank of England Governor Carney recently commented that removal of stimulus may become necessary and that there is “limited” tolerance to above-target inflation. Similarly, European Central Bank President Mario Draghi claimed that “deflationary forces” have been replaced by inflationary ones. ECB officials quickly qualified Draghi’s statement as trying to balance recent economic strength with the continuing need for stimulus. Our take on all of the above is how hyper-sensitive asset prices have become to central bank activities and tone of speeches. It makes the July 5 FOMC meeting release all the more important to pay close attention to. For more on monetary policy outlook, please refer to page 38 of the Voya Global Perspectives™ Book. - Special Guest Blogger: Pavel Dekhman

Tuesday, June 27, 2017

Global trade has been in focus since the election. Global trade is one of the tectonic shifts that holds the ability to meaningfully move the world’s economy. After plunging off a cliff in 2009, trade volumes have been steadily recovering. Despite the post-election speculation regarding a trade war, trade activity has actually picked up and is up 3.4% over a year ago (as of April 2017). Emerging economies, especially emerging Asia is a standout in trade growth. April’s trade numbers were a little disappointing but shrugged off by investors who seem to intuitively know that President Trump is aware of the importance of global trade. Trump’s meeting with India’s Prime Minister Modi reinforced investor confidence and is economically significant as India is one of the world’s fastest growing emerging economies with GDP growth of 7% last year. Please follow global trade on page 46 of the Global Perspectives book and watch Doug Cote’s latest comments on the market here.

Friday, June 23, 2017

Wow, one year already since Brexit? That was fast. Investors who bailed learned at least one thing from Brexit (British voting to exit Eurozone membership). Don’t sell when the facts tell you otherwise. To quote former president Franklin Roosevelt “the only thing to fear is fear itself”. In hindsight the Bank of England (BOE) had the ability to use a number of tools to cushion the blow with various tools of monetary policy. BOE Governor Mark Carney used ALL the tools at his disposal and a crisis was averted and the massive European Central Bank stimulus was finally helping the economy to gain traction at just that time. Today, we have way less to be concerned with. I know oil is in a bear market, rates are dropping as is inflation and more. But, the fundamentals are strong with U.S. corporate earnings surging nearly 14%, global manufacturing in expansion mode across the board, U.S. housing setting new cycle highs and initial unemployment claims at a 44-year low. Meanwhile, the markets are having the best returns in years so turn off your TV and enjoy the summer. Please review Voya Global Perspectives™ Weekly for a quick read of global financial markets.

Thursday, June 22, 2017
Average hourly wages have climbed unevenly higher, and productivity gains have been inconsistent.

This morning brought with it an Initial Jobless Claims print of 241k, while up from 43-year low of 227k in February, still indicative of a tight labor market, also corroborated by May unemployment reading which stood at a low 4.3%. But where is the corresponding wage growth? Year-over-year growth in Average Hourly Earnings has recently slipped from to 2.5% from cycle highs of 2.9% reached last December, and remains below levels of over 3% reached in the previous economic expansion. Employers are retaining skilled workers, but restraining meaningful wage increases to maintain their bottom-line earnings. However, lukewarm wage growth could be indicating that there is greater slack in the economy than economists realize. For more on wage growth, please refer to page 64 of the Voya Global Perspectives™ Book. - Special Guest Blogger: Pavel Dekhman


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