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Wednesday, April 29, 2015

U.S. economic growth slowed significantly in the first quarter, posting its poorest showing in a year. Bad weather, a strong dollar , a slowdown in oil and gas drilling, and a significant west coast port closure seem to be the main culprits. Growth was a meager 0.2 percent in Q1. Not surprisingly, exports were down 7.2 percent, based on that stronger dollar. But the consumer was somewhat disappointing. Although the consumer was the main driver of growth, consumer expenditures only rose 1.9 percent, down from 4.4 percent in the prior quarter as consumers are still reluctant to spend their gas savings windfall. Similar to last year, expectations are for a reacceleration as we move through the year. Please follow GDP on page 61 in the Voya Global Perspectives™ book.

Tuesday, April 28, 2015

U.S. Treasury bonds are currently yielding 1.94 percent, 60 basis points above Italy’s 10-year treasury bonds. The ECB’s trillion euro quantitative easing/bond buying program is driving European yields down. And it is the relative-yield trade between low-yielding euro zone bond markets and U.S. Treasuries that is keeping the lid on U.S. rates. Investors who have shunned bonds, fearing rising rates, have missed opportunities as bond indices across the board – with the exception of global bonds – have positive returns YTD. In fact, high yield bonds and long U.S. Treasuries are up higher than the S&P500 (YTD as of 4/27/2015) and corporate bonds are not far behind. When is the best time to own bonds? All of the time, as they offer diversification and risk control to a well balanced portfolio. Please follow fixed income performance on page 26 of the Voya Global Perspectives™ book.

Friday, April 24, 2015

Some recent retirement statistics are just plain scary. According to the Center for Retirement Research at Boston College the average retirement savings of those in their 60’s is $111,000. This is hardly the nest egg needed to live on for perhaps 30 years. Retirees will need to continue to grow their nest egg while taking income distributions and, therefore, will need exposure to equities not just bonds. Luckily the financial industry is aware of this need and has developed some innovative, income generating, multi-asset products that are designed to allow investors to have their cake while eating it too. Please check out the latest retirement savings outlook on page 80 on the Voya Global Perspectives™ book.

Thursday, April 23, 2015

This is the biggest week for Q1 earnings reports. Most of the news has been better than expected. That is because expectations were essentially in the basement. Earnings expectations plunged for two reasons. The stronger dollar will negatively impact the sales and earnings of companies doing business internationally. And, lower oil prices will severely affect the earnings of the energy sector. So far one third of the companies in the S&P500 have reported, and earnings are 7.2 percent higher than last year. So far so good. However, expectations are still for a quarter of negative growth. If this does come to pass, it will be the first quarter of negative growth since third quarter 2012. Keep an eye on earnings growth by sector on page 18 of the Voya Global Perspectives™ book.

Wednesday, April 22, 2015

After a winter in the doldrums, the housing market is showing signs of life. Sales of existing homes surged 6.1 percent to a 5.19 million annual rate in March, the quickest pace in 18 months. Credit is still tight, but when it comes to home buying the most important factor is employment. The best job market in 14 years will continue to support the housing recovery. Please follow existing home sales, new home sales, and housing starts on page 58 of the Voya Global Perspectives™ book.

Tuesday, April 21, 2015

This week a flurry of earnings reports will dominate markets. Investors caught up in all of the corporate news may miss an important economic development brewing. Japan's prime minister announced that the U.S. and Japan are close to a major agreement regarding the TPP. The TPP is the Trans-Pacific Partnership, a free trade agreement 10 years in the making, which would strengthen economic ties with Japan, Singapore, Malaysia, Australia, Vietnam, Chile, New Zealand, and Brunei – countries that currently account for more than 10 percent of U.S. trade. The goal of this pact is to bolster future economic growth and American jobs as well as counter China's growing influence, but it will undoubtedly be met with opposition as the North American trade agreement was 20 years ago. Please see the Voya Global Perspectives™ 2105 Forecast, where we discuss the tectonic shift – global trade.

Thursday, April 16, 2015

Global diversification works when you least expect it. Emerging markets have been underperforming the last few years, leading investors to shy away from them and stick with large company domestic equities. And, why not? The Fed’s taper increased volatility and caused a huge outflow of funds from these markets, emerging market currencies have been under pressure, and to top it all off global growth is slowing. Yet, the MSCI Emerging Market Index is up 9 percent so far this year. China, the biggest constituent in that index, is up 30 percent despite yesterday’s GDP report showing growth decelerating to 7 percent, the slowest since the recession ended. Global central bank stimulus and low oil prices are fueling the emerging market revelry. Investors herding into U.S. large caps have been rewarded with a comparatively puny 2.9 percent YTD. The tricky thing about putting all of your eggs into one basket is that it only works if you pick the right basket. Please review the latest Voya Global Perspectives™ market commentary.

Wednesday, April 15, 2015

Investors looking for firm economic footing won’t find any comfort in today’s manufacturing numbers. Industrial production dropped 0.6 percent for the month of March, the biggest decline since August 2012, and the first quarter was down 1 percent annualized, the first quarterly decline since the end of the recession. The Empire State manufacturing number was also a miss, falling sharply to negative 1.2 from 6.9 in March. However, the market responded positively so far today. Perhaps the recent round of soft data has investors thinking a June rate hike is now off the table. Please follow industrial production on page 11 of the Voya Global Perspectives™ book.

Tuesday, April 14, 2015

The latest report from the IMF attributes the collapse in oil prices to an increase in supply rather than a decline in demand. This is good economic news. Although demand for oil has softened the precipitous drop in oil is not due to widespread economic deterioration but to an abundance of new supplies resulting from fracking and shale drilling. However, the IMF did downgrade U.S. economic growth to 3.1% for 2015. (Still above the Fed target of 2.5%) The bad news regarding low oil is undoubtedly front loaded – energy companies are in the firing line with their top line sales and bottom line earnings taking a direct hit. The beneficiaries, the consumers, are slowly coming to the table. Retail sales for March finally reversed course after three months of declines and rose .9%. This is the strongest increase in a year. Economists were hoping for a slightly better rebound after a truly miserable winter but the trend is in line with improving expectations. Please join our wbeinar for a complete market update on Thursday, April 16th.


Wednesday, April 8, 2015

Mergers & Acquisitions (M&A) are an enormously good sign, indicative of a healthy market. It means there are compelling values and synergistic combinations available to shareholders on both sides of the deal. Last year, finally, M&A made an astounding comeback coincident with strong global markets. Well, 2015 sure has its challenges: collapsing oil prices, the prospect of Iran with a nuclear weapon, plummeting expectations for quarterly corporate profits, and a seemingly weakening consumer. But, M&A and megadeals out of the gate in 2015 are surging to all time record highs. Some recent notable deals include 3G Capital’s bid for Kraft to merge with Heinz, sending Kraft shares up 38 percent in one day, as well as yesterday’s FedEx bid for Dutch package delivery firm TNT Express, sending TNT shares up 30 percent in early trading. Today’s monster deal of Anglo-Dutch oil and gas giant Royal Dutch Shell buying Britain’s BG Group for $70 billion in cash and stock – creating an enormous European energy giant, sending BG up over 30 percent on the day – is one of the biggest deals for the sector in over a decade. Risk is also missing opportunity. Sure, cash is safe, but by being out of the equity market investors are exposed to locking in near zero returns for an entire year instead of participating in these handsome returns simply by being in the global equity markets. Please review the Voya Global Perspectives™ 2015 Forecast, “Global Deal Activity Catalysts for Markets in 2015.”


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