Week of July 13, 2015

Equity markets showed resilience last week. The perfect storm was brewing with continued drama surrounding the Greek bailout, Chinese equity markets continuing to collapse and software glitches that shutdown the New York Stock exchange, grounded flights at United Airlines and took the Wall Street Journal’s web page offline briefly. Despite the chaos, the S&P 500 rebounded in the back half of the week to finish flat. The Dow Jones Industrial Average rose slightly and the Nasdaq Composite only fell a moderate amount. The U.S. treasury market did the opposite. Yields on the 10-year treasury slipped during the first two days of the week to 2.2% but jumped more than 25 basis points to 2.45% by the end of the week.

IMF Cuts Global Growth Forecast

Last week, the IMF cut its global growth forecast by 20 basis points to 3.3%, the weakest rate of expansion since 2009. The IMF chief economist was quoted as saying, “we have entered a period of low growth.” He cited mounting debt, high unemployment and limited policy options as headwinds for expansion this year. The IMF expects global growth to pick up next year and expand to its fastest pace in five years, at 3.8%.

^{Source: http://www.wsj.com/articles/imf-sees-2015-global-economic-growth-at-weakest-rate-since-financial-crisis-1436446905}

2015 Rate Hikes Still On Course

Late last week, Federal Reserve Chair, Janet Yellen, gave a speech to the City Club of Cleveland where she stated, “I expect that it will be appropriate at some point later this year to take the first step to raise the federal funds rate and thus begin normalizing monetary policy.” These comments were the first since the collapse of the Chinese equity market and renewed turbulence in Greece. She also emphasized that the pace of hikes will be gradual to support the improving, but fragile economic backdrop. Fed watchers will have their eyes trained on more commentary this week as Janet Yellen heads to Capitol Hill to sit before lawmakers and present the Federal Reserve’s semiannual report on monetary policy.

Gold Loses Its Luster

One of the interesting aspects of the recent global turmoil surrounding the Greek bailout and the bursting of the bubble in Chinese equities is that an asset class known to thrive amid chaos has instead languished. Prices of the traditional safe haven peaked in 2011 due to rising anxiety of increasing amount of debt in Europe. But this time around, the price of the yellow metal has moved lower. The gold price is off 3% year-to-date and has collapsed 40% to its lowest level in five years, to roughly $1,160 an ounce. Experts point to a few reasons for gold’s under performance. Many argue that financial markets are becoming immune to the fearful headlines while others say a stronger dollar and expectations of higher interest rates weigh on the demand for assets with no yield like gold.

^{Source: http://www.wsj.com/articles/no-gold-rush-as-greece-and-china-troubles-roil-markets-1436427839}

Fun Story of the Week

Flying has never been hassle free but one of the growing annoyances over the past several years has been the rise of baggage fees. Most airlines charge fees that can top $100 to check luggage and there is very little passengers can do about it. However, James McElvar, member of the boy band Rewind, recently found a creative way to avoid paying the ~$70 fee on an EasyJet flight from London to Glasgow: he wore all of his clothes instead of packing them. McElver bundled up in four jumpers, six t-shirts, three pairs of jeans, two pairs of sweatpants, a couple of jackets and two hats before boarding the flight. The 19-year old said he immediately regretted his decision when he discovered he could barely walk down the jet way. Shortly after takeoff he became sick and collapsed from heat exhaustion. After landing, the singer was taken to a nearby hospital where during his recovery he received a tweet from Virgin’s train service. It read, “Next time travel with us, we won’t make you wear all of your clothes at once!”

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_{Securities offered through Jacques Financial, LLC (JFLLC) a Broker-Dealer, Member FINRA and SIPC. Certain associates of Joseph W. Jacques, CPA, CFP^TMare registered representatives of JFLLC. Joseph W. Jacques, CPA, CFP^TM and JFLLC are affiliated. Investment advisory services are offered through Jacques Advisors, LLC an affiliate of JFLLC. Tax services are offered through Jacques & Associates Certified Public Accountants, LLC an affiliate of JFLLC.}

^{* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investments may be appropriate for you, consult with your financial advisor.
* The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
* The Nasdaq Composite Index is a market-capitalization weighted index of the more than 3,000 common equities listed on the Nasdaq stock exchange. The types of securities in the index include American depositary receipts, common stocks, real estate investment trusts (REITs) and tracking stocks.
* The Dow Jones Industrial Average is an unmanaged group of securities demonstrating how 30 large publicly owned companies have traded and cannot be invested into directly.
* Indexes are unmanaged, statistical composites and their returns do not include payment of any sales charges or fees an investor would pay to purchase the securities they represent. Such costs would lower performance. It is not possible to invest directly in an index.
* Past performance does not guarantee future results.
* Charts and graphs should not be relied upon as the sole basis for any investment decision and are for general informational purposes only.
* The prices of small cap stocks are generally more volatile than large cap stocks.
* Consult your financial professional before making any investment decision.
* This newsletter was prepared by CWM, LLC.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
Sources:
Mashable, July 2015, https://mashable.com/2015/07/13/rewind-singer-baggage-fees/?utm_cid=mash-com-Tw-main-link
Wall Street Journal, July 2015, http://www.wsj.com/articles/yellen-fed-remains-on-track-to-raise-rates-in-2015-1436545887
Wall Street Journal, July 2015, http://www.wsj.com/articles/no-gold-rush-as-greece-and-china-troubles-roil-markets-1436427839
Bloomberg, July 2015, http://www.bloomberg.com/news/articles/2015-07-09/imf-cuts-world-growth-outlook-as-risks-rise-from-greece-to-china
Wall Street Journal, July 2015, http://www.wsj.com/articles/imf-sees-2015-global-economic-growth-at-weakest-rate-since-financial-crisis-1436446905
Wall Street Journal, July 2015, http://www.wsj.com/articles/u-s-treasury-bonds-extend-selloff-as-fears-on-greece-china-ease-1436533964}

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