Market Commentary: May 22, 2016

The Markets

When is a door not a door?

The answer is: When it’s ajar.

Investors and analysts were trying to find the answer to a different riddle last week: When are strong retail sales not strong retail sales?

The answer is: When the retailers are department stores.

Consumers spent more in April than they have in more than a year. Commerce Department data showed April’s retail sales improved by 1.3 percent month-to-month and 3.0 percent year-to-year. Yet, several large department stores reported poor first quarter earnings and weren’t optimistic about the future, according to Barron’s.

The Wall Street Journal pointed out Internet and mobile app purchasing increased by 2.4 percent in April and was up 10.2 percent for the past 12 months, while purchases made in department stores fell by 1.7 percent for the last 12 months.

In general the market has been essentially flat year to date. In January the market had a very strong selloff the entire month due to pressures coming from weak economic data from China. The next month had no recovery and over the past two months the market has been positive and regained the paper losses created in January. This is similar to some of the patterns that occurred last year in 2015. My approach has been to invest in multiple styles of stocks and bonds to help reduce volatility and try to capture different sections of the market on the upside. Once again patience and discipline are very important during times like this and I will continue to monitor for trends to develop.

Fast Growing Economies

Which country has the world’s fastest growing economy? We all know China’s growth is slowing. Last week, China’s Vice-Premier Zhang Gaoli indicated the country is on pace to match its growth target of 6.5 percent to 7.0 percent for 2016. As we’ve mentioned before, the Conference Board believes Chinese government growth numbers are inflated. It estimates China’s true growth rate at 3.7 percent for 2016, which is unchanged from 2015. However, that’s still a lot faster than the 2.0 percent growth projected for the world’s advanced economies.

Advanced countries may be lagging, but there are countries in the world with economies that are growing. According to the data , countries that will deliver the strongest economic growth during 2016 include:

  • Myanmar (8.6 percent)
  • Ivory Coast (8.5 percent)
  • Bhutan (8.4 percent)
  • India (7.5 percent)
  • Laos (7.4 percent)
  • Iraq (7.2 percent)
  • Cambodia (7.0 percent)
  • Tanzania (6.9 percent)
  • Bangladesh (6.6 percent)
  • Senegal (6.6 percent)

These projections reflect gross domestic product growth, which is the total of all goods and services produced in a nation, and offer little insight to issues such as well-being and quality of life.

Weekly Focus

“By the time a man is wise enough to watch his step, he’s too old to go anywhere.”
— Billy Crystal, American comedian

Image courtesy of Simon Cunningham, used in accordance with the Creative Commons 2.0 Attribution license.



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