Current Environment - Macro Overview

  March 16, 2016

Volatile oil prices and uncertainty about the presidential race led to erratic markets throughout February, yet buffered by improving economic news including GDP growth for the fourth quarter of 2015 that was revised higher from 0.7% to 1.0%, as released by the Commerce Department.

The Commerce Department also reported that consumer spending rose 0.5% in January, the biggest gain in 10 months, along with an increase in Personal Consumption Expenditures (PCE) of 1.3% in December. Economic indicators such as these are tracked closely by the Federal Reserve for signs of improvements in the overall economy, which may lead the Federal Reserve to raise rates faster than anticipated. Many economists believe that a delicate balance between economic growth and interest rate increases is the Fed’s biggest challenge.

Saudi Arabia and Russia came close to an oil production cut agreement, but then scraped the idea last minute sending oil prices lower. Energy markets were hoping for some sort of production cut from two of the world’s largest producers in order to prop prices up.

With U.S. companies now allowed to export oil since the removal of the 40-year export ban on December 18th, the country is poised to improve the efficiency and flexibility of global oil markets as U.S. oil finds its way into other countries.

U.S. banks will undergo more stringent stress tests imposed by the Federal Reserve, designed to assess how well banks can absorb negative economic impacts, such as high unemployment, low growth, and low interest rates, which inhibit bank earnings. The stress tests have become the Fed’s main tool for keeping banks in check.


Sources: Department of Commerce, Fed

Indices mentioned are unmanaged and cannot be invested into directly.  Past performance is not a guarantee of future results.

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