I reflect on this quote from Paul ‘Bear’ Bryant, the legendary football coach at the University of Alabama – “Offense sells tickets, but defense wins championships.”
In the current economic and financial market environment I am focusing more on defense than offense. Why?
On the economic front, the US economy continues to grow but signs of slowing are appearing. I see no signs of a recession but rather a below trend level of economic growth. A significant bright spot remains employment. Applications for unemployment benefits are near a 43-year low and employment gains averaged 209,000 jobs per month in the first quarter.
(courtesy CNBC 4-28-16)
On the financial front, US companies reporting 1st quarter 2016 earnings have been decent so far but their forecasts going forward are less robust. Lower energy costs and a slightly weaker US dollar are helping offset slower sales.
(courtesy CNBC 4-18-16)
Globally, there is still an oversupply of oil/gas keeping pressure on oil exporting countries’ economies, China’s transition from a manufacturing to consumer driven economy remains slow. Europe is a mixed bag with some countries returning to economic growth, while several continue to lag.
Seasonally, we are heading into the weakest period of the year for the equity markets. I expect the volatility we have seen since June 2015 to continue throughout the rest of 2016.
(courtesy ACM 4-28-16)
I am presently focusing on defense for all the reasons outlined above but remain ready to shift back to offense when the opportunity to do so looks reasonably promising. As you can see from the chart above, the volatility often creates opportunities.
May Calendar of Events (comments and additions for future months are always welcome)
May is National Mental Health awareness month. Nearly 44 million American adults, and millions of children, experience mental health conditions each year. Let’s all get educated on this issue and work towards acceptance and inclusion of people dealing with mental health issues.
May 5th Holocaust Remembrance Day – let’s never forget how hatred for a race of people led to this horror.
May 5th Cinco De Mayo
May 8th Mother’s Day – wishing all mom’s, grandmothers, and great grandmothers a wonderful day.
May 23rd My daughter Caryn’s birthday
May 30th Memorial Day – let’s remember and give thanks to all who served our country
I hope you find this report useful. Please share it with anyone who you feel would benefit from the information.