Since Zenith examines economic data beyond the headline, we would like to share our thoughts on the recent mix of data specifically to aid portfolio managers and investment committees. By taking a close look at the internal composition of the Leading Economic Indicators, your investment team can apply a more realistic expectation on future economic growth as it relates to your asset allocation decisions.

These numbers are reasonable at best.

1. Unemployment claims near a 4-month high-negative

2. Existing home sales down 2.6% in March-negative

3. Philadelphia Fed Manufacturing-Still growing at 8.5 but down from 12.5 prior and less than estimates. Encouraging that there is positive growth although new orders are down. Mildly positive

4. LEI-Leading economic indicators from the conference board up .3 in March. While encouraging as a leading indicator, the leader in the 10 indicator index was Interest Rate Spread. In fact of the 7 of 10 that were up, three were financial indicators. Credit index, stock prices and the interest rate spread. Since these can be very volatile and manipulated by monetary policy, I would not give this reading AS positive a read as the press release. Mildly positive

Overall, a reasonable day but one with plenty of forward looking question marks. While risk assets should not be abandoned, Zenith recommends a tilt toward the safer end of the risk spectrum.

Tom Koehler, CFA

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