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Nashville, Tennessee - Photo Courtesy of Barry Shulam
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Update - 6/30/2015

Phillip Cochran
VP/Chief Investment Officer

Consumer Sentiment

  • Bloomberg’s Consumer Comfort was reported at 40.53 on 6/4, 40.1 on 6/11/15, 40.9 on 6/18, and 42.6 on 6/25.


  • Weekly U.S. Initial Jobless Claims were reported at 277K on 6/4, 279K for 6/11, 268K for 6/18 and 271K for 6/25.


  • Headline inflation increased +.40% for the month of May which was more than April’s gain but lower than expectations, raising the YoY reading to .0%. However core prices decreased at .1% leaving Core prices at +1.7% YoY (lower than last month’s YoY increase of 1.8%).

Interest Rates

  • We expect no significant change in LIBOR interest rates in the near future.
  • ML began the month at .18300 and reached a 12-month high of .18875 on 6/10, and was .18660 on 6/26. 3ML began June at .28250 and reached a 12-month high of .28785 on 6/10, with 6/26 showing a level of .28175.


  • Remember that WTI crude prices reached a $60 handle for the first time since December 2014 in late April. The high level for June was 61.82 on 6/10 and the lowest level for June was 58.34 on 6/4. Crude was trading at $58.94 per barrel on 6/26.


The U.S. economic picture continues to be very unclear so far in 2015. Employment data remains volatile this year with monthly non-farm jobs created as low as 85K and as high as 280K. Even with June’s 280K we’re averaging only 236K monthly for the first half of 2015, still well below 2014’s average of 260K. The largest problem with the jobs reports continues to be that the new jobs created consist of part-time and what are considered non-career jobs that do not ultimately help the economy.

We continue to feel that if the Fed chooses to raise rates this year, it will be because of pressure felt by the FOMC to give them a place to be able to affect economic influence. In other words, with rates where they are, the FOMC has no real contribution to make to the economic environment. The Fed currently only has two options to affect change in the economy, raise rates or QE. The appetite for QE is not there, leaving a rate hike as their only option. Many feel the market has priced in 50bps in rate hikes for the remainder of 2015. We feel that, if any hikes occur this year, the Fed will move 25bps in two moves in late 3rd quarter and late 4th quarter. We also feel that if the economy hits a bump in the road because of this, that the Fed could look at holding the higher rate and look at another set of QE. The goal would be to increase short-term rates while holding down long term rates. The reality is that the FOMC has given poor forward guidance at this point.

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