Today the Department of Labor released jobs data for March indicating that the US economy added just 126,000 jobs in March. For 2015, the US has averaged under 200,000 new jobs per month in contrast to the 289,000 monthly average in Q4. The ISM release earlier this week reported a PMI figure of 51.5% for March. This is down 1.4% from the prior month. Exports are contracting, down to 47.5 in March. The strong dollar has been blamed for the slowdown and analysts continue to fear that this will be a drag on earnings. The consensus now seems to be that the Fed may hold off on raising rates in June.

The first quarter market returns provided a bit of a lesson in the value of diversification. After approximately zero gain in 2014, international developed stocks rose 5.6% (MSCI ACWI ex US index). Meanwhile, US stocks barely broke above even with a .95% gain (S&P500 index). The US bond market gained 1.51% (Barclays Agg Bond index). So where does this put us? While the US growth is slowing, we are still viewed as one of the strongest economies. That said, PE levels are elevated and concerns over the earnings impact of the strong dollar and Fed rate increases are likely to contribute to volatility this year. PE levels in the developed countries outside of the US are relatively more attractive, but concerns over slow growth and potential deflationary pressures are weighing on future prospects. Diversification is doing its job and we are not making any changes to our tactical asset allocations at this time.




Disclosure
Outlook is not intended as investment advice. Investment allocations are unique to each client’s situation. This outlook includes discussion of historical results as well as models for evaluating possible future returns. Investing is inherently risky. We are not assuring or projecting any specific investment returns.