This week, the Federal Reserve made big news when it reduced the federal funds rate by 0.25 percent, its second cut this year. While any Fed action always dominates the headlines, the interest rate reduction was expected and fully priced into the market. Having raised federal funds a quarter point just last December, it has been a rather dramatic change of monetary policy in which the Fed has now cut rates twice this year.
With interest rates dropping, you may be considering refinancing a mortgage. There are a number of factors to consider and here are some questions we pose to clients to help with the process.
The global search for yield has driven tremendous fund flows into all corners of the fixed income market. While our primary focus is on investment grade bonds, this trend has also driven yields lower on non-investment grade bonds which are sometimes referred to as “high-yield” or “junk” bonds.
Earlier in this expansion it was all about jobs. Each month, we would wring our collective hands over how many jobs were created, what kind of jobs were created and whether they were even good jobs. Today, while it is still a market moving number, the monthly payroll report doesn’t seem to carry as much mindshare with Wall Street.
There were a number of moving pictures this past week that we could cover. One topic that we have not covered in our communication that caught our attention this week is … opioids.
As the new school year starts, we are reminded of the day when many of our children learned about the different work responsibilities at our firm and we, in turn, learned more about them.
For the week, the S&P 500 returned -1.41 percent and the 10-year U.S. Treasury bond yield declined to 1.51 percent. On Friday, the S&P 500 declined by more than 2.5 percent on news that China had escalated the trade war which was coupled with a similar response from the White House.
On Wednesday at midday, the global financial media held their collective breath as the benchmark U.S. Treasury Yield Spread (2-year/10-year yield) inverted. Then, as they exhaled, minor hysteria ensued.
We were in consensus regarding our 2019 Investment Outlook theme, “The Fasten Seatbelt Sign Is On,” and this week’s market volatility reinforced that we landed on the right message. The Dow was down by 600 on Tuesday and then rallied by nearly 1,000 points within 24 hours.
After rising in lockstep for most of this year-to-date, stocks and bonds moved in dramatically different directions after a week chocked full of market moving developments.
Ferguson Wellman Capital Management and West Bearing Investments were recently named by Portland Business Journal to their Oregon and S.W. Washington Money Management Firms list, ranked at seven out of 50 companies.
The publication constructed the list by surveying over 50 money management firms and then ranked them according to assets under management in Oregon and S.W. Washington as of May 31, 2019. While Ferguson Wellman and West Bearing manage over $5.5 billion in total, the ranking was exclusively related to Oregon and S.W. Washington assets.
“Though it is flattering to be listed among the largest investment advisors in the region, more significantly, such occasions afford us the opportunity to humbly reflect on the privilege our clients have given us by entrusting us with the management of their assets,” said George Hosfield, CFA, director and chief investment officer.
Founded in 1975, Ferguson Wellman Capital Management is a privately-owned registered investment advisory firm, established in the Pacific Northwest. The firm manages over $5.5 billion for more than 830 clients that include individuals and families; Taft-Hartley and corporate retirement plans; and endowments and foundations with portfolios of $3 million or more. West Bearing Investments, a division of Ferguson Wellman, serves clients with assets starting at $750,000. (data as of June 30, 2019).
Methodology and Disclosures:
Portland Business Journal produced their 2019 Oregon and S.W. Washington Money Management Firms list by ranking the companies according to Oregon and S.W. Washington assets under management. The research and ranking were gathered and distributed by Portland Business Journal. Ferguson Wellman and West Bearing (the firm) is not aware of any facts that would call into question the validity of the ranking. The firm does not believe this advertisement is inappropriate and is not aware of any unfavorable rating towards the firm. The rating category is money managers in Oregon and S.W. Washington, the number of firms given the opportunity to participate was 130, the number of respondents to the survey was 53 and the percentage of advisers that made the list was 94 percent. The rating is not representative of any one client’s experience and is not indicative of Ferguson Wellman’s future performance. Ferguson Wellman did not pay a fee to participate in this survey.
This morning the Bureau of Economic Analysis released the second quarter GDP estimate and, while growth was down 3.1 percent from the first quarter, it was still a healthy 2.1 percent with consumer and government spending that was strong.
Ferguson Wellman Capital Management was recently named by Financial Advisor to their “2019 RIA Survey and Ranking.” The firm was listed at 47 of 507 companies.
A couple of months ago, Netflix announced it would be losing the number one most-watched show on the platform, The Office, in 2021 to NBC Universal (owned by Comcast) in order to promote their own streaming service set to launch next year.
Ferguson Wellman Capital Management has been named to the Financial Times Top 300 RIAs List for 2019.
Federal Reserve Chair Jerome Powell and other members of the rate-setting Federal Open Market Committee (FOMC) have signaled they will be cutting the benchmark federal funds rate at the end of this month. This will be their first interest rate cut since December 2008.
As the second quarter came roaring to a close, stocks marched consistently higher while bond yields moved drastically lower. Those trends continued the first week of July, but it is doubtful that they can continue in unison much longer. Either the economy stabilizes and rates stop falling, or the stock market will inevitably take a break from this rise higher.