Permanent Value

Week in Review 5/6/13

Bruce Doole
May 6th, 2013

First Quarter 2013: Review

The United State’s economic growth and market performance was fostered by the ongoing housing recovery, pliant consumption, and strong earnings growth.

• January and February 2013 equity flows were 20% higher than the first two months of 2012, 2011 and 2010

• The U.S. GDP grew at a 0.4% annualized pace in the fourth quarter, thus increasing from an earlier prediction of 0.1%

• Unemployment rates fell to 7.6% in March while inflation stood at 2.0% at the end of February

• Public sector jobs decreased by 7,000 after an increase of 14,000 in the month before

• Retail sales decreased in March by 0.4%-the lowest since June 2012

What to Expect in the Future

As a result of the potency of earnings growth, current market valuations are under previous market peaks, implying that upward valuation migration is feasible.

• Japan’s new aggressive monetary easing policy includes a commitment to double the nation’s monetary base as well as its holdings of Japanese government bonds. Expanding the monetary base swiftly devalued the currency and simultaneously boosted equity prices to stimulate inflation within two years

• Auto sales remained above 15 million vehicles during the 1st quarter, up 7.9% from last year. Sales are predicted to maintain a healthy pace once consumers begin replacing aging vehicles

• Consumer confidence decreased in March despite an increase in February. The loss of confidence fell harder on future expectations than on current expectations due to uncertain effects of sequestration and weakness in labor markets

• The U.S. is predicted to become more energy independent as it increases production in oil, natural gas and renewables. Domestic production of crude oil is expected to increase to record levels in the near future, resulting in positive net exports and less dependence on foreign oil. This should have a beneficial effect on consumers, since less money will be spent at the pump