Are We Falling Into Recession?

The ongoing downward revisions are discouraging. The Atlanta Federal Reserve released its latest reading on GDP for 2017 Q1 on Thursday, lowering projections for U.S. economic growth once again to a mere +0.2% annualized rate. This latest downward revision has U.S. GDP growth quickly approaching negative territory. And if current trends continue, the final reading on 2017 Q1 GDP growth may just end up solidly in the red. This raises an important question. With the technical definition of an economic recession being two consecutive quarters of negative GDP growth, is the U.S. economy imminently at risk of falling into a recession?

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High Times For High Yield

It has been high times for high yield bonds over the past year. The asset class weathered the oil price plunge and has since increased by as much as +25% over the past year. High yield default rates that had once soared into dangerous territory have also since been swiftly coming back down. And even better than its stock market counterparts, the high yield corporate bond market is well into record territory on a dividend-adjusted basis. So what could the high yield bond market have to possibly worry about today?

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Sell In May And Go Away?

It’s that time of year again. It’s almost May, and with it comes the annual debate among traders as to whether it is time to step away from the stock market until the late fall after any October swoon has come and gone. Even long-term investors give consideration to this seasonal phenomenon as a potential time to lighten up on stock portfolio allocations at the margins. But as we enter this latest annual phase in 2017, it is worthwhile to consider whether such a strategy makes sense this year.

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A False Sigh Of Relief

Global capital markets breathed a collective sigh of relief on Sunday evening. Voters took to the polls in France in the first round of their presidential election, and the outcome was as predicted. Independents Emmanuel Macron and Marine Le Pen landed in the top two spots and will proceed into the second round of voting scheduled for just two weeks on Sunday, May 7, with Mr. Macron considered the overwhelming favorite to prevail. But while it appears that the status quo has been defended yet again for the European continent, the problem has not been solved with the outcome of this vote. In fact, regardless of Sunday’s vote or the final outcome on May 7, the rot only continues to worsen.

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The Bear Is On The Prowl

The stock market bear is back on the prowl. While certainly still not a meaningful threat to stock investors at the present time, the bear is increasingly lurking about in the shadows. And the longer the rot continues to linger in many stock market segments, the more emboldened the bear is likely to be to make a bigger charge at the broader market.

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