Quarterly Market Update
Second Quarter 2014
Quarterly Capital Markets Review and Outlook
A Late Spring for Economic Activity
We anticipate a softer pace of growth in the first quarter after a strong fourth quarter, 2013, but with a pickup in the spring and summer. We forecast 2014 GDP growth of 2.5% with balanced risks to growth. Read more >
Economy Poised to Improve Along with the Weather
2014 should be a brighter year for the economy once bad weather is removed from the equation. Personal consumption should serve as the primary catalyst of the expansion. Read more >
Earnings Should Drive Equity Market Returns
Earnings should drive equity markets this year and market volatility could potentially increase, but the stage is set for decent equity returns, probably better than what we might expect in the fixed income space. Read more >
Fixed Income Outlook
Slow March to Higher Rates Begins
Slowly improving economic growth is adding to investor confidence that the Fed will begin raising short-term rates in mid-2015. We anticipate that the yield on the 10-year Treasury will drift upward to 3.25% or more by the end of 2014.. Read more >
Q&A with Managing Director of Portfolio Management, Gwynne Shackelford and Investment Strategist, Anne-Joëlle Viguier-Galley, Ms, CFA
In this edition of BBVA Compass Market Outlook, Managing Director of Portfolio Management, Gwynne Shackelford and Investment Strategist, Anne-Joëlle Viguier-Galley postulate that China may pose a threat to the current U.S. economic expansion which has proven to be more anemic for longer than would be expected after the recession ended in 2009. Ms. Shackelford and Ms. Viguier-Galley examine the implications for the U.S. and the rest of the world of China’s attempts to shift from being the export machine of the world to becoming more domestically consumer oriented which has slowed the pace of growth in the world’s second-largest economy. Read more >
BBVA Compass is the trade name for Compass Bank, which is a member of the BBVA Group. Securities products are NOT deposits, are NOT FDIC insured, and are NOT bank guaranteed. May LOSE value, are NOT insured by any federal government agency.
This material contains forward looking statements and projections. There are no guarantees that these results will be achieved.
Investing involves risk including the potential loss of principal. There is no guarantee that a diversified portfolio will outperform a non-diversified portfolio in any given market environment. No investment strategy, such as asset allocation, can guarantee a profit or protect against loss in periods of declining values. Past performance is no guarantee of future results. Please note that individual situations can vary. Therefore, the information presented here should only be relied upon when coordinated with individual professional advice.
Indexes are unmanaged and investors are not able to invest directly into any index.
International investing involves special risks not present with U.S. investments due to factors such as increased volatility, currency fluctuation, and differences in auditing and other financial standards. These risks can be accentuated in emerging markets.
Investments in stocks of small companies involve additional risks. Smaller companies typically have a higher risk of failure, and are not as well established as larger blue-chip companies. Historically, smaller-company stocks have experienced a greater degree of market volatility than the overall market average.
Equity investments tend to be volatile and do not involve the guarantees associated with holding a bond to maturity.
In general, the bond market is volatile as prices rise when interest rates fall and vice versa. This effect is usually pronounced for longer-term securities. Any fixed income security sold or redeemed prior to maturity may be subject to a substantial gain or loss.
Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.
The investor should note that vehicles that invest in lower-rated debt securities (commonly referred to as junk bonds) involve additional risks because of the lower credit quality of the securities in the portfolio. The investor should be aware of the possible higher level of volatility, and increased risk of default.
Municipal bond offerings are subject to availability and change in price. If sold prior to maturity, municipal bonds may be subject to market and interest risk. An issuer may default on payment of the principal or interest of a bond. Bond values will decline as interest rates rise. Depending upon the municipal bond offered, alternative minimum tax and state/local taxes could apply.
The price of commodities is subject to substantial price fluctuations of short periods of time and may be affected by unpredictable international monetary and political policies. The market for commodities is widely unregulated and concentrated investing may lead to higher price volatility.
Investments in real estate have various risks including possible lack of liquidity and devaluation based on adverse economic and regulatory changes.
Other Sources: Bloomberg; California.gov; Russell.com; First page index returns are calculated on a total return basis using the following indexes: S&P 500 (SPX), MSCI World (MXWO), MSCI Emerging Markets (MXEF), Bloomberg 7-10 Year U.S. Treasury Index (USG4TR), Morningstar U.S. Agency Bond TR Index (MSBIUATR), Municipal Bond Buyer 40 Index (BBMIRNEW), Credit Suisse High Yield Index (CSHY), MSCI U.S. REIT Index (RMZ Index).