Quarterly Market Update
Second Quarter 2015
Quarterly Capital Markets Review and Outlook
Projecting 2.9% GDP Growth in 2015
Real GDP growth in 2015 is expected to accelerate to its strongest rate in a decade. However, stronger U.S. growth conflicts with weaker global prospects, creating a balancing act as the Fed tries to determine the appropriate time for the first rate hike.1 Read more >
Consumer Spending Trends Critical Determinant of Economic Growth
While corporate profits have been strong coming out of the recession, pain has been felt to a much greater extent by people who may have lost their jobs or homes. Those who were impacted by such losses have a longer memory than the stock market. Subsequently, consumer spending may not return to the pre-financial crisis spending levels for a time. Read more >
As the Quarter Goes, So Too May the Year
We anticipate global equity performance should closely mirror the return pattern of the first quarter, i.e. developed international market stocks and U.S. small- and mid-cap stocks should continue to lead returns, and that the S&P 500 will continue to lag the former, for the balance of the year. Read more >
Fixed Income Outlook
A Hike in the Fed Funds Rate in 2015 of Greater than 0.50% Looks Increasingly Unlikely
While the Fed would like to proceed with hiking rates, it cannot ignore the impact global quantitative easing (QE) programs are having on the U.S. dollar. Fed rate hikes will likely increase dollar strength and create more headwinds for U.S. companies deriving significant revenue from exports. In light of where interest rates are overseas, there is definitely damage to be done to U.S. companies, and to employment, by raising rates too much or too early. Read more >
Q&A with BBVA Compass Chief Investment Strategist, Gwynne Shackelford and BWS Investment Strategist, Anne-Joëlle Viguier-Galley
U.S. Economy May Outperform U.S. Stock Market in 2015
In this edition of BBVA Compass Market Outlook, Mses. Shackelford and Viguier-Galley examine the major financial and economic themes that are anticipated to drive global markets in 2015.2 Read more >
1 BBVA Research, https://www.bbvaresearch.com/en/publicaciones/u-s-economic-outlook-first-quarter-2015/
2 BWS is BBVA Wealth Solutions, Inc., a registered investment advisor and an affiliate of Compass Bank
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).