Insight on Business

June 2014

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42 | I nsIgh t • J u n e 2 0 14 w w w . i n s i g h t o n b u s i n e s s . c o m D urIng the past year economIsts have debated considerably the relationship between an eventual tapering of quantitative easing and interest rates. e u.s. Federal reserve's stimulus program sent 10- year treasury rates to record lows in 2012, so investors are well aware of the potential impact the Fed can have. headed into 2014, investors were concerned that rates could spike once the Fed began to reduce its rate of stimulus. although the Fed has maintained its plan to reduce asset purchases by $10 billion per month, 10-year treasury rates have fallen from 3 percent to 2.6 percent, defying economic expectations. is can only mean one thing: Investors are moving money from equities to low-risk alternatives such as bonds. e reasons behind the bond rally in 2014 could be partially attributed to dismal economic reports. e first quarter of 2014 saw slowing growth below federal projections. gross domestic product growth slowed from 2.6 percent to 0.1 percent, reflecting decreases in exports and increases in prices for american consumers. exports are down from 9.5 percent to 7.6 percent, while the percentage of imported goods remained the same. additionally, prices have risen for consumers, decreasing demand for goods. according to the pce price index, american consumers saw a 1.4 percent increase in prices. payroll employment numbers rose to 288,000 and unemployment fell to 6.3 percent. however, the majority of jobs added to the economy this year have been low-paying, service-sector jobs. is month's u.s. economic health Index tm reflects the recent economic slowdown as cleartrenD indicated an increase in contracting economic sectors from 10 percent to 12 percent. In this month's issue, cleartrenD identifies trends in the professional services and higher education sectors, as well as the top employment sectors of the Fox cities region. "e volatile nature of small-cap equities can give us a clue as to the condition of economic trends," says mark scheffler of e appleton group. "is month, cleartrenD gave us cash recommendations for small-cap funds, providing insight into deteriorating economic trends." Key: = uptrend = downtrend Ticker = trading symbol (individual securities only) Trend Began = date on which current trend was identified Confidence = clearTREND's historic success rate in generating capital gains based on accurate trend identification clearTREND U.S. Economic Health Index: trending i n fo c u s Investors seek low-risk alternatives in a slowing market environment Caution ahead This index measures more than 130 unique U.S. market sectors to determine how many are expanding, stable, or contracting. More than 50% of expanding sectors are healthy, while less than 50% are not. 69% Expanding: 69% Stable: 19% Contracting: 12% Poor Fair Good Excellent Sector Focus Professional Services Description Ticker Trend Began Confidence Aecom Technology Corp ACM 2/27/14 82.35% International Business Machines Corp IBM 2/14/14 72.20% Jacobs Engineering Group Inc JEC 5/7/14 76.70% Lockheed Martin Corp LMT 4/15/13 80.32% Microsoft Corp MSFT 3/28/13 82.42% Omnicom Group Inc OMC 4/24/14 75.00% Stantec Inc STN 4/23/14 88.24% URS Corp URS 4/21/14 81.82% Higher Education for Undergrads Description Ticker Trend Began Confidence American Public Education Inc APEI 3/7/14 80.00% Apollo Education Group Inc APOL 6/5/13 69.70% Bridgepoint Education Inc BPI 3/20/14 83.33% DeVry Education Group Inc DV 9/13/13 74.67% Grand Canyon Education Inc LOPE 4/24/14 92.31% ITT Educational Services Inc ESI 3/3/14 72.81% New Orient Education EDU 4/9/14 80.00% Strayer Education Incorporated STRA 3/17/14 73.83% Data as of 5/8/2014

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