Insight on Business

November 2015

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40 | I NSIGH T • N o v e m b e r 2 0 15 w w w . i n s i g h t o n b u s i n e s s . c o m W hat happens when a central bank has exhausted most of the conventional methods to jumpstart economic growth? Well, experts start to consider extreme and unconventional methods, which is what the conversation is sounding like from the Federal Reserve Board. So far, the Fed has pursued two major avenues to promote economic growth. At the height of the recession, the Fed lowered interest rates to near zero percent and enacted the American Recovery and Reinvestment Act, which injected trillions of dollars of stimulus into the economy. Since then, the stimulus program has ended and most of the world expects the Federal Reserve to raise interest rates back to normal levels. When Fed Chairwoman Janet Yellen had an opportunity to do this in September, she decided against raising rates. What gives? Her decision is an indicator the nation's top economists do not think the U.S. economy can handle a rise in rates. In fact, the conversation is turning toward exploring extreme measures to help drive economic growth. One of these measures includes lowering interest rates below zero percent, effectively charging savers who park their assets in the safety of their bank accounts. e thinking is to push savers out of safe investments and into the market, which could lengthen the bull market by pushing asset prices higher. e problem with this measure is that even though asset prices might increase, investors who are forced into the marketplace may be taking on more risk than they want or expect. If markets deteriorate, investors who have conservative risk temperaments could experience investment loss more typical of aggressive investors. clearTREND research by our firm in Appleton indicates downward trends in most market segments except the NASDAQ index. Our U.S. Economic Health Index shows 15 percent of U.S. sectors are expanding while 73 percent are contracting. "is is the largest number of contracting economic sectors we've seen since the inception of the U.S. Economic Health Index," says Alexander Hunt, advisor to private clients and retirement plans. "As an indicator that the economy is on uneven footing, it's understandable that the Fed is exploring extreme options like negative rates to promote economic growth." 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 Can negative rates really happen in the U.S.? Going negative This index measures more than 130 unique U.S. market sectors to determine how many are expanding, stable or contracting. More than 50 percent of expanding sectors are healthy, while less than 50 percent are not. 15% Expanding: 15% Neutral: 12% Contracting: 73% Poor Fair Good Excellent 100% 15% 12% 73% Data as of 10/8/2015 Sector Focus: Tax Planning Description Ticker Trend Began Confidence BlackRock Inc. BLK 6/30/15 77.11% Cohen & Steers Inc. CNS 4/21/15 79.55% Goldman Sachs Group Inc. GS 10/8/15 78.48% JPMorgan Chase & Co. JPM 9/14/15 77.24% Morgan Stanley MS 9/25/15 82.43% Northern Trust Corporation NTRS 9/24/15 78.46% State Street Corporation STT 10/1/15 78.12% T. Rowe Price Group Inc. TROW 10/5/15 80.77% Technology Description Ticker Trend Began Confidence Apple Inc. AAPL 9/22/15 80.84% Cisco Systems Inc. CSCO 9/18/15 71.62% Facebook Inc. FB 2/24/15 92.86% Intel Corporation INTC 10/5/15 74.48% International Business Machines Corporation IBM 10/6/15 75.46% Microsoft Corporation MSFT 10/2/15 83.33% Oracle Corporation ORCL 7/2/15 81.15% QUALCOMM Incorporated QCOM 10/8/15 73.90% 15% Expanding: 15% Neutral: 12% Contracting: 73% Poor Fair Good Excellent 100% 15% 12% 73%

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