Volatility is back! 

April looked like it was going to be a month of smooth sailing in the stock and bond markets, but the last week brought a typhoon of volatility, especially in the bond markets.  A sell-off in U.S. government bonds continued for an eighth consecutive session last Wednesday resulting in the Treasury bond market’s longest losing streak since March 2011 (Source: http://www.wsj.com/articles/u-s-government-bonds-pare-losses-1430917172).

People that are considering a mortgage probably noticed that rates shot up significantly in April, which is typically bad for bonds.  This has the potential to hurt the re-finance mortgage markets as well.

You’ve probably noticed at the gas pump that oil prices rocketed up from lows in mid-March around $45 per barrel of West Texas Crude Oil up to around $60, a roughly 33% increase (Source:  http://www.nasdaq.com/markets/crude-oil.aspx?timeframe=1m).  When gas and oil cost more, this helps energy companies, but hurts consumers and businesses.  We believe this increase is primarily a result of the U.S. Dollar decreasing in value.  When a currency moves 1% or 2% it can have a huge global impact.  The U.S. Dollar lost nearly 5% in the past month, and that has had major repercussions for several asset classes (Source:  http://www.bloomberg.com/quote/DXY:CUR).  That being said, we do not believe this is a time to panic.

Many of our economic indicators have turned yellow, but are not yet red.  We are always aware of the fact that the market has had a good number of years in a row without an annual loss, and a very long streak of avoiding a 10% correction.  This is concerning, so we typically tend to play defense shortly after our indicators turn red rather than waiting it out.  For now, we’re watching and waiting to see how May unfolds.  So far May is off to a nice start with stocks and bonds making a recovery.  Rest assured we have an exit strategy in hand if we need it.

Interesting Notes

Are you a saver? – Sixty-seven percent of Americans consider themselves “savers,” but 54% have a level of debt that is equal to or exceeds their savings.  –  Northwestern Mutual, Planning and Progress Study 2015

Athletes earn so much but… One in six NFL players will go bankrupt within 12 years of retirement, and 60% of NBA players go broke within five years of leaving the game. – CNBC Squawk Box, April 27, 2015

Fireworks Disney World is the second largest purchaser of explosives in the United States after the U.S. military. – Empire, October 15, 2013

Apple Cash – Apple has enough cash in the bank ($194 billion) to buy every single team in the NFL, NBA, NHL, and Major League Baseball. – Marketwatch, April 28, 2015