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Weekly Market Update – July 24, 2015

The Dow fell 162 points Friday on global growth concerns.  For the week the Dow was down 2.9% (its worst week since January) and for the year the index is now down 1.4%.

An unexpected contraction in Chinese manufacturing (to a 15-month low) heightened concerns of a global economic slowdown as markets fell worldwide Friday.  In the US, though Amazon reported better-than-expected second-quarter earnings late Thursday, overall, earnings reports from the majority of multinationals have underwhelmed (Apple, Microsoft, Caterpillar), reinforcing the growth concerns as sluggish demand overseas and the stronger US dollar have weighed on profits.   

Domestically, a surprise drop in US home sales in June also cast doubt on the strength of the housing sector in what is typically the industry’s most active time of year. 

The yield on the 10-year Treasury fell 1 basis point to 2.27%, down 8 bps for the week and now up 10 bps for the year.  Through Thursday, July 23, our trust preferred portfolios were up approximately 2%, on average, versus .27% for the Barclays Aggregate Bond Index. 

Oil fell 31 cents to $48.14 Friday, down 5.4% for the week, its fourth straight week of losses.  Data earlier in the week showing an unexpected increase in US crude supply, the stronger dollar, the weak Chinese manufacturing data released Friday and the threat of a flood of Iranian oil into the market combined to exert downward pressure on prices.

Next week’s economic calendar highlights include consumer confidence on Tuesday and Friday, weekly jobless claims and the first estimate of Q2 GDP on Thursday and a July manufacturing report on Friday. Expect consumer confidence to fall slightly, weekly jobless claims to fall in the 270-280,000 range (from 255,000 this week), the GDP release to show growth of approximately 1.5% in the second quarter and the manufacturing report to show an uptick in activity from June.  The Fed also meets next Tuesday and Wednesday though no major interest rate announcements are anticipated.

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Ulland Investment Advisors

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