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Weekly Market Update – March 24, 2017

Ulland Investment Advisors in the News. On Friday Barron’s featured Ulland Investment Advisors’ article,

“The Risks of Passive Investing: Trouble Ahead for PFF”.

Ulland’s article highlights the specific risks associated with the PFF, most of which relate to the massive size of the ETF ($17 Billion). Not to be lost on readers however, is our argument that active management is an attractive way for investors to gain access to the preferred market.

A Full Version of the article can be found here:

The Dow finished down on Friday, falling 60 points to close at 20,597.  For the week, the Dow was down 1.52% (S&P 500 -1.4%) and year-to-date is now up 4.2% (S&P 500 +4.7%).  The yield on the 10-year Treasury fell 1 bp Friday to 2.40%, ending the week down 10 bps.  Through Thursday, March 24, our trust preferred portfolios were up over 2% YTD, substantially more than the Barclays Aggregate Bond Index, which was up 0.6%.

US economic data was mixed this week.  February new home sales came in at 592,000 SAAR, better than January’s upwardly revised 558,000 level. Existing-home sales dropped 3.7% to 5,480,000 SAAR. Realtors saw improved foot traffic, but low supply in the affordable range was pressuring prices. January pricing index was flat vs. a consensus increase of 0.5%. Initial jobless claims rose 15,000 to 258,000, ahead of 240,000 consensus.

The bill to repeal and replace the Affordable Care Act has been pulled. Many investors viewed the bill as a barometer of the Trump administration’s ability to implement its wider policy agenda, including tax reform and infrastructure spending plans.  Tax law changes are particularly hard to make since taxpayers are affected differently.  The administration’s efforts to reduce existing regulation continue, although the full impact of any change may take a year or more.  The final approval this week of the Keystone XL Pipeline permit is one of the larger regulatory changes so far.

The price of crude oil was down 1% on the week to ~$48 a barrel – down ~10% YTD.  There is a growing concern that OPEC’s pledge to reduce global inventories will encourage the U.S. producers to boost production. The oil cartel and some non-OPEC countries have agreed to cut output by 1.8 million barrels a day. This agreement will expire at the end of June and the oil market is closely observing whether the production cuts will be extended at the OPEC’s meeting May 25th. The US rig count rose 20 this week (+21 oil, -2 gas). $50 oil is the breakeven price in many oil fields.

Next week’s economic calendar may be a bit quieter, with Consumer Confidence on Tuesday (3/28), Pending Home Sales and Crude Inventories on Wednesday (3/29), Initial Jobless Claims on Thursday (3/30), and Chicago Purchasing Manager Index on Friday (3/31). 

Have a great weekend!


Ulland Investment Advisors

4550 IDS Center · Eighty South Eighth Street · Minneapolis MN 55402 · Telephone: 612-312-1400 · Facsimile: 612-204-3464