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Weekly Market Update – May 22, 2015

Markets dropped into the close on Friday causing the Dow and S&P 500 to finish in the red.  They were down 0.29% and 0.22%, respectively.  The Dow finished the week down 0.22%, while the S&P 500 was up slightly with a 0.16% gain. 

The Federal Open Market Committee (FOMC) minutes were released from April’s meeting on Wednesday.  As expected, the minutes strongly suggested that an interest rate hike in June was off the table and would remain data dependent going forward.  The lackluster economic data and lack of inflation to start 2015 has pushed the prospect of an increase in interest rates to September if not later.  While the unemployment rate is more 1% lower than the Fed’s previously announced target of 6.5%, the Fed has been reluctant to increase rates largely because wage growth has been nonexistent.  Janet Yellen and the Fed continue to walk a fine line of projecting a consistent message (to maintain their credibility), while at the same time allowing flexibility in their policy decisions.

European politicians continue to deliberate the possibility for another Greek Bailout.  Over the past several months, negotiations between European ministers and their Greek counterparts have taken the routine of two steps forward two steps back.  This week was no different, with the groups failing to make significant progress towards resolving their differences.  With Greece running out of cash to meet their debt payments and public pension obligations, the end of this game of financial chicken is nearing.

Next week we expect Magnum Hunter Resources, one of our larger positions, to announce one if not several liquidity enhancing initiatives.  These initiatives should help the company recover from the pressure it has been under lately.  Initial and Continuing Jobless Claims are reported on Thursday, with expectation for claims of 270 K and 2,250K.  This would represent a slight improvement for the Initial Jobless Claims and a slight increase for the Continuing Claims from the prior week.  The second estimate for Q1 GDP will be presented on Friday, with a downward revision from -.7% to -1.0%.

The market and our office will be closed on Monday in observance of Memorial Day.

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Ulland Investment Advisors

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