The Secular Advisor – November 10, 2015

Economic Summary

Employment – Unemployment rate drops to 5%. Earnings growth jumps most since ’09, trend: above 2.5%. Full-time employment back to pre-recession levels. EVERYTHING IS “IN PLACE” FOR A RATE HIKE.

Q4 GDP Forecast – 2.3%

Employment

The civilian unemployment rate has fallen to 5.0% (“consistent with full employment”) despite 94.5 million being out of the “labor force.”

Earnings growth is now above 2.5% and most importantly above the Fed 2% inflation target…

Full-time work back to pre-Great Recession levels…

HOWEVER, most hiring is still in low-paying jobs…

… Manufacturing: 0

Q4 GDP Forecast

The FED’s GDPNow model forecast for real Q4 GDP growth (seasonally adjusted annual rate) was 2.3% on November 4.

To learn more, visit Federal Reserve Bank of Atlanta’s website.

Asset Allocation Summary

Major Asset Class Allocations – 5% Stocks, 75% Bonds, 20% Cash

Int’l Developed Stock Allocations – 1.25% – Italy/Germany

Int’l Emerging Stock Allocations – 1.25% – Mexico/Indonesia

Int’l Emerging – BRIC Stock Allocations – 2.5% – Brazil/Russia

US Bond Allocation – 62.5%

Int’l Developed Bond Allocation – 2.5%

Int’l Emerging Bond Allocation – 10%

Asset Class Trends (for new allocation commitments)

Int’l Developed Stock Trend – bearish

Int’l Emerging Stock Trend – bearish

US Bond Trend – neutral

Int’l Developed Bond Trend – neutral