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The S&P 500 has followed a pattern of ups and down ever since confusion over the Fed’s intentions became an issue in May. This week the Fed gets another chance to communicate more clearly. The Federal Open Market Committee (FOMC) meets on Tuesday and Wednesday, but importantly, this meeting will be followed by a press conference, providing Chairman Bernanke an opportunity to clarify the Fed’s thinking, and settle financial markets in the process. Whether he succeeds remains to be seen. Either way, expect no change in policy. The recent economic data has been better than it was earlier in the spring, but almost certainly has not been strong enough to convince the Fed to change. This also likely means the July meeting is out as well for any change, since any economic improvement will not have persisted for long enough to be convincingly sustainable. Bernanke is likely to re-emphasize that the path of policy is data dependent. He is also likely to point out that even after any tapering of quantitative easing begins, monetary policy will still be quite accommodative, and interest rates are likely to remain near zero for a considerably longer time. It would be great if he went so far as to point out that the gradual removal of Fed accommodation is exactly what we should all want.

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Minneapolis – (June 11, 2013) – Ameriprise Financial (NYSE: AMP) today announces the launch of its exclusive Confident Retirement^® approach. This major new initiative, which is being introduced to the firm's financial advisors, pairs a strong framework with easy-to-use technology to help inspire an ongoing dialogue between clients and their advisors. The process leads clients to an understanding of their retirement needs based on their individual dreams and goals, and helps advisors figure out how to utilize their assets in retirement to help them achieve their expectations. View More

After suffering through two straight weeks of losses, stocks staged a strong rebound on Thursday and Friday to squeeze out a gain of 0.8 percent last week. Confusion over the Fed’s intentions and mixed economic data had driven the S&P 500 lower by 3.6 percent from its closing high of 1669 on May 21, to its recent closing low of 1609 on June 5. The move higher on Thursday and Friday earned back a lot of that decline with a combined gain of 2.1 percent. If the recent pullback has run its course, which certainly remains to be seen, it will have looked quite similar to the two previous pullbacks we have experienced so far this year. The first came between February 19-25, in response to the release of minutes from the Fed’s January meeting. It resulted in a 2.8 percent decline. The second came between April 11-18, and came after some unexpectedly weak economic data and the release of more Fed minutes. It resulted in a decline of 3.2 percent. Beyond the similar extent of these three declines, another common element is the unmistakable influence of the Fed in both triggering them, and resolving them. Each was triggered to various extents by rising fear of the Fed pulling back on quantitative easing sooner than expected. And each concluded as those fears subsided, either in response to public statements by the Fed, or in response to the release of economic data that will have a strong bearing on the Fed’s thinking.

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Today’s numbers were clearly a welcome surprise.  Job growth is still a bit weaker than desired at this stage but the fact that it is holding up as well as it is, despite the exceptionally strong headwinds of higher taxes and sharp government spending cuts, is a testament to the economy’s much improved underlying fundamentals.

Demand ultimately drives the economy and the improvements we’ve recently seen in the consumer sector should eventually pull other sectors of the economy, such as manufacturing and employment growth, up to healthier rates of expansion. Consumer spending has been improving in recent weeks and was particularly strong over the Memorial Day weekend; the recent rebound in consumer sentiment also suggests that these improvements could build momentum going forward.


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Federal Reserve Chairman Bernanke has made it clear that any decision to reduce the pace of monetary stimulus through its quantitative easing program is dependent upon the strength of the incoming economic data. Based upon what we have seen recently, it seems unlikely that a tapering of QE3 is imminent. 

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Markets experienced a bout of arrhythmia last week after listening to Federal Reserve Chairman Bernanke’s congressional testimony, and then reading through the minutes of the Fed’s most recent Open Market Committee meeting. And the episode did result in the first weekly decline for stocks in the past five. But, the decline was relatively modest, at 1.1 percent in the S&P 500, and it moderated as the week came to a close. This is a rather benign response to what appeared to be a resetting of expectations as to when the Fed might begin to adjust the pace of QE3. In response to questioning, Bernanke said that the Fed could consider adjustments during the next few meetings of the FOMC, if the data is sufficiently strong. Yet, it is unlikely that will be the case, certainly not for long enough, for a policy adjustment to occur coming out of the June and July FOMC meetings. However, it does suggest that September/October is not too soon to be thinking about it, again if the data is strong. That is sooner than many investors had considered likely, and last week’s arrhythmia was the result.

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Last week was another strong one for equities, as the S&P 500 gained 2.1 percent. It was the fourth straight weekly gain, during which time it has risen 7.2 percent. It ended the week 16.9 percent higher for the year to date. The resilience of this rally has been something to behold. There have only been four weeks all year in which the S&P 500 fell, with an average decline of less than 1 percent. And there have been only six down weeks in the six months since this rally began last November, and the average decline is still below 1 percent. For the month of May at the sector level, financials, industrials, consumer discretionary and technology stocks are beating the market, in anticipation of improving economic activity in the months ahead, and providing some optimism that this rally can be extended with cyclical groups which have mostly trailed.

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Minneapolis – (May 14, 2013) – Countless studies have shown that many Baby Boomers don’t believe they have enough savings to live comfortably in retirement, but why are so many financially unprepared? Data from the Retirement Derailers^SM survey, released today by Ameriprise Financial (NYSE: AMP), helps answer the questions many have about the retirement crisis in America. View More

Wednesday’s report on March new orders for durable goods (manufactured goods intended to last 3-years or more) is further evidence that the pace of economic activity has decelerated. New order trends also suggest that manufacturing activity is unlikely to improve much over the near-term, but neither do we expect the sector to see an outright contraction.

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