February 2016

The failure of earnings to reverse course to the upside after peaking in 3Q14 puts the equity markets at fundamental risk.

The rolling corrections starting in the summer of 2015 have set up a trading pattern that has some analogies to the patterns seen in late 2007 and early 2008.

Manager Commentary

Equity market conditions continued to be challenging with the S&P 500 falling (5.04%) in January after falling (1.78%) in December.

• There have been several questions regarding the eventual accuracy of the Atlanta Fed’s GDPNow forecast; it is important to note that GDPNow is computed based on the same data as is used for the official GDP calculation — it is simply recalculated in real-time as data is received.
• GDPNow right before the first estimate of 4Q15 GDP was 0.7%; the first estimate was 0.7