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HCR Wealth Advisors see Mixed Signals for the Economy


In a blog post dated July 18 of this year, HCR Wealth Advisors suggested they are seeing mixed signals that could be a precursor to an economic slowdown. For further information one may contact them by phone at 310-473-5445, or by fax at 310-473-5775. Their Web Site is www.hcrwealth.com.

HRC Wealth Advisors is a Los Angeles based firm with nearly 800 clients and more than 937 million in managed assets. They mainly provide financial and wealth management services. They consult businesses and do insurance services too.

While HCR Wealth Advisors is not predicting a sudden economic reversal, they clearly believe signs are right for an economic slowdown. According to their post, while the S&P 500 is at new highs investors are becoming more bearish in the months of May and June. Fund flows show 90 billion taken out of stocks and 220 billion going into bonds, a sure sign of money fleeing to safety.

Another important mixed signal is the inverting of the yield curve. Recently 10-year bonds are yielding 2.10% while 3-month bonds offer a better yield at 2.16%. This is a traditional sign of a coming economic slowdown or recession; although, it is far from clear, how long it will take before this signal is confirmed with higher unemployment and less business activity.

HCR Wealth Advisors finds that it is concerning the Fed is ready to cut short-term rates again from only 2.25%. To combat the last recession the Fed cut rates from 5.25% in 2007 and from 6.50% for the recession beginning in 2000. It is normally the case that in good times such as we are experiencing now that the fed is still raising rates to accrue ammunition for the next recession.

Also, GDP is clearly slowing. From the first-quarter GDP of 3.1%, the second-quarter GDP is expected to be not more than 1.6%. Corporate profits are slowing as well. Taken together these signs do not confirm the good times that a record market high seems to suggest. HCR Wealth Advisors, therefore, suggests caution and that it may be time to get defensive with one’s portfolio.

This article is for informational purposes only and should not be considered investment advice. HCR Wealth Advisors is not affiliated with this website.

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