Fund performance

A new report just released by Moody’s Capital Markets Research Group says that the recent volatility of equities markets in the U.S. -- along with other dreary economic news -- is having an unmistakably negative impact on the nation’s economy.

As if the stock market's wild vacillations in the past few weeks weren't evidence enough that few have a firm hold on the U.S. economy's near- and long-term outlook, Fannie Mae this week issued an analysis that says the likelihood of a dreaded double-dip recession is now a 50/50 proposition.

The ongoing sovereign debt crisis in Europe, debt concerns in the U.S. following its credit downgrade, weak GDP growth in the U.S. and Japan still reeling from the March earthquake have put the global economy in a fragile state, according to Business Monitor International.

A barrage of dour economic reports, the recent market correction, the U.S. credit downgrade, job insecurity and lower individual net worth pulled the Bankrate Financial Security Index down to 92.3.

With stocks bouncing around like they’re on a trampoline, it can be difficult for investors to find companies that offer any possibility of steady growth or protection against a further slump -- particularly with the economy looking increasingly weak.

The downgrade of U.S. debt may have led to more market volatility than the Flash Crash.

The Conference Board Leading Economic Index for the U.S. increased 0.5% in July to 115.80 ( 2004 = 100 ), marking the third month in a row that the index has risen. June saw a 0.3% gain, and May say a 0.7% increase.

With the market and economy turbulent, fund managers are steering away from equities and toward the safe haven of cash.

The debt ceiling debate, the nation’s credit rating downgrade, market declines and unemployment are taking a serious toll on investors, causing the Country Financial Security Index to fall 1.3 points in August to 62.4, a record low.

The inability of stock analysts and others to say, “Oops, I was wrong” may help cause even more serious damage in the stock market over time.

The last two weeks have been a heart-stopping roller coaster ride for investors. But don’t assume that the ride is necessarily over, said Michael Ryan, chief investment strategist at UBS.

The persistently weak economy and new regulations are preventing investment management firms from growing, according to a survey of 100 executives by KPMG.

Hedge funds have been holding their own amid the severe market swings of the past week, with the Dow Jones Credit Suisse Core Hedge Fund Index declining only -3.66% month-to-date through Aug. 14. By comparison, the Dow Jones Industrial Average fell -11.58% in that time, and the S&P 500 declined -13.18%.

It is ironic that Standard & Poor's, one of the three major credit rating agencies at the heart of the financial crisis, would downgrade the United States' credit rating from triple-A to AA+. After all, S&P should have properly assessed the asset-backed housing securities that led to the Great Recession not as investment-grade but what they actually were. Junk.

As the financial markets hit investors with gale-force gyrations last week, most advisers are telling their clients to drop anchor.

There’s more bad news for the economy and the stock market after a report from Thomson Reuters and the University of Michigan found that their Consumer Confidence Index in early August plunged to its lowest point since May of 1980.

CFOs Expect Strong Earnings But Inflation Fears Abound: SurveyBy Larry BarrettAugust 10, 2011Chief financial officers in the U.S. and Europe are largely optimistic about sales and earnings for their individual companies through the rest of the year, but rising commodity prices and extreme volatility in the equities markets has most convinced inflation is on the rise and will likely hinder any substantial recovery in the overall economy.Like what you see? Click here to sign up for Financial Planning's daily newsletter to get the latest on advisor market trends, investment management, retirement planning, practice management, technology, compliance and new product development.The CFO Outlook survey, conducted last month by Financial Executives International and Baruch College’s Zicklin School of Business, interviewed 228 corporate CFOs based in the U.S., 78 corporate CFOs from Italy and 44 CFOs from France.The survey found that while U.S. CFOs are slightly more optimistic than their European counterparts, concerns about the impact of raising the debt ceiling and the possibility of a double-dip recession are prompting most to extend their forecasts for the start of a U.S. economic recovery by more than a year to the second half of 2012 or beyond. The second quarter CFO Optimism Index for the global economy experienced a decline for U.S. CFOs from the previous quarter (61.70 to 59.40 in Q2), but remained higher than European CFOs, which also dipped (58.90 to 55.10 in Q2). U.S. CFOs’ optimism in their own companies remained consistent with the previous quarter (72), and demonstrated a higher level of confidence in their businesses than did European CFOs (down to 63.20 from Q1’s 66.10). However, the confidence among U.S. CFOs in the U.S. economy weakened. The index dropped five points from the previous quarter (59.00 from Q1’s 64.10) and dropped below their optimism for the global economy. Over the next 12 months, U.S. CFOs are forecasting a 21% increase in their net earnings, an 11% increase in revenue and a 15% increase in capital spending, while CFOs in Europe anticipate more modest increases in revenue and net earnings (6% each) and only a 4% increase in capital spending."Globally, CFOs continue to display caution. Inflation concerns and fears about the recovery may further delay new hiring and investing," John Elliott, Dean of the Zicklin School of Business at Baruch College, said in the report. "While U.S. CFOs have high expectations for earnings growth and generally hold a more positive outlook than Europeans about the global economy and the future of their businesses, their declining confidence in the U.S. economy reflects uncertainly.""Decisions from Congressional leadership and the President will be especially significant for U.S. businesses in the coming months," he added.Mainly due to rising commodity prices, inflation levels continue to be a major area of concern for CFOs. When asked to rate their inflation concerns on a scale of one to five (with five being the highest level of concern), 70% of U.S. CFOs and 66% of European CFOs selected a three or higher. The report found that while more than half feel their level of concern was unchanged from last quarter, over a third of both U.S. CFOs (39%) and European CFOs (36%) expressed more concern this quarter.From a big-picture perspective, the survey discovered that because of these formidable macroeconomic obstacles, a relatively lower number of U.S. CFOs feel the U.S. is in the midst of, or drawing close to, a recovery. Twenty-seven percent of U.S. CFOs believe that a recovery has occurred, and more than half (55%) predict that a recovery will not take place until the second half of 2012 or beyond.For nearly half of U.S. CFOs (47%), a lowered U.S. unemployment rate was perceived to be the most telling indicator of an economic recovery, which is followed by a rising gross domestic product (GDP) (22%) and a rise in consumer spending (17%).

WASHINGTON—Standard & Poor's downgrade of U.S. debt last week is likely to hasten the replacement of credit ratings within bank regulatory requirements.

Market volatility and an uneven path for the economic recovery are set to continue for years, according to Towers Watson. What’s more, all asset classes will face higher-than-average volatility, Towers Watson said.

The August reading of the Consumer Reports Index fell to 43.3, its lowest level since December 2009. Falling 5.1 points from 48.5 in July, the index registered its sharpest drop in two years.