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Fed chair Janet Yellen reminded us last Friday that we can expect an interest rate hike this year. Vice-chair Stanley Fischer, while admonishing us not to fixate on when that first rate hike might occur, reiterated that the timing remains data dependent. If you look at the Fed’s dual mandate of full employment and stable prices, an argument could be made that those conditions have already been met.



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MINNEAPOLISMay 19, 2015 – Ameriprise Financial, Inc. (NYSE: AMP), today announced its support for U.S. service members with a $100,000 grant to Wounded Warrior Project® (WWP). The donation will be directed to the Warriors to Work® program, which provides career guidance and services to WWP Alumni transitioning to the civilian workforce. This year, the program aims to place 2,500 wounded service members in employment that is well suited for their skills, with an ultimate goal of employing 10,000 injured veterans by 2017.
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The S&P 500 closed at an all-time high on Friday, despite a series of economic reports that suggested the expected second quarter rebound was nowhere in sight. While this may be good news to those who would prefer that the Fed not raise rates anytime soon, it does cause us to re-examine our assumptions of how this year is likely to unfold. We may arrive at the same destination, but how we get there may be very different from what we expected just a few short months ago. Albert Einstein’s exhortation to “question everything” now seems particularly appropriate.



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The U.S. labor market rebounded in April, adding 223,000 new non-farm jobs after a March slump that was even weaker than first reported. The unemployment rate fell to 5.4 percent, its lowest reading since May 2008, while average hourly earnings barely edged higher, leaving the year-over-year increase at just 2.2 percent.

Capital markets cheered the report, as it suggested the economy was awakening from the first quarter slowdown, yet without much discernable wage inflation, reducing the already low odds of a June rate hike by the Federal Reserve. Before the Fed’s next meeting on June 16 and 17, it will have the benefit of just one more month of jobs and inflation data, unlikely to trigger a rate hike by themselves, regardless of their strength.

 



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Much of last week’s economic focus was on the first quarter U.S. GDP report, which registered barely positive growth, at least in the first estimate. Although the 0.2 percent annualized growth rate was at the lower end of the range of expectations, the overall weakness didn’t surprise anyone. The now familiar but nevertheless influential culprits of cold weather, West Coast port closures and the strong dollar were blamed.



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MINNEAPOLISAPRIL 28, 2015 – Ameriprise Financial (NYSE: AMP) today announced it has signed a definitive agreement to acquire the retail assets of JHS Capital Advisors (“JHS”), an independent broker-dealer and investment advisor based in Tampa, Fla. The transaction will build on the successful track record of growth in advice and wealth management at Ameriprise.
 
JHS is privately owned and provides comprehensive financial services to clients through a team of 150 financial advisors operating across the U.S. JHS generated over $38 million in revenue in 2014 and at year-end had retail assets totaling $4.1 billion. Like Ameriprise, JHS operates both employee and independent advisor channels. JHS advisors are expected to join one of the existing channels at Ameriprise.
 
“We’re pleased to welcome JHS advisors to the Ameriprise family,” said Neal Maglaque, Ameriprise Chief Operating Officer and head of business development within the company’s advice and wealth management division. “This is a natural fit in terms of both firms’ shared commitment and dedication to providing outstanding service to clients. We look forward to helping JHS advisors grow and serve their clients under the Ameriprise banner.”
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The major U.S. stock averages posted new all-time highs last week, despite further evidence that economic activity in the first quarter was sluggish. The S&P 500 gained 1.8 percent on the week, while the Nasdaq Composite index added 3.2 percent, raising their respective year-to-date gains to 2.9 and 7.7 percent. Prices rose despite a report that showed durable goods orders were once again soft in March (after backing out the volatile transportation component). In fact, capital goods orders in the private sector, ex-aircraft, fell for the seventh straight month.

 



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Now that the March Fed minutes have been released, we are onto the data dependency phase of deciphering when interest rates might first be raised. And since the seemingly interminable winter of 2015 seems to have finally ended, we can look forward to data that is free of weather-related distortion.
 

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The value of the U.S. dollar has risen dramatically over the last nine months in comparison to many of the other major currencies across the globe. Different strategies by some of the world’s largest central banks have led to a miss-match of currency supply fundamentals and a rapid rebalancing of currency exchange rates. Most notably, since July 1, 2014, the U.S. Dollar Index has jumped 23 percent, its sharpest pace of appreciation in more than 30 years (see chart below). The Dollar Index is a measure of the U.S. dollar’s value in comparison to the world’s other major currencies.



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