Camelot Investment Committee Talking Points

Future Domestic Monetary Policy

On September 20-21, the Federal Open Market Committee (FOMC) will meet in Washington to discuss the US economy and contingent policy. According to Bloomberg, there is a 20% chance of a rate hike this month (Spalding). While bond traders are pessimistic about an increase in short term rates this month, Yellen has indicated positive economic conditions in her speech in Jackson Hole. From the macro-economic indicators presentenced over the past couple of weeks, monthly lagging and coincidental indicators have created a distorted picture in some economists’ eyes. According to Wells Fargo Senior Economist Mark Vitner, “Hours and wages have been weak over the past month. The Fed is more inclined to wait for more data. They don’t want to surprise the market. Quarterly and yearly data will indicate strong signs by the end of the year” (Vitner).  

Looking along the lines of long term federal monetary policy, there are indications pointing towards more “exotic” ways in supporting the economic activity. In the United States, the fed decided to lower short term interest rates while buying longer term notes (Federal Reserve Bank). This traditional easing is intended to flatten the yield curve to achieve target inflation. On the other side of the world, the Bank of Japan (BOJ) has decided to do the opposite by selling longer term notes and buying shorter term notes (Anstey). This is called a reverse operation twist. The BOJ has had deflationary pressures on their economy, so they are attempting to steepen the yield curve to create inflation. If this effort works in Japan, it would not be surprising to see other central banks adopting this policy to increase economic growth after all of the quantitative easing. 

Slowing Production in China

The current ‘factory of the world’, i.e. China, continues to see slower growth. Over the past 20 years, Chinese monthly production expanded well over 10-15% year/year, but has declined to levels hovering around 5-6%. The growth in industrial production for August was 6.3% (Trading Economics). 

Another indicator provided by the Chinese bureau of statistics shows a flattening and/or decreasing trend in cement production (graph below) from its peak in 2014. Although there is a seasonal recognition to the data, the spring and summer months decreased year over year. The reported cement production amount in July 2016 was 214.1 million tons (Trading Economics). Historically peak cement production months tend to be in the fall, and this will be interesting to see if there will be greater capacity this fall. 

Compiled by the Camelot Portfolios Investment Committee

Darren Munn, CFA, Chief Investment Officer

Sarah Berndt, Portfolio Manager

Eric Kartman, Research

Drew Steinman, CPA, Trader/Research

Frank Echelmeyer, MBA, CKA®, Advisor Consultant

-for Broker/Dealer and RIA use only-


Anstey, Chris. Bloomberg. 7 Sept 2016. 2016.

Spalding, Rebecca. Bloomberg. 12 Sept 2016. 2016.

Trading Economics. Cement Production. 2016. 2016.

Vitner, Mark. Wells Fargo Monthly Economic Outlook. 12 September 2016. 2016.


The materials presented is for use by professional advisors only.  It is not intended as informational and educational, and is not intended to be interpreted as investment advice.  The references to specific investment ideas, be they concepts, trends, sectors or even specific securities, are not recommendations for any advisor to adopt for any of their clients.  No investor or client reading these materials should view them as investment advice.  These materials are to be utilized as a catalyst for thought and discussion regarding the economy, investments, and responsible investing in general.  Past performance is not necessarily indicative of future returns, and there is no guarantee that any information presented herein will contribute to a profitable portfolio.  All facts referenced herein are derived from sources believed to be reliable.  

Any charts, graphs, or visual aids presented herein are intended to demonstrate concepts more fully discussed in the text of this brochure, and which cannot be fully explained without the assistance of a professional from Camelot Portfolios LLC.  Readers should not in any way interpret these visual aids as a device with which to ascertain investment decisions or an investment approach.  Only your professional adviser should interpret this information. A267