March 31, 2017—Active managers in domestic equities have had less success in outperforming their benchmarks in virtually each successive year of the current bull market. Starting in March of 2009 when the market finally bottomed and started upward, a bit more than half of active managers in the large-cap space were able to beat the S&P 500 index on a rolling 5-year time frame (Figure 1). By 2016, however, less than 15% of large-cap equity managers had managed to do so.
March 15, 2017—As expected, the Federal Open Market Committee (FOMC) of the Federal Reserve (Fed) hiked its benchmark interest by 25 basis points, or bps (0.25%), from a range of 0.50%–0.75% to a range of 0.75%–1.0%. It is the third such hike of this cycle, but comes just 12 weeks after the previous hike in rates on December 16, 2016. The gap between the first and second hike in December 2016 was a full year.
A picture perfect jobs reportMarch 10, 2017— The February jobs report was ideal in terms of an indication of ongoing labor market strength, stronger economic growth, and bolstering the case for rate hikes from the Federal Reserve. Headline job growth of 235,000 was a bit above market expectations and essentially the same as January’s upwardly revised 238,000. The unemployment rate ticked down one-tenth to 4.7% indicating increasing labor market tightness.