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It is said that one man's trash is another man's treasure, or that one man's lost is another man's found. The stock market lost some goodwill, and Michael Lewis found some buyers for his new book; the Federal Reserve lost some unemployment targets, and the bond market found the sell button; gold lost ground, and everything else gained.

  1. The MSCI World Index, a broad measure of developed world's stock markets, rose 0.21 percent for the month.
  2. The S&P 500, a measure of large U.S. companies, rose 0.84 percent for the month.
  3. The MSCI Emerging Market Index, a broad measure of the emerging world's stock markets, rose 3.07 percent for the month.
  4. The MSCI US REIT Index rose 0.54 percent for the month.
  5. Gold declined 3.20 percent during the month.

In the final days of February and more clearly in the early days of March, it became evident that Russia had annexed Crimea. The most interesting and encouraging part of this still-unfolding story is that it hasn't led to global fear or contagion. It isn't hard to think of a time when this would have sent oil markets into frenzy or stock markets plummeting. So far, the only real impact has been on Russian currency and the stock market. We believe this limited contagion will be a positive driver of global stock markets in the future. The reduced global risk premium is particularly good for the U.S., as we have seen some initial signs of resilience in the economic recovery at home.

The Federal Reserve has recognized that the economy here at home is able to withstand the drawdown of quantitative easing (QE) and the eventual rise of interest rates. While the stock market didn't particularly like the delivery, the message is clearly positive: the U.S. economy is continuing to gain steam, and as a result, the Federal Reserve will wind down QE by the end of this year. The first increase of the Fed Funds rate will likely occur sometime in the six months following the end of QE. Bond markets reacted negatively, with a particular impact on shorter-term bonds, which reflected anticipated tightening earlier than previous projections. This wasn't the only mention of quick reaction trading that happened in March.

High frequency trading (HFT) has been a perennial hot topic for the better part of a decade now, but with author Michael Lewis proclaiming the U.S. stock market is "rigged," it has been thrust upon us with slightly more staying power than in previous iterations. We could spend a lot of time talking about both sides of the argument, but as a client of Fifth Third Private Bank, it is important for you to know that we are aware of the issues surrounding HFT and have several measures in place to ensure the predatory actors are not taking advantage of our clients. These measures include sophisticated trading algorithms designed specifically to address the issues with HFT, and post trade analysis, both of which are executed and monitored by a team of experienced and dedicated trading professionals.

 
 
     
 

Market commentary provided by Fifth Third Private Bank. Source of statistics is Bloomberg.com. This information is current as of the date of this letter and the opinions expressed are subject to change at any time, based on market and other conditions. This information is intended for educational purposes only and does not constitute the rendering of investment advice or specific recommendations on investment activities and trading. The mention of a specific security within this letter is not intended as a solicitation to buy or sell the specific security. Index performance shown within this letter is not representative of any Fifth Third managed account.

Diversification does not assure or guarantee better performance and cannot eliminate the risk of investment loss.

Past performance is no guarantee of future results. Indexes are unmanaged, do not incur investment management fees, do not represent the performance of any particular investment, and may not be invested directly into by investors. Small company investing involves specific risks not necessarily encountered in large company investing such as increased volatility. Investments in foreign markets entail special risks such as currency, political, economic and market risks. 

S&P 500 Index is a composite of 500 companies, amongst the largest based in the United States, and it often used as a measure of the overall U.S. stock market.

MSCI EMF (Emerging Markets Free) Index is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets.  As of June 2006 the MSCI Emerging Markets Index consisted of the following 25 emerging market country indices: Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Israel, Jordan, Korea, Malaysia, Mexico, Morocco, Pakistan, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.

Gold Index is the U.S. dollar per Troy ounce

MSCI US REIT Index is a free float- adjusted market capitalization weighted index that is comprised of equity REITs that are included in the MSCI US Investable Market 2500 Index, with the exception of specialty equity REITs that do not generate a majority of their revenue and income from real estate rental and leasing operations. The index represents approximately 85% of the US REIT universe.

The MSCI World Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets. The MSCI World Index consists of the following 24 developed market country indices: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the United Kingdom, and the United States*.


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